PERSONS & FAMILY RELATIONS
Persons and Personality ..... 10
Effect and Application of Laws ........................................ 2
CAPACITY TO ACT .............................................. 10 CIVIL PERSONALITY ................................................. 10 RESTRICTIONS ON CAPACITY TO ACT ........................... 10
WHEN LAWS TAKE EFFECT ................................. 2
DOMICILE AND RESIDENCE OF PERSON ........... 13 FOR NATURAL PERSONS .......................................... 13 FOR JURIDICAL PERSONS ......................................... 13 DOMICILE VS. RESIDENCE ......................................... 13 REQUISITES OF DOMICILE ......................................... 13 KINDS OF DOMICILE ................................................ 13
IGNORANCE OF THE LAW .................................. 2 RETROACTIVITY OF LAWS .................................. 2 ACTS CONTRARY TO LAW ................................... 2 WAIVER OF RIGHTS ............................................ 2
Family Code ..........................13
REPEAL OF LAWS ............................................... 2 TWO KINDS OF REPEAL OF LAW ................................... 2
Marriage ...............................13
JUDICIAL DECISIONS .......................................... 2 DUTY TO RENDER JUDGMENT ............................ 3 PRESUMPTION AND APPLICABILITY OF CUSTOM ............................... 3 LEGAL PERIODS .................................................. 3 POLICY ON LAST DAY BEING A LEGAL HOLIDAY/SUNDAY ... 3 APPLICABILITY OF PENAL LAWS ........................ 3 EXEMPTIONS UNDER INTERNATIONAL LAW (THEORY OF EXTRATERRITORIALITY) ............................................ 3 CONFLICT OF LAWS ............................................ 3 CONFLICT OF LAWS/ PRIVATE INTERNATIONAL LAW ........ 3 SOURCES ............................................................... 3 EXAMPLES OF CONFLICT OF LAW RULES IN THE PHILIPPINES......................................... 3 RULE ON PROPERTY ................................................. 4 RULE ON SUCCESSION............................................... 4 RULE ON EXTRINSIC VALIDITY OF CONTRACTS ................ 5
SPECIAL CONFLICT OF LAW RULES .................... 5 MARRIAGE ............................................................. 6 DIVORCE AND SEPARATION ........................................ 8 ANNULMENT AND DECLARATION OF NULLITY ................. 8
Human Relations .................. 8 ABUSE OF RIGHT ................................................ 8 ACTS CONTRARY TO LAW ................................... 9 ACTS CONTRA BONUS MORES ........................... 9 PRINCIPLE OF UNJUST ENRICHMENT................. 9
REQUISITES ....................................................... 13 NATURE OF MARRIAGE ............................................ 13 KINDS OF REQUISITES ............................................. 13 EFFECT OF ABSENCE OF REQUISITES ........................... 13 ESSENTIAL REQUISITES ............................................ 13 EFFECT OF MARRIAGES CELEBRATED ABROAD AND FOREIGN DIVORCE ..................... 16 MARRIAGES CELEBRATED ABROAD ............................. 16 PROOF OF FOREIGN MARRIAGE.................................. 16 FOREIGN DIVORCES ................................................ 16 VOID AND VOIDABLE MARRIAGES .................... 16 PRESUMPTION OF MARRIAGE .................................... 16 VOID MARRIAGES ................................................... 17 ACTION OR DEFENSE OF NULLITY .............................. 20 ANNULLABLE MARRIAGE .......................................... 21 EFFECT OF PENDING ACTIONS/DECREE ...................... 24 EFFECTS OF NULLITY .............................................. 24
Legal Separation .................24 GROUNDS FOR LEGAL SEPARATION................ 24 ACTS OF VIOLENCE ACCORDING TO RA 9262 ............... 25 DEFENSES ........................................................ 26 GROUNDS FOR DENYING LEGAL SEPARATION .............. 26 COOLING-OFF PERIOD AND RECONCILIATION EFFORTS...................... 26 CONFESSION OF JUDGMENT ............................ 26 EFFECTS OF FILING PETITION .......................... 26 EFFECTS OF PENDENCY ................................... 26 EFFECTS OF LEGAL SEPARATION..................... 26
RECONCILIATION ............................................. 27 HOW DONE ........................................................... 27 EFFECTS OF RECONCILIATION ................................... 27 ANNEX TO VOID AND VOIDABLE MARRIAGES AND LEGAL SEPARATION ............ 27 GROUNDS ............................................................ 27 EFFECTS OF FILING / PENDING DECREE ....................... 27 EFFECTS OF AFFIDAVIT OF REAPPEARANCE, JUDICIAL DECLARATION OF NULLITY, ANNULMENT AND LEGAL SEPARATION ........................................................ 28
Rights and Obligations between Husband and Wife .............. 28
ESSENTIAL OBLIGATIONS ................................ 28 FAMILY DOMICILE ............................................ 28 SUPPORT .......................................................... 29 MANAGEMENT OF HOUSEHOLD ....................... 29 EFFECT OF NEGLECT OF DUTY .......................... 29
THE FAMILY AS AN INSTITUTION ..................... 40 ASPECTS OF FAMILY RELATIONS ............................... 40 FAMILY RELATIONS INCLUDE ................................... 40 EXCEPTIONS TO THE GENERAL RULE – CANNOT BE SUBJECT OF COMPROMISE ................................................... 40 THE FAMILY HOME .......................................... 40 CONSTITUTED BY .................................................. 40 INCLUDES ............................................................ 41 GUIDELINES .......................................................... 41 BENEFICIARIES OF THE FAMILY HOME ......................... 41 REQUISITES TO BE A BENEFICIARY .............................. 41 REQUIREMENTS FOR THE SALE, ALIENATION, DONATION, ASSIGNMENT, OR ENCUMBRANCE OF THE FAMILY HOME . 41 REQUISITES FOR CREDITOR TO AVAIL OF THE RIGHT UNDER ARTICLE 160 ......................................................... 41
Paternity and Filiation .........42 KINDS OF FILIATION ........................................ 42 LEGITIMATE CHILDREN .................................... 42 WHO ARE LEGITIMATE CHILDREN .............................. 42 WHO ARE ILLEGITIMATE CHILDREN ............................ 42 IMPUGNING LEGITIMACY ......................................... 42 ACTION FOR IMPUGNING LEGITIMACY ........................ 43
EXERCISE OF PROFESSION ............................... 29
PROOF OF FILIATION........................................ 43 ACTION FOR CLAIMING FILIATION .............................. 44 RIGHTS OF LEGITIMATE CHILDREN ............................ 44
Property Relations of the Spouses ................................29
ILLEGITIMATE CHILDREN ................................. 44 ACTION FOR CLAIMING FILIATION .............................. 44 RIGHTS OF ILLEGITIMATE CHILD ................................ 45
MARRIAGE SETTLEMENTS ............................... 29 MARRIAGE SETTLEMENT RULES ................................ 29 DONATIONS BY REASON OF MARRIAGE .......... 30 DISTINGUISHED FROM ORDINARY DONATIONS .............. 31 ABSOLUTE COMMUNITY OF PROPERTY AND CONJUGAL PARTNERSHIP OF GAINS ........ 31 COMPARISON OF ACP AND CPG .................................. 31 SEPARATION OF PROPERTY OF THE SPOUSES AND ADMINISTRATION OF COMMON PROPERTY BY ONE SPOUSE DURING THE MARRIAGE ........ 38 JUDICIAL SEPARATION OF PROPERTY MAY EITHER BE VOLUNTARY OR FOR SUFFICIENT CAUSE ..................... 38
PROPERTY REGIME OF UNIONS WITHOUT MARRIAGE ....................................... 39
The Family........................... 40
LEGITIMATED CHILDREN.................................. 45 TO BE CAPABLE OF LEGITIMATION ............................. 45 PROCEDURE ........................................................ 45 GROUNDS FOR IMPUGNING LEGITIMATION ................. 45 RIGHTS ............................................................... 45 IMPUGNING LEGITIMATION ...................................... 45
Adoption.............................. 46 RA 8552 – DOMESTIC ADOPTION LAW ............. 46 WHO CAN ADOPT ................................................... 46 WHO CAN BE ADOPTED ........................................... 46 PRE-ADOPTION PROCEDURES .................................. 47 ADOPTION PROCEDURES......................................... 47 WHO MAY NOT ADOPT/ BE ADOPTED ......................... 48 RIGHTS OF AN ADOPTED CHILD ................................. 48 RESCISSION OF ADOPTION ....................................... 48 RECTIFICATION OF SIMULATED BIRTH......................... 49
RA 8043 – THE LAW ON INTER-COUNTRY ADOPTION ........................................................ 49 INTER-COUNTRY ADOPTION ..................................... 49 WHO CAN ADOPT ................................................... 49 WHO CAN BE ADOPTED ........................................... 50
Support ............................... 50 WHAT IT COMPRISES ....................................... 50
EFFECT OF PARENTAL AUTHORITY UPON THE PERSONS OF THE CHILDREN............................ 54 RIGHTS OF PARENTS UPON THE PERSON OF THE CHILDREN ................................ 54 DUTIES OF PARENTS UPON THE PERSON OF THE CHILDREN ................................ 54 SUBSTITUTE REPRESENTATION ................................ 54 COURT ASSISTANCE IN THE DISCIPLINE OF THE CHILD .... 54
WHO ARE OBLIGED ........................................... 50 TO SUPPORT EACH OTHER ....................................... 50 PROPERTIES ANSWERABLE FOR SUPPORT ....................51 ORDER OF SUPPORT ................................................51 STRANGER GIVES SUPPORT.......................................51 PERSON OBLIGED REFUSES OR FAILS TO GIVE SUPPORT ..51 CONTRACTUAL SUPPORT OR THAT GIVEN BY WILL ..........51
EFFECTS OF PARENTAL AUTHORITY UPON THE PROPERTY OF THE CHILDREN.......................... 54 PROCEDURE IN THE APPROVAL OF THE PARENT’S BOND 54 OWNERSHIP OF CHILD’S ACQUISITIONS ...................... 55 PARENT’S USUFRUCT ............................................ 55
SUPPORT DURING MARRIAGE LITIGATION ......51
SUSPENSION OR TERMINATION OF PARENTAL AUTHORITY ...................................................... 55
AMOUNT .......................................................... 52 WHEN DEMANDABLE ....................................... 52 OPTIONS .......................................................... 52 ATTACHMENT .................................................. 52
Parental Authority ...............52 GENERAL PROVISIONS ..................................... 52 PARENTAL AUTHORITY INCLUDES ............................. 52 PARENTAL AUTHORITY AND RESPONSIBILITY MAY NOT BE RENOUNCED OR TRANSFERRED EXCEPT IN THE CASES AUTHORIZED BY LAW .............................................. 52 CASES WHEN PARENTAL AUTHORITY AND RESPONSIBILITY MAY BE TRANSFERRED OR RENOUNCED...................... 52 RULES AS TO THE EXERCISE OF PARENTAL AUTHORITY ... 52 CHARACTERISTICS OF PARENTAL AUTHORITY............... 52 PARENTAL PREFERENCE RULE .................................. 52 WHO EXERCISES AUTHORITY IN CASES OF DEATH, ABSENCE, UNSUITABILITY, REMARRIAGE, OR SEPARATION OF PARENTS ......................................................... 52 DESCENDANT’S PRIVILEGE OF REFUSAL TO TESTIFY ....... 53 TENDER YEARS PRESUMPTION ................................. 53
SUBSTITUTE AND SPECIAL PARENTAL AUTHORITY ...................................................... 53 PERSONS EXERCISING SUBSTITUTE PARENTAL AUTHORITY IN DEFAULT OF PARENTS OR JUDICIALLY APPOINTED GUARDIAN ........................................................... 53 SUBSTITUTE PARENTAL AUTHORITY OVER DISADVANTAGED CHILDREN ............................................................ 53 PERSONS EXERCISING SPECIAL PARENTAL AUTHORITY ... 53 LIABILITY OF THOSE EXERCISING SPECIAL PARENTAL AUTHORITY OVER THE CHILD ................................... 53
WHEN PARENTS ENTRUST THE MANAGEMENT OF THEIR PROPERTIES TO A CHILD ......................................... 55
RA 7610 – CHILD ABUSE LAW ........................... 55 PARENTAL AUTHORITY PERMANENTLY TERMINATES ..... 55 TERMINATION OF PARENTAL AUTHORITY WHICH CAN BE REVIVED BY FINAL JUDGMENT .................................. 55 GROUNDS FOR SUSPENSION OF PARENTAL AUTHORITY . 55 SCOPE OF SUBSTITUTE AND SPECIAL PARENTAL AUTHORITY ................................ 55 RA 7610 – CHILD ABUSE LAW .................................. 55
Emancipation, as amended by RA 6809 ......................... 55 Summary Judicial Proceedings in the Family Law ...................................... 56 PROCEDURAL RULES PROVIDED FOR IN THIS TITLE SHALL APPLY TO ........................ 56 SEPARATION IN FACT ...................................... 56 SEPARATE CLAIM FOR DAMAGES............................... 56 JURISDICTION ....................................................... 56 NOTIFICATION TO OTHER SPOUSE ............................. 56 PROCEDURE ......................................................... 56 WHEN APPEARANCE OF SPOUSES REQUIRED ............... 56 NATURE OF JUDGMENT ........................................... 56 RULES APPLICABLE FOR ADMINISTERING OR ENCUMBERING SEPARATE PROPERTY OF SPOUSE .... 56
INCIDENTS INVOLVING PARENTAL AUTHORITY .................................... 57
PROCEDURE ......................................................... 57
PROPERTY
Retroactive Effect ................ 57
Characteristics .................... 66
INVALIDITY OF OTHER PROVISIONS ................. 57
Classification ....................... 66
RETROACTIVE EFFECT ...................................... 57
Funeral ................................. 57
NATURE OF FUNERAL ............................................. 57 GUIDELINES IN MAKING FUNERAL ARRANGEMENTS ....... 58
Use of Surnames ................ 58
SURNAMES OF CHILDREN ................................ 58 WIFE AFTER AND DURING MARRIAGE ............. 58 CONFUSION AND CHANGE OF NAMES ............. 58
Absence ............................... 59 PROVISIONAL MEASURES IN CASE OF ABSENCE ....................................... 59 PRESUMPTION IN THE RULES OF COURT ...................... 59 REQUISITES ......................................................... 60 WHO MAY BE APPOINTED AS REPRESENTATIVE ............. 60 DECLARATION OF ABSENCE ............................. 60 WHEN MAY A DECLARATION OF ABSENCE BE DECLARED . 60 WHO MAY ASK FOR A DECLARATION OF ABSENCE ......... 60 ADMINISTRATION OF THE PROPERTY OF THE ABSENTEE.......................... 60 WHO MAY ADMINISTER THE PROPERTY ...................... 60 WHEN WILL THE ADMINISTRATION OF PROPERTY CEASE ..61 PRESUMPTION OF DEATH .................................61 EXTRAORDINARY ABSENCE .......................................61
Civil Registrar....................... 61 RA 9048 AS AMENDED BY RA 10172 ................. 62 GROUNDS ............................................................ 63
HIDDEN TREASURE .......................................... 66 BASED ON MOBILITY – IMMOVABLE OR MOVABLE ............................... 66 REAL OR IMMOVABLE PROPERTY .............................. 66 PERSONAL OR MOVABLE ........................................ 68 IMPORTANCE AND SIGNIFICANCE OF CLASSIFICATION UNDER THE CIVIL CODE ........................................... 68
BASED ON OWNERSHIP ................................... 69 PUBLIC DOMINION ................................................. 69 PRIVATE OWNERSHIP ............................................. 70 BASED ON CONSUMABILITY............................. 70 CONSUMABLE ....................................................... 70 NON-CONSUMABLE ............................................... 70 SUSCEPTIBILITY TO SUBSTITUTION ................. 70 FUNGIBLES .......................................................... 70 NON-FUNGIBLES .................................................. 70 BASED ON THE CONSTITUTION ......................... 71 OTHER CLASSIFICATIONS ................................. 71 BY THEIR PHYSICAL EXISTENCE .................................. 71 BY THEIR AUTONOMY OR DEPENDENCE ....................... 71 BY SUSCEPTIBILITY TO DETERIORATION ....................... 71 BY REASON OF THEIR SUSCEPTIBILITY TO DIVISION......... 71 BY REASON OF DESIGNATION .................................... 71 EXISTENCE IN POINT OF TIME .................................... 71
Ownership ............................. 71 DEFINITION ....................................................... 71
RULE 108, RULES OF COURT ............................ 63
RIGHT IN GENERAL ........................................... 71 RIGHTS INCLUDED IN OWNERSHIP .............................. 71 BUNDLE OF RIGHTS ................................................. 71
CANCELLATION OR CORRECTION OF ENTRIES IN THE CIVIL REGISTRY .................................... 63 WHO MAY FILE PETITION ......................................... 64 ENTRIES SUBJECT TO CANCELLATION ......................... 64
PROTECTING PROPERTY ................................... 71 BASIC DISTINCTIONS ............................................... 71 REMEDIES.............................................................72 RIGHT TO RECOVER POSSESSION................................72 LIMITATIONS ON OWNERSHIP ..........................72 LIMITATIONS ON THE RIGHTS OF OWNERSHIP PROVIDED BY LAW .................................................72
Accession ............................. 74 CLASSIFICATION OF ACCESSION ...................... 74 WITH RESPECT TO IMMOVABLES ................................ 74 WITH RESPECT TO MOVABLE PROPERTY ...................... 79
Quieting of Title or Interest in and Removal or Prevention of Cloud over Title to or Interest in Real Property .................. 81 IN GENERAL...................................................... 81 PURPOSE .......................................................... 81 NATURE: QUASI IN REM ................................... 81 JUSTIFICATIONS FOR QUIETING OF TITLE ........ 81 THE ACTION TO QUIET TITLE DOES NOT APPLY ......................... 81 REQUIREMENT ................................................. 81 REQUISITES OF AN ACTION TO QUIET TITLE .................. 81 THERE IS A CLOUD ON TITLE TO REAL PROPERTY OR ANY INTEREST TO REAL PROPERTY .................................. 81 THE PLAINTIFF MUST HAVE LEGAL OR EQUITABLE TITLE TO, OR INTEREST IN THE REAL PROPERTY ......................... 82 PLAINTIFF MUST RETURN THE BENEFITS RECEIVED FROM THE DEFENDANT ................................................... 82
QUIETING OF TITLE V. REMOVAL OF CLOUD..... 82 REQUISITES OF AN ACTION TO PREVENT A CLOUD ......... 82
LAW ................................................................... 83 CONTRACTS ......................................................... 83 SUCCESSION......................................................... 84 TESTAMENTARY DISPOSITION OR DONATION INTER VIVOS ..................................... 84 BY FORTUITOUS EVENT OR BY CHANCE ....................... 84 BY OCCUPANCY ..................................................... 84 BY ASSOCIATIONS AND SOCIETIES WITH SECRET ARTICLES ............................ 84
RIGHT OF CO-OWNERS..................................... 84 RIGHT TO THE SHARE IN THE BENEFITS AS WELL AS CHARGES ............................................ 84 RIGHT TO USE THE THING OWNED IN COMMON ............. 84 RIGHT TO BRING AN ACTION IN EJECTMENT ................. 84 RIGHT TO COMPEL OTHER CO-OWNERS TO CONTRIBUTE TO THE EXPENSES OF PRESERVATION AND TO THE TAXES ....................... 84 RIGHT TO REPAIR .................................................. 84 RIGHT TO OPPOSE ALTERATIONS............................... 84 RIGHT TO FULL OWNERSHIP OF HIS PART AND OF THE FRUITS AND BENEFITS PERTAINING THERETO ............................................ 85 RIGHT TO PARTITION ............................................. 85 RIGHT TO REDEMPTION........................................... 85 RULES................................................................. 85
TERMINATION/EXTINGUISHMENT ................... 85 TOTAL DESTRUCTION OF THING OR LOSS OF THE PROPERTY CO-OWNED .......................... 85 MERGER OF ALL INTERESTS IN ONE PERSON ................ 85 ACQUISITIVE PRESCRIPTION..................................... 85 PARTITION OR DIVISION .......................................... 86
Possession........................... 86 DEFINITION ...................................................... 86 CONCEPT OF POSSESSION ............................... 86
PRESCRIPTION/NON-PRESCRIPTION OF ACTION ........................................................ 82 PRESCRIPTION OF ACTION ....................................... 82
Co-ownership ..................... 82 DEFINITION ...................................................... 82 REQUISITES ...................................................... 82 WHAT GOVERNS CO-OWNERSHIP .................... 82 CHARACTERISTICS OF CO-OWNERSHIP ........... 82 THERE ARE IDEAL SHARES DEFINED BUT NOT PHYSICALLY IDENTIFIED .............................. 83
SOURCES OF CO-OWNERSHIP .......................... 83
CHARACTERISTICS ........................................... 86 ESSENTIAL REQUISITES OF POSSESSION ..................... 86 DEGREES OF POSSESSION........................................ 86 CASES OF POSSESSION ........................................... 87 ACQUISITION OF POSSESSION ......................... 88 WAYS OF ACQUIRING POSSESSION............................. 88 BY WHOM MAY POSSESSION BE ACQUIRED .................. 89 WHAT DO NOT AFFECT POSSESSION .......................... 89 RULES TO SOLVE CONFLICTS OF POSSESSION ............... 89 EFFECTS OF POSSESSION ................................ 90 RIGHT TO BE PROTECTED IN HIS POSSESSION ............... 90 ENTITLEMENT TO FRUITS – POSSESSOR IN GOOD FAITH/BAD FAITH...................... 90 REIMBURSEMENT FOR EXPENSES—
POSSESSOR IN GOOD FAITH/BAD FAITH .......................91
LOSS OR UNLAWFUL DEPRIVATION OF A MOVABLE ................................................. 93 POSSESSION OF MOVABLE ACQUIRED IN GOOD FAITH (IN CONCEPT OF OWNER) IS EQUIVALENT TO TITLE .......................................... 93 PERIOD TO RECOVER .............................................. 93 FINDER OF LOST MOVABLE ....................................... 93 DISTINGUISHED FROM VOIDABLE TITLE ....................... 93
EFFECTS OF POSSESSION................................. 93 EFFECTS OF POSSESSION IN THE CONCEPT OF OWNER .... 93 RIGHTS OF POSSESSOR.................................... 94 PRESUMPTION IN FAVOR OF THE POSSESSOR— FOR ACQUISITIVE PRESCRIPTION ............................... 94 LOSS/TERMINATION OF POSSESSION..................................................... 94 ABANDONMENT .................................................... 94 ASSIGNMENT, EITHER ONEROUS OR GRATUITOUS ......... 94 POSSESSION BY ANOTHER; IF POSSESSION HAS LASTED LONGER THAN ONE YEAR; REAL RIGHT OF POSSESSION NOT LOST AFTER 10 YEARS ..................................... 94 RULES FOR LOSS OF MOVABLES ................................ 95
Usufruct............................... 95 CONCEPT .......................................................... 95 OBJECTS OF USUFRUCT.................................... 95 CHARACTERISTICS ........................................... 95 NATURAL CHARACTERISTICS .................................... 95 CLASSIFICATION ............................................... 95 BY ORIGIN ............................................................ 95 BY PERSON ENJOYING RIGHT OF USUFRUCT ................. 96 BY OBJECT OF USUFRUCT ......................................... 96 BY THE EXTENT OF THE USUFRUCT ............................. 96 BY THE TERMS OF THE USUFRUCT .............................. 96
USUFRUCT OVER FRUIT BEARING TREES AND SPROUT AND WOODLANDS .............................. 101 USUFRUCT ON A RIGHT OF ACTION ........................... 101 USUFRUCT ON MORTGAGED PROPERTY ..................... 101 USUFRUCT OVER AN ENTIRE PATRIMONY ................... 101 USUFRUCT OVER DETERIORABLE PROPERTY ............... 101 USUFRUCT OVER CONSUMABLE PROPERTY ................ 101
RIGHTS OF THE OWNER .................................. 101 EXTINGUISHMENT/TERMINATION.................. 102 DEATH OF USUFRUCTUARY ..................................... 102 EXPIRATION OF PERIOD OR FULFILLMENT OF RESOLUTORY CONDITION IMPOSED ON USUFRUCT BY PERSON CONSTITUTING THE USUFRUCT ................................ 102 MERGER OF RIGHTS OF USUFRUCT AND NAKED OWNERSHIP IN ONE PERSON .................. 102 RENUNCIATION OF USUFRUCT ................................. 102 EXTINCTION OR LOSS OF PROPERTY.......................... 102 TERMINATION OF RIGHT OF PERSON CONSTITUTING THE USUFRUCT ............................... 103 PRESCRIPTION ..................................................... 103
CONDITIONS NOT AFFECTING USUFRUCT ...... 103 EXPROPRIATION OF THING IN USUFRUCT ................... 103 BAD USE OF THING IN USUFRUCT ............................. 103
Easement ........................... 103 CHARACTERISTICS .......................................... 103 ESSENTIAL FEATURES............................................ 103 CLASSIFICATION .............................................104 AS TO RECIPIENT OF BENEFITS................................. 104 AS TO CAUSE OR ORIGIN......................................... 104 AS TO ITS EXERCISE............................................... 104 AS INDICATION OF ITS EXISTENCE ............................. 105 BY THE OBJECT OR OBLIGATION IMPOSED................... 105 GENERAL RULES .................................................. 105 RELEVANCE OF CLASSIFICATIONS .................. 105
SPECIAL CASES OF USUFRUCT ....................... 100
DETERMINES WHAT EASEMENTS CAN BE ACQUIRED BY PRESCRIPTION ........................ 105 DETERMINES WHAT EASEMENTS CAN BE ACQUIRED BY TITLE .................................... 105 DETERMINES HOW TO COMPUTE THE PRESCRIPTIVE PERIOD ..................................... 105 DETERMINES HOW EASEMENT IS LOST BY PRESCRIPTION ...................................... 105
USUFRUCT OVER A PENSION OR PERIODICAL INCOME ........................................ 100 USUFRUCT OF PROPERTY OWNED IN COMMON ........... 100 USUFRUCT CONSTITUTED ON A FLOCK OR HERD OF LIVESTOCK ......................................... 101
CREATION ....................................................... 105 BY TITLE ............................................................. 105 BY LAW (LEGAL EASEMENTS) .................................. 106 BY WILL OF THE OWNERS (VOLUNTARY EASEMENTS) .... 106
RIGHTS AND OBLIGATIONS OF USUFRUCTUARY ......................................... 97 RIGHTS................................................................ 97 OBLIGATIONS........................................................ 98
BY PRESCRIPTION ................................................ 106
LEGAL EASEMENTS ........................................ 106 LAW GOVERNING LEGAL EASEMENTS ....................... 106 VOLUNTARY EASEMENTS............................... 106 RIGHTS AND OBLIGATIONS OF OWNERS OF DOMINANT AND SERVIENT ESTATES ............. 106 RIGHT OF DOMINANT ESTATE OWNER ....................... 106 OBLIGATIONS OF DOMINANT ESTATE OWNER ............. 106 RIGHT OF SERVIENT ESTATE OWNER ......................... 107 OBLIGATIONS OF SERVIENT ESTATE OWNER ................ 107 KINDS OF LEGAL EASEMENTS .........................107 NATURAL DRAINAGE ............................................. 107 RIPARIAN BANKS .................................................. 107 DRAINAGE OF BUILDINGS ....................................... 107 DAM .................................................................. 107 DRAWING WATER ................................................ 108 AQUEDUCT ......................................................... 108 SLUICE GATE....................................................... 108 RIGHT OF WAY..................................................... 108 PARTY WALL ....................................................... 109 LIGHT AND VIEW .................................................... 111 INTERMEDIATE DISTANCES ..................................... 112 NUISANCE ........................................................... 112 LATERAL AND SUBJACENT SUPPORT ......................... 112 MODES OF ACQUIRING EASEMENT ................. 112 BY TITLE ............................................................. 112 BY PRESCRIPTION ................................................. 112 EXTINGUISHMENT OF EASEMENTS ................. 112 MERGER ............................................................. 113 BY NON-USER FOR 10 YEARS................................... 113 EXTINGUISHMENT BY IMPOSSIBILITY OF USE ............... 113 EXPIRATION OF THE TERM OR FULFILLMENT OF RESOLUTORY CONDITION ................ 113 RENUNCIATION OF THE OWNER OF THE DOMINANT ESTATE..................................... 113 REDEMPTION AGREED UPON BETWEEN THE OWNERS.......................................... 113 OTHER CAUSES NOT MENTIONED IN NCC 631 .............. 113
Nuisance.............................. 114
NUISANCE V. TRESPASS .................................. 114 NUISANCE V. NEGLIGENCE .............................. 114 CLASSES .......................................................... 114 ACCORDING TO NATURE ......................................... 114 ACCORDING TO SCOPE OF INJURIOUS EFFECTS ............ 114 DOCTRINE OF ATTRACTIVE NUISANCE............ 115
LIABILITY IN CASE OF NUISANCE .................... 115 WHO ARE LIABLE .................................................. 115 LIABILITY OF CREATOR OF NUISANCE ........................ 115 LIABILITY OF TRANSFEREES .................................... 115 NATURE OF LIABILITY ............................................ 115 RIGHT TO RECOVER DAMAGES ................................. 115 NO PRESCRIPTION ................................................ 115 REGULATION OF NUISANCES .......................... 115 PUBLIC NUISANCE ................................................ 115 PRIVATE NUISANCE ............................................... 116
Modes of Acquiring Ownership .......................... 116 MODES OF ACQUIRING OWNERSHIP............... 116 OCCUPATION.................................................... 117 REQUISITES.......................................................... 117 KINDS ................................................................. 117 SPECIAL RULES ..................................................... 117 DONATION ...................................................... 118 OTHER INSTANCES CONSIDERED AS DONATION ........... 118 NATURE ............................................................. 118 WHAT MAY BE DONATED ........................................ 118 WHAT MAY NOT BE DONATED .................................. 118 KINDS OF DONATIONS ........................................... 118 FORMALITIES REQUIRED ........................................ 120 QUALIFICATIONS OF DONOR, DONEE......................... 120 EFFECTS OF DONATION/LIMITATIONS ........................121 VOID DONATIONS ................................................. 122 REVOCATION AND REDUCTION ................................ 122 TRADITION ...................................................... 127 CONCEPT ............................................................ 127 REQUISITES......................................................... 127 PURPOSE............................................................ 127 KINDS ................................................................ 127
Prescription .........................127
DEFINITION ..................................................... 127 RATIONALE ..................................................... 127 KINDS OF PRESCRIPTION................................ 127 ACQUISITIVE PRESCRIPTION.................................... 127 EXTINCTIVE PRESCRIPTION ..................................... 128 NO PRESCRIPTION APPLICABLE ..................... 128 BY OFFENDER ...................................................... 128 REGISTERED LANDS - PD 1529 ............................... 128 RIGHTS NOT EXTINGUISHED BY PRESCRIPTION ............ 128 ACTION TO QUIET TITLE IF PLAINTIFF IS IN POSSESSION . 128
VOID CONTRACTS .................................................128 ACTION TO DEMAND PARTITION ...............................128 PROPERTY OF PUBLIC DOMINION..............................128
PRESCRIPTION DISTINGUISHED FROM LACHES .................................................128 PRESCRIPTION OR LIMITATION OF ACTIONS ..129 TO RECOVER MOVABLES .........................................129 TO RECOVER IMMOVABLES......................................129 OTHER ACTIONS ...................................................129 OBLIGATIONS & CONTRACTS
[Obligations] ...................... 132 Definition ............................ 132 Elements of an Obligation .................... 132
ELEMENTS OF AN OBLIGATION ....................... 132
Different Kinds of Prestations .................... 132 Classification of Obligations ................... 132 FROM THE VIEWPOINT OF “SANCTION” .......... 132 FROM THE VIEWPOINT OF SUBJECT MATTER.. 132 FROM THE AFFIRMATIVENESS OR NEGATIVENESS OF THE OBLIGATION .............. 132 FROM THE VIEWPOINT OF PERSONS OBLIGED.......................................... 132
Sources of Obligations ...... 132
SINGLE ACT OR OMISSION CAN GIVE RISE TO DIFFERENT CAUSES OF ACTION ...................... 132 NATURAL OBLIGATIONS ................................. 132 EXTRA-CONTRACTUAL OBLIGATIONS ............. 133 QUASI-CONTRACTS ............................................... 133 OTHER QUASI-CONTRACTS ..................................... 135 QUASI-DELICTS .................................................... 136
Nature and Effect of Obligations.......................... 137
OBLIGATION TO GIVE ...................................... 137 A DETERMINATE OR SPECIFIC THING ......................... 137 AN INDETERMINATE OR GENERIC THING .................... 137 OBLIGATION TO DO OR NOT TO DO................. 138 BREACH OF OBLIGATIONS .............................. 138 COMPLETE FAILURE TO PERFORM ............................ 138 DEFAULT, DELAY, OR MORA.................................... 138 FRAUD (DOLO) IN THE PERFORMANCE OF OBLIGATION .............................. 139 NEGLIGENCE (CULPA) IN THE PERFORMANCE OF OBLIGATION ............................... 140 DILIGENCE NORMALLY REQUIRED IS ORDINARY DILIGENCE OR DILIGENCE OF A GOOD FATHER OF A FAMILY; EXCEPTIONS ....................................................... 140 EXTENT OF DAMAGES TO BE AWARDED ..................... 140 CONTRAVENTION OF THE TENOR OF OBLIGATION ......... 141 LEGAL EXCUSE FOR BREACH OF OBLIGATION – FORTUITOUS EVENT; REQUISITES ............................. 141
REMEDIES AVAILABLE TO CREDITOR IN CASE OF BREACH ........................................ 141 SPECIFIC PERFORMANCE ........................................ 141 SUBSTITUTED PERFORMANCE BY A THIRD PERSON OF ANOTHER’S OBLIGATION TO DELIVER A GENERIC THING OR OF AN OBLIGATION TO DO, UNLESS IT IS PURELY PERSONAL ACT ........................ 141 RESCISSION (RESOLUTION IN RECIPROCAL OBLIGATIONS) .................................... 141 DAMAGES, IN ANY EVENT ....................................... 141 SUBSIDIARY REMEDIES OF CREDITORS ...................... 142 ACCION SUBROGATORIA ........................................ 142 ACCION PAULIANA ............................................... 142 ACCION DIRECTA ................................................. 142
Kinds of Civil Obligations .. 143
PURE ............................................................... 143 CONDITIONAL ................................................. 143 SUSPENSIVE CONDITION ........................................ 143 RESOLUTORY CONDITION ....................................... 143 POTESTIVE – CASUAL OR MIXED............................... 143 OBLIGATIONS SUBJECT TO POTESTATIVE SUSPENSIVE CONDITIONS ARE VOID .......................................... 143 EFFECT OF THE HAPPENING OF SUSPENSIVE CONDITION; RESOLUTORY CONDITION ...................................... 144 EFFECT OF LOSS OF SPECIFIC THING, OR DETERIORATION OR IMPROVEMENT OF SPECIFIC THING BEFORE FULFILLMENT
OF SUSPENSIVE CONDITION; OR IN CASE OF ARESOLUTORY CONDITION IN AN OBLIGATION TO DO OR NOT TO DO ..................
145
LOSS OF DETERMINATE THING DUE OR IMPOSSIBILITY OR DIFFICULTY OF PERFORMANCE ...................... 155
OBLIGATIONS WITH A PERIOD OR TERM........ 145 SUSPENSIVE PERIOD ............................................ 146 RESOLUTORY PERIOD ........................................... 146 DEFINITE OR INDEFINITE PERIOD ............................. 146
CONDONATION OR REMISSION OF DEBT ........ 156 EXPRESS – FORMALITY OF DONATION ....................... 156 IMPLIED ............................................................. 156
ALTERNATIVE OR FACULTATIVE ..................... 147
CONFUSION..................................................... 156
DIFFERENCE BETWEEN ALTERNATIVE AND FACULTATIVE OBLIGATIONS .............................. 147 EFFECT OF LOSS OF SPECIFIC THINGS OR IMPOSSIBILITY OF PERFORMANCE OF ALTERNATIVE, THROUGH FAULT OF DEBTOR/CREDITOR OR THROUGH FORTUITOUS EVENTS ............................... 147
Joint and Solidary Obligation ........... 148 JOINT (DIVISIBLE) OBLIGATION ...................... 148 PRESUMPTION OF JOINT OBLIGATION ....................... 148 PRESUMPTION OF EQUAL DIVISION .......................... 148 EFFECT OF INSOLVENCY OF A JOINT DEBTOR .............. 148 JOINT (INDIVISIBLE) OBLIGATION................... 149 OBLIGATION CANNOT BE PERFORMED IN PARTS BUT DEBTORS ARE BOUND JOINTLY ............................... 149 IN CASE OF FAILURE OF ONE OF THE JOINT DEBTORS TO PERFORM HIS PART (SHARE), THERE IS DEFAULT BUT ONLY THE GUILTY DEBTOR SHALL BE LIABLE FOR DAMAGES....................................... 149
SOLIDARY OBLIGATION .................................. 149 ANYONE OF THE SOLIDARY CREDITORS MAY COLLECT OR DEMAND PAYMENT OF WHOLE OBLIGATION; THERE IS MUTUAL AGENCY AMONG SOLIDARY DEBTORS ........... 149 ANY OF THE SOLIDARY DEBTORS MAY BE REQUIRED TO PAY THE WHOLE OBLIGATION; THERE IS MUTUAL GUARANTY AMONG SOLIDARY DEBTORS .................................. 149
DIVISIBLE AND INDIVISIBLE............................. 151
COMPENSATION ............................................. 156 KINDS ............................................................... 157 OBLIGATIONS NOT COMPENSABLE ............................ 158 NOVATION....................................................... 158
[Contracts] ......................... 160 Essential Requisites ......... 160 CONSENT ........................................................ 160 CONCURRENCE OF OFFER AND ACCEPTANCE .............. 160 ACCEPTANCE ....................................................... 160 LEGAL CAPACITY .................................................. 160 VICES OF CONSENT ............................................... 161 OBJECT ............................................................ 162 DEFINITION ......................................................... 162 REQUISITES......................................................... 162 CAUSE ............................................................. 162 DEFINITION ........................................................ 162 REQUISITES......................................................... 162 CAUSE IN ............................................................ 162
Kinds of Contracts ............ 163 CONSENSUAL .................................................. 163 REAL ............................................................... 163
OBLIGATIONS WITH A PENAL CLAUSE ............ 151 FORMAL OR SOLEMN ...................................... 163 DONATIONS ........................................................ 163
Extinguishment of Obligations......................... 153 PAYMENT ........................................................ 153 DATION IN PAYMENT ............................................. 153 FORM OF PAYMENT .............................................. 153 EXTRAORDINARY INFLATION OR DEFLATION .............. 153 APPLICATION OF PAYMENT ..................................... 153 TENDER OF PAYMENT AND CONSIGNATION ................. 153
PARTNERSHIP WHERE REAL PROPERTY IS CONTRIBUTED ................................... 163 ANTICHRESIS ...................................................... 164 AGENCY TO SELL REAL PROPERTY OR AN INTEREST THEREIN ............................................................ 164 STIPULATION TO CHANGE INTEREST ......................... 164 STIPULATION LIMITING COMMON CARRIER’S DUTY OF EXTRAORDINARY DILIGENCE TO ORDINARY DILIGENCE ....................................... 164 CHATTEL MORTGAGE............................................. 164
SALE OF LARGE CATTLE .........................................
164
CONTRACT OF SALE/CONTRACT TO SELL ...... 172
Formality ........................... 164
Parties to a Contract of Sale ..................172
STATUTORY BASIS ......................................... 164
Defective Contracts .......... 165 FOUR KINDS OF DEFECTIVE CONTRACTS ........165 RESCISSIBLE CONTRACTS ...............................165 DIFFERENCE FROM RESCISSION (RESOLUTION) UNDER ART. 1191 ...........................................................166 VOIDABLE CONTRACTS ...................................166 UNENFORCEABLE CONTRACTS .......................166 VOID CONTRACTS ............................................ 167
Effects of Contracts ........... 169 STATUTORY BASIS ..........................................169
CAPACITY OF PARTIES ................................... 172 KINDS OF INCAPACITY ........................................... 172 ABSOLUTE INCAPACITY ................................. 172 RELATIVE INCAPACITY: MARRIED PERSONS .. 173 HUSBAND AND WIFE ............................................ 173 ALIENAGE .......................................................... 173 TRUSTEESHIP ..................................................... 173 SPECIAL DISQUALIFICATIONS ........................ 173 SPECIFIC INCAPACITY/ SPECIAL DISQUALIFICATIONS ... 173 EFFECTS OF INCAPACITY ................................ 173
Subject Matter ....................174 REQUISITES OF A VALID SUBJECT MATTER ... 174 MUST BE LICIT .................................................... 174 EXISTING, FUTURE, CONTINGENT ............................ 174 DETERMINATE OR DETERMINABLE ........................... 175
SALES
PARTICULAR KINDS ....................................... 175
Introduction ....................... 171
Obligations of the Seller to Transfer Ownership ............175
DEFINITION OF SALES .................................... 171 ESSENTIAL REQUISITES OF A CONTRACT OF SALE .................................... 171 ESSENTIAL ELEMENTS OF A VALID CONTRACT OF SALE .. 171 STAGES OF CONTRACT OF SALE ..................... 171 PHASES OF A SALE CONTRACT ................................. 171 OBLIGATIONS CREATED ................................. 171 NATURE OF OBLIGATIONS CREATED PER DEFINITION IN ART.1458 .................................
171
CHARACTERISTICS OF A CONTRACT OF SALE 171 SALE IS TITLE AND NOT MODE ....................... 171 SALE DISTINGUISHED FROM OTHER CONTRACTS ........................................................................ 171 DONATION .......................................................... 171 BARTER ............................................................. 172 CONTRACT FOR A PIECE OF WORK ............................ 172 DACION EN PAGO ................................................. 172
SALE BY A PERSON NOT THE OWNER AT TIME OF
DELIVERY ........................................................ 175 SALE BY A PERSON HAVING A VOIDABLE TITLE ............................ 176
Price ....................................176 MEANING OF PRICE ....................................... 176 REQUISITES FOR A VALID PRICE .................... 176 HOW PRICE IS DETERMINED .......................... 176 INADEQUACY OF PRICE ................................. 176 WHEN NO PRICE AGREED .............................. 177 MANNER OF PAYMENT MUST BE AGREED UPON ................................ 177 EARNEST MONEY VS. OPTION MONEY .......... 177
Formation of Contract of Sale ................. 177 PREPARATORY .............................................. 177 OFFER ............................................................... 177 OPTION CONTRACT .............................................. 177 RIGHT OF FIRST REFUSAL ....................................... 178 MUTUAL PROMISE TO BUY AND SELL ........................ 178 PERFECTION .................................................. 178 WHEN PERFECTED ................................................ 178 EFFECT OF PERFECTION ......................................... 178 FORM AND OFFER ................................................ 178 FORMALITIES OF THE CONTRACT .................. 178
WHEN OWNERSHIP IS TRANSFERRED .......... 183 WHEN OWNERSHIP IS TRANSFERRED TO THE BUYER, THE GOODS ARE AT THE BUYER’S RISK ............................ 183
Documents of Title ............ 183 DEFINITION .................................................... 183 PURPOSE OF DOCUMENTS OF TITLE .............. 183 NEGOTIABLE DOCUMENTS OF TITLE .............. 183 WHO MAY NEGOTIATE IT? ...................................... 183 A PERSON TO WHOM A DOCUMENT HAS BEEN NEGOTIATED ACQUIRES .......................................................... 183
NON-NEGOTIABLE DOCUMENTS OF TITLE ..... 183
Transfer of Ownership ...... 179 MANNER OF TRANSFER ................................. 179 GENERAL CONCEPTS ............................................. 179 WHEN DELIVERY DOES NOT TRANSFER TITLE 179 SALE ON APPROVAL, TRIAL, OR SATISFACTION ........... 179 WHEN SALE NOT VALID ......................................... 180 WHEN SELLER IS NOT THE OWNER ........................... 180 SALE BY PERSON HAVING A VOIDABLE TITLE .............. 180 KINDS OF DELIVERY ....................................... 180 ACTUAL DELIVERY ............................................... 180 CONSTRUCTIVE DELIVERY ..................................... 180 DOUBLE SALES .............................................. 181 RULES GOVERNING SALE OF MOVABLES, IMMOVABLES AND UNREGISTERED LANDS .......................................... 181 PROPERTY REGISTRATION DECREE ...............182 REQUISITES FOR REGISTRATION OF DEED OF SALE IN GOOD FAITH .................................................................182 ACCOMPANIED BY VENDORS DUPLICATE CERTIFICATE OF TITLE,PAYMENT OF CAPITAL GAINS TAX, AND DOCUMENTARY TAX REGISTRATION FEES ...................182
WARRANTIES OF SELLER OF DOCUMENTS OF TITLE .............................................................. 184 A PERSON WHO NEGOTIATES A DOCUMENT OF TITLE WARRANTS ........................................................ 184 HE DOES NOT WARRANT THAT ................................ 184 GOODS IN THE HANDS OF THE CARRIER COVERED BY A NEGOTIABLE DOCUMENT CANNOT BE ATTACHED OR LEVIED UPON, UNLESS .................................................... 184
RULES ON LEVY/GARNISHMENT OF GOODS . 184
Remedies of an Unpaid Seller ..................... 184 DEFINITION OF UNPAID SELLER .................... 184 REMEDIES OF UNPAID SELLER ....................... 184 JUDICIAL REMEDIES OF AN UNPAID SELLER ................ 184 ALTERNATIVE REMEDIES OF THE UNPAID SELLER UNDER RECTO LAW ........................................................ 185
Performance of Contract .. 185
GENERAL RULE ..............................................182
DELIVERY OF THING SOLD .............................. 185 SALE OF MOVABLES .............................................. 185 SALE OF IMMOVABLES .......................................... 186 INSPECTIONS AND ACCEPTANCE.............................. 186
WHEN LOSS OCCURRED BEFORE PERFECTION .....................................182
PAYMENT OF PRICE ........................................ 186 PAY THE PRICE OF THE THING SOLD ......................... 186
Risk of Loss ....................... 182
WHEN LOSS OCCURRED AT TIME OF PERFECTION ..................................................182 WHEN LOSS OCCURRED AFTER PERFECTION BUT BEFORE DELIVERY ...................................182
Warranties .......................... 187 CONDITION V. WARRANTY .............................. 187
EXPRESS WARRANTIES .................................. 187 EXPRESS WARRANTY DISTINGUISHED FROM FALSE REPRESENTATION ................................................ 187
IMPLIED WARRANTIES ................................. 188 IMPLIED WARRANTY OF TITLE ................................ 188 IMPLIED WARRANTY AGAINST ENCUMBRANCE/NONAPPARENT SERVITUDES ....................................... 188 IMPLIED WARRANTY AGAINST HIDDEN DEFECTS ......... 188 IMPLIED WARRANTY AS TO MERCHANTABLE QUALITY AND FITNESS OF GOODS .............................................. 188 IMPLIED WARRANTY AGAINST REDHIBITORY DEFECT IN THE SALE OF ANIMALS ............................................... 189
EFFECTS OF WARRANTIES ............................. 189 EFFECTS OF WAIVERS .................................... 189 BUYER’S OPTIONS IN CASE OF BREACH OF WARRANTY ................................................... 189 EXPRESS WARRANTY ........................................... 189 IMPLIED WARRANTY AGAINST EVICTION .................. 189 IMPLIED WARRANTY AGAINST ENCUMBRANCES ......... 190 IMPLIED WARRANTY AGAINST HIDDEN DEFECTS ........ 190 IMPLIED WARRANTY AGAINST REDHIBITORY DEFECTS OF ANIMALS ........................................................... 190 WARRANTY IN SALE OF CONSUMER GOODS .............. 190
Breach of Contract ............ 190 REMEDIES OF THE SELLER ............................. 191 SALE OF MOVABLES .............................................. 191 RECTO LAW: SALE OF MOVABLES ON INSTALLMENT ................................................192 SALE OF IMMOVABLES ........................................... 193
REMEDIES OF THE BUYER ............................... 193 SALE OF MOVABLE ................................................ 193 SALE OF IMMOVABLES .......................................... 194
Extinguishment of Sale..... 194 CAUSES ......................................................... 194 CONVENTIONAL REDEMPTION ..................... 195 DEFINITION ........................................................ 195 PERIOD ............................................................. 195 BY WHOM EXERCISED ........................................... 195 FROM WHOM TO REDEEM ...................................... 195 HOW EXERCISED ................................................. 195 EFFECT OF REDEMPTION ....................................... 195 EFFECT OF NON-REDEMPTION ............................... 195 RIGHT TO REDEEM VS. OPTION TO PURCHASE ........... 195
EQUITABLE MORTGAGE ................................. 196 DISTINGUISHED FROM OPTION TO BUY ........ 196 PRESUMPTION THAT A CONTRACT IS AN EQUITABLE MORTGAGE ARISES WHEN ..................................... 196 FOR THE PRESUMPTION OF AN EQUITABLE MORTGAGE TO ARISE UNDER ART. 1602, 2 REQUISITES MUST CONCUR ................................. 196 RATIONALE BEHIND PROVISION ON EQUITABLE MORTGAGE ..................... 196 REMEDIES OF APPARENT VENDOR ........................... 196
PERIOD OF REDEMPTION ............................... 196 EXERCISE OF THE RIGHT TO REDEEM ............ 197 LEGAL REDEMPTION ..................................... 197 DEFINITION ........................................................ 197 MANNER ............................................................ 197 PERIOD TO REDEEM .............................................. 197 INSTANCES OF LEGAL REDEMPTION ......................... 198 AGE REDEMPTION ......................................... 199
The Law on Sale of Subdivision and Condominium (PD 957) ... 200 DEFINITIONS ................................................. 200 DEFINITION OF "SALE" OR "SELL" .......................... 200 DEFINITION OF "BUY" OR "PURCHASE" ................... 200 REQUIREMENTS FOR OWNERS AND DEVELOPERS ...... 200
The Condominium Act (RA 4726) ................................. 202
DEFINITION OF A CONDOMINIUM ................ 202 OTHER DEFINITIONS ..................................... 203 TRANSFERS OR CONVEYANCES OF A UNIT OR AN APARTMENT, OFFICE OR STORE, OR OTHER SPACE THEREIN ............................................ 203 RIGHTS OF A CONDOMINIUM UNIT OWNER (ASIDE FROM RIGHTS ARISING FROM OWNERSHIP) ................................................ 203 PARTITION BY SALE ...................................... 203 DECLARATION OF RESTRICTIONS BY OWNER OF PROJECT – PRECONDITION TO CONVEYANCE ................ 203
ASSESSMENT IN ACCORDANCE WITH DECLARATION OF RESTRICTIONS ................. 204 HOW LIEN ENFORCED AFTER NON-PAYMENT OF ASSESSED FEES ............................................ 204 CONTENTS OF A DECLARATION OF RESTRICTIONS .............................................. 204 INVOLUNTARY DISSOLUTION OF THE CONDOMINIUM CORPORATION .................... 204 POWER OF ATTORNEY HELD BY CORPORATION IN CASE OF VOLUNTARY DISSOLUTION OF CONDOMINIUM CORPORATION .................... 204 SALE, EXCHANGE, LEASE, OR DISPOSITION BY CORPORATION OF THE COMMON AREAS ..... 204 STOCKHOLDER/MEMBER DEMANDING PAYMENT FOR SHARES OR INTEREST AKA APPRAISAL RIGHT ........................................ 204 REQUIREMENTS FOR REGISTRATION OF CONVEYANCE WITH THE REGISTER OF DEEDS .............................. 204 REALTY TAX ON CONDOMINIUMS ................. 204 SUCCESSION
General Provisions ............ 206 DEFINITION & TRANSMISSION ....................... 206 SUCCESSION OCCURS AT THE MOMENT OF DEATH ........................................................... 206 KINDS ............................................................ 206 KINDS OF SUCCESSION ......................................... 206 KINDS OF SUCCESSORS ......................................... 206 KINDS OF HEIRS .................................................. 206
Testamentary Succession ........................ 206 WILLS ............................................................. 206 IN GENERAL ....................................................... 206 TESTAMENTARY CAPACITY AND INTENT .................... 207 FORM................................................................ 208 WITNESSES ........................................................ 210 CODICILS ............................................................ 211 INCORPORATION BY REFERENCE .............................. 211 REVOCATION ....................................................... 211
REPUBLICATION AND REVIVAL ................................ 212 ALLOWANCE AND DISALLOWANCE OF WILLS .............. 212
INSTITUTION OF HEIRS .................................. 213 EXTENT OF GRANT .............................................. 213 EFFECT OF PREDECEASE OF HEIR ............................ 213 IDENTIFICATION OF HEIRS, MANNER OF INSTITUTION .. 213 FALSE CAUSE ..................................................... 213 PRETERITION ...................................................... 213 COMPULSORY HEIRS IN THE DIRECT LINE ................... 214 PRETERITION V. DISPOSITION LESS THAN LEGITIME ...... 214 DISTINGUISHED FROM DISINHERITANCE .................... 214 EFFECTS OF PRETERITION ..................................... 214 SUBSTITUTION OF HEIRS ............................... 214 DEFINITION ........................................................ 214 KINDS ............................................................... 214 TESTAMENTARY DISPOSITIONS WITH A CONDITION, A TERM, AND A MODE ............... 215 3 KINDS OF TESTAMENTARY DISPOSITIONS ................ 215 CONDITIONS ....................................................... 215 LEGITIME ....................................................... 216 DEFINITION ........................................................ 216 COMPULSORY HEIRS AND VARIOUS COMBINATIONS ..... 216 RESERVA TRONCAL .............................................. 218 DISINHERITANCE .................................................. 219
Legal or Intestate Succession ........ 224
GENERAL PROVISIONS................................... 224 INSTANCES WHEN LEGAL OR INTESTATE SUCCESSION OPERATES ......................................................... 224 THE INTESTATE OR LEGAL HEIRS ............................. 224 FUNDAMENTAL PRINCIPLES IN INTESTATE SUCCESSION........................................ 224
RELATIONSHIP ............................................... 225 BASIC CONCEPTS IN RELATIONSHIP ......................... 225 INCAPACITY ....................................................... 225 REPUDIATION .................................................... 225 ADOPTION ......................................................... 225 RIGHT OF REPRESENTATION ......................... 225 EFFECT OF REPRESENTATION ................................. 225 WHEN IT OCCURS................................................. 226 REPRESENTATION IN THE DIRECT DESCENDING LINE ... 226 REPRESENTATION IN COLLATERAL LINE ................... 226 PER STIRPES ...................................................... 226 THE DOUBLE HEIRSHIP TEST .................................. 226 REPRESENTATION IN ADOPTION ............................. 226 ORDER OF CONCURRENCE IN THE CASE OF AN ADOPTED CHILD .............................................................. 226
ORDER OF INTESTATE SUCCESSION .............. 227 RULES OF EXCLUSION AND CONCURRENCE IN INTESTATE SHARES ............................................................ 227 OUTLINE OF INTESTATE SHARES ............................. 227
OBJECT OF THE CONTRACT ............................ 237 OBJECT OF UNIVERSAL PARTNERSHIP ....................... 237 OBJECT OF PARTICULAR PARTNERSHIP ..................... 237
Provisions Common to Testate and Intestate Succession ........................ 228
FORM OF THE CONTRACT ............................... 237
RIGHT OF ACCRETION ................................... 228 DEFINITION AND REQUISITES ................................. 228 EFFECT OF PREDECEASE, INCAPACITY, DISINHERITANCE OR REPUDIATION IN TESTAMENTARY AND INTESTATE SUCCESSION ...................................................... 229
CAPACITY TO SUCCEED BY WILL OR INTESTACY ................................. 229 PERSONS INCAPABLE OF SUCCEEDING ..................... 229 ACCEPTANCE AND REPUDIATION OF THE INHERITANCE ................................................ 230 CHARACTERISTICS .............................................. 230 REQUISITES ....................................................... 230 ACCEPTANCE VS. REPUDIATION .............................. 230
DURATION OF THE CONTRACT ....................... 237 COMMENCEMENT ................................................. 237 TERM ................................................................ 237 EXTENSION ........................................................ 237 RULES TO DETERMINE EXISTENCE ................ 238 RELATIONS CREATED .................................... 238 KINDS OF PARTNERSHIP ............................... 238 AS TO LEGALITY OF EXISTENCE ............................... 238 AS TO OBJECT .................................................... 238 AS TO DURATION ................................................ 238 AS TO LIABILITY OF PARTNERS ............................... 238 AS TO PUBLICITY ................................................. 238 AS TO PURPOSE .................................................. 238 KINDS OF PARTNERS .................................... 238 DISTINGUISHED FROM OTHER CONTRACTS . 239
COLLATION ..................................................... 231 CONCEPT OF COLLATION ....................................... 231 OPERATIONS RELATED TO COLLATION ...................... 231 PERSONS OBLIGED TO COLLATE ............................... 231 WHAT TO COLLATE ............................................... 231 PROPERTIES NOT SUBJECT TO COLLATION ................. 231 PARTITION AND DISTRIBUTION OF ESTATE .. 232 PARTITION ........................................................ 232 PARTITION INTER VIVOS ........................................ 232 EFFECTS OF PARTITION ......................................... 233 NULLIFICATION OF PARTITION ................................ 233 AGENCY & PARTNERSHIP
Contract of Partnership .. 236 DEFINITION .................................................... 236 ELEMENTS ..................................................... 236 ESSENTIAL FEATURES ................................... 236 EFFECT OF UNLAWFUL OBJECT ............................... 236 ASSOCIATIONS WITHOUT LEGAL PERSONALITY .......... 236 CHARACTERISTICS ........................................ 236 PARTIES TO THE CONTRACT .......................... 236
Rights and obligations of the partnership ........................ 241 RIGHT TO CONTRIBUTION, IN GENERAL ........ 241 OBLIGATION OF PARTNERS TO THE PARTNERSHIP WITH RESPECT TO CONTRIBUTION OF MONEY OR PROPERTY .... 241 AMOUNT OF CONTRIBUTION ................................... 241 DETERMINING VALUE OF CONTRIBUTION IN GOODS ..... 241 ADDITIONAL CAPITAL CONTRIBUTION ....................... 241 PROHIBITION AGAINST ENGAGING IN BUSINESS .......... 241 RISK OF LOSS OF THINGS CONTRIBUTED .................... 241 REMEDY IN CASE OF NON-COMPLIANCE ................... 242 OBLIGATION OF PARTNERS TO THE PARTNERSHIP WITH RESPECT TO CONTRIBUTION OF INDUSTRY ...................... 242 PROHIBITION AGAINST ENGAGING IN BUSINESS ......... 242 RIGHT TO APPLY PAYMENT TO PARTNERSHIP CREDIT .......................................................... 242 RIGHT TO RETURN OF CREDIT RECEIVED ...... 242 RIGHT TO INDEMNITY FOR DAMAGES ........... 242 COMPENSATION OF LIABILITY ................................ 242
SUIT FOR DAMAGES
............................................. 243
RESPONSIBILITY OF THE PARTNERSHIP TO PARTNERS ..................................................... 243
Rights and obligations of partners inter se ............... 243
RIGHT TO ASSOCIATE ANOTHER IN SHARE ... 243 SUBPARTNERSHIP ............................................... 243 RIGHT TO ACCESS PARTNERSHIP BOOKS ..... 243 BASIS OF RIGHT .................................................. 243 REASONABLE HOUR ............................................. 243 RIGHT TO A FORMAL ACCOUNT ..................... 243 ACCRUAL OF RIGHT ............................................. 243 PERSON OBLIGED ................................................ 243 PRESCRIPTION OF ACTION ..................................... 243 NATURE OF ACTION ............................................. 244 PROPERTY RIGHTS OF PARTNERS ................ 244 IN GENERAL ....................................................... 244 PARTNERSHIP PROPERTY AND PARTNERSHIP CAPITAL 244 OWNERSHIP OF CERTAIN PROPERTY ........................ 244 RIGHTS IN SPECIFIC PROPERTY ............................... 244 INTEREST IN THE PARTNERSHIP ............................. 244 RIGHTS OF ASSIGNEE ........................................... 244
REVOCATION OF POWER OF MANAGING PARTNER ...... 246 MANAGEMENT BY TWO OR MORE PARTNERS ............. 246 STIPULATION ON UNANIMITY OF MANAGING PARTNERS
....................................................................... 246 MANAGEMENT WHEN MANNER NOT AGREED UPON .... 246 INSTANCES OF MUTUAL AGENCY ............................ 246
Obligations of partnership/partners to third persons ..............................247 LIABILITY OF PARTNERS FOR PARTNERSHIP CONTRACTS .................................................. 247 NATURE OF INDIVIDUAL LIABILITY ........................... 247 LIABILITY OF INDUSTRIAL PARTNER ........................ 247 STIPULATION AGAINST INDIVIDUAL LIABILITY ............ 247 LIABILITY OF PARTNERS FOR PARTNERSHIP CONTRACTS .................................................. 247 ACTS APPARENTLY FOR THE CARRYING ON OF USUAL BUSINESS ......................................................... 247 ACTS NOT APPARENTLY FOR CARRYING ON OF THE USUAL BUSINESS ......................................................... 247 ACTS OF STRICT DOMINION ................................... 247 ACTS IN CONTRAVENTION OF RESTRICTION ............... 248
CHARGING OF PARTNERSHIP INTEREST BY PERSONAL CREDITOR OF PARTNERS ...................................... 244 CHARGING ORDER ............................................... 245
CONVEYANCE OF REAL PROPERTY OF PARTNERSHIP ............................................... 248 TITLE IN THE PARTNERSHIP NAME .......................... 248 TITLE IN THE NAME OF ONE OR MORE (NOT ALL) OF THE
RIGHT TO PROFITS AND OBLIGATION FOR LOSSES .......................................................... 245 RULES FOR DISTRIBUTION OF PROFITS AND LOSSES .... 245 DESIGNATION OF SHARE BY THIRD PERSONS ............. 245 EXCLUSION OF PARTNER FROM SHARE .................... 245
PARTNERS AND THE RECORD DOES NOT DISCLOSE THE RIGHT OF THE PARTNERSHIP ................................. 248 TITLE IN THE NAME OF ONE OR MORE OR ALL THE PARTNERS, OR IN A THIRD PERSON IN TRUST FOR THE PARTNERSHIP .................................................... 248 TITLE IN THE NAMES OF ALL THE PARTNERS .............. 248
OBLIGATION TO RENDER INFORMATION ...... 245 BASIS OF OBLIGATION .......................................... 245 OBLIGATION TO ACCOUNT AND ACT AS TRUSTEE ........................................................ 245 BASIS OF OBLIGATION .......................................... 245
Operation of the Partnership ................ 246 FIRM NAME .................................................... 246 RIGHT TO CHOOSE FIRM NAME ............................... 246 MANAGEMENT OF THE PARTNERSHIP .......... 246 POWERS OF A MANAGING PARTNER ........................ 246
LIABILITY OF PARTNERSHIP FOR ADMISSION BY PARTNER ....................................................... 248 LIABILITY OF PARTNERSHIP FOR WRONGFUL ACTS OF PARTNER ........................................ 248 LIABILITY OF THE PARTNERSHIP FOR MISAPPLICATION OF MONEY OR PROPERTY RECEIVED ...................................................... 248 LIABILITY OF OTHER PARTNERS FOR WRONGFUL ACTS OR MISAPPLICATION ....... 248 LIABILITY IN CASE OF PARTNERSHIP BY ESTOPPEL ...................................................... 248 LIABILITY OF PARTNER BY ESTOPPEL ....................... 248
NATURE OF LIABILITY ........................................... 249 EFFECTS OF ACTS OF PARTNER BY ESTOPPEL ............. 249 ESTABLISHING LIABILITY ....................................... 249
LIABILITY OF INCOMING PARTNER ................ 249 NOTICE TO OR KNOWLEDGE OF THE PARTNERSHIP ............................................... 249 PREFERENCE OF PARTNERSHIP CREDITORS 249
Dissolution and winding up ................. 250 CONCEPTS ...................................................... 250 EFFECT OF DISSOLUTION ON EXISTENCE OF PARTNERSHIP ................................................ 250 CAUSES OF DISSOLUTION .............................. 250 WITHOUT VIOLATION OF THE AGREEMENT ................. 250 IN CONTRAVENTION OF THE AGREEMENT .................. 250 BY OPERATION OF LAW ......................................... 250 BY DECREE OF COURT ............................................ 251 OTHER CAUSES .................................................... 251
RIGHTS OF PARTNERS IN CASE OF RESCISSION ................................. 253 SETTLING OF ACCOUNTS BETWEEN PARTNERS..................................... 253 COMPOSITION OF PARTNERSHIP ASSETS .................. 253 AMOUNT OF CONTRIBUTION FOR LIABILITIES ............. 253 ENFORCEMENT OF CONTRIBUTION .......................... 253 ORDER OF APPLICATION OF ASSETS ......................... 254 DOCTRINE OF MARSHALING OF ASSETS .................... 254 DISTRIBUTION OF PROPERTY OF INSOLVENT PARTNER. 254 RIGHTS OF CREDITORS OF DISSOLVED PARTNERSHIP ................................................ 254 CREDITORS OF DISSOLVED PARTNERSHIPAS CREDITORS OF NEW PARTNERSHIP.............................................. 254 LIABILITY OF A NEW PARTNER ................................ 254 PRIORITY OF CREDITORS OF DISSOLVED PARTNERSHIP 254 EFFECT OF CONTINUING USE OF PARTNERSHIP NAME .. 254
RETIRED OR REPRESENTATIVE OF DECEASED PARTNER ....................................................... 254 RIGHT TO AN ACCOUNT ................................. 254 EXISTENCE OF RIGHT ............................................ 255 NEED FOR LIQUIDATION ........................................ 255
EFFECT OF DISSOLUTION ON AUTHORITY OF PARTNERS.......................................................251 WITH RESPECT TO PARTNERS .................................. 251 WITH RESPECT TO THIRD PERSONS ........................... 251
Limited partnership .......... 255
LIABILITY OF PARTNERS IN TRANSACTIONS AFTER DISSOLUTION....................................................... 251
CHARACTERISTICS ......................................... 255
DEFINITION .................................................... 255
CASES WHERE PARTNERSHIP IS NOT BOUND........................ 252 PARTNERSHIP BY ESTOPPEL AFTER DISSOLUTION ....... 252
ADVANTAGES OF LIMITED PARTNERSHIP ..... 255
CONTRACTS AFTER DISSOLUTION BY SPECIFIC CAUSES........................................................... 252
GENERAL AND LIMITED PARTNERSHIP DISTINGUISHED ............................................. 256
EFFECT OF DISSOLUTION ON EXISTING LIABILITY OF PARTNERS ................................................ 252 WINDING UP PARTNERS ........................................ 252 WHO MAY WIND UP .............................................. 252 MANNER OF WINDING UP ...................................... 252 NATURE OF JUDICIAL LIQUIDATION .......................... 252 POWERS OF WINDING UP PARTNER .......................... 252
FORMATION OF LIMITED PARTNERSHIP ....... 256 PURPOSE OF FILING ............................................. 256 NO SUBSTANTIAL COMPLIANCE .............................. 256 FIRM NAME ........................................................ 256 FALSE STATEMENT IN THE CERTIFICATE .................... 256 ADMISSION OF ADDITIONAL LIMITED PARTNERS ......... 257 GENERAL AND LIMITED PARTNER AT THE SAME TIME ... 257
RIGHTS OF PARTNERS IN CASE OF DISSOLUTION ................................... 252
MANAGEMENT OF LIMITED PARTNERSHIP.... 257 MANAGEMENT BY GENERAL PARTNERS .................... 257
DISSOLUTION WITHOUT VIOLATION OF THE AGREEMENT .............................. 252 DISSOLUTION IN CONTRAVENTION OF THE AGREEMENT ............................................. 253
GENERAL AND LIMITED PARTNER DISTINGUISHED ............................................. 255
LIABILITY OF LIMITED PARTNER FOR PARTICIPATING IN CONTROL .......................................................... POWERS OF GENERAL PARTNER .............................
257 257
OBLIGATIONS OF A LIMITED PARTNER .......... 257 OBLIGATIONS RELATED TO CONTRIBUTION ................ 257 LIABILITY TO PARTNERSHIP CREDITORS .................... 258 LIABILITY TO SEPARATE CREDITORS ......................... 258 RIGHTS OF A LIMITED PARTNER .................... 258 RIGHTS OF LIMITED PARTNER, IN GENERAL ............... 258 RIGHT TO TRANSACT BUSINESS WITH PARTNERSHIP .... 258 RIGHT TO SHARE IN PROFITS .................................. 258 RIGHT TO RETURN OF CONTRIBUTION....................... 259 PREFERENCE OF LIMITED PARTNERS ........................ 259 RIGHT TO ASSIGN INTEREST ................................... 259 RIGHT TO ASK FOR DISSOLUTION............................. 259 CAUSES OF DISSOLUTION OF LIMITED PARTNERSHIP ................................................ 259 SETTLEMENT OF ACCOUNTS .......................... 260 ORDER OF PAYMENT............................................. 260 SHARE IN THE PARTNERSHIP ASSETS ....................... 260 AMENDMENT OR CANCELLATION OF CERTIFICATE................................................... 260 WHEN CERTIFICATE IS CANCELLED ........................... 260 WHEN CERTIFICATE IS AMENDED ............................. 260 REQUIREMENTS FOR AMENDMENT OR CANCELLATION . 260
Contract of agency ........... 260
KINDS OF AGENCY, IN GENERAL .................... 264 AS TO MANNER OF ITS CREATION ............................ 264 AS TO CAUSE OR CONSIDERATION ........................... 264 AS TO EXTENT OF BUSINESS COVERED ...................... 265 AS TO AUTHORITY CONFERRED ............................... 265 AS TO ITS NATURE AND EFFECTS ............................. 265 AS TO KINDS OF PRINCIPAL .................................... 265 KINDS OF AGENCY AS TO MANNER OF CREATION ...................................................... 265 EXPRESS AGENCY ................................................ 265 IMPLIED AGENCY ................................................. 265 KINDS OF AGENCY AS TO EXTENT OF BUSINESS COVERED........................................................ 265 UNIVERSAL AGENCY ............................................. 265 GENERAL AGENCY ............................................... 265 SPECIAL AGENCY ................................................. 265 KINDS OF AGENCY AS TO AUTHORITY CONFERRED ................................................... 265 COUCHED IN GENERAL TERMS ................................ 265 COUCHED IN SPECIFIC TERMS ................................. 265 SPECIAL KINDS OF AGENCY ........................... 266 AGENCY BY ESTOPPEL........................................... 266 AGENCY WITH UNDISCLOSED PRINCIPAL ....................267 AGENCY BY OPERATION OF LAW ...............................267 IRREVOCABLE AGENCY...........................................267
DEFINITION .................................................... 260 CHARACTERISTICS ..........................................261 CONSTITUTION OF AGENCY.............................261 ESSENTIAL ELEMENTS............................................ 261 PARTIES ............................................................. 261 CAPACITY OF PARTIES ............................................ 261 INTENTION OF PARTIES .......................................... 261 CONSENT OF PARTIES ............................................ 261 POWER OF ATTORNEY ........................................... 262 FORM OF CONTRACT............................................. 262 DESIGNATION BY THE PARTIES ................................ 262 ACTS DELEGATED ................................................ 262 PRESUMPTION OF EXISTENCE ................................. 262 COMMUNICATION OF EXISTENCE OF AGENCY .............. 262 DUTY OF THIRD PERSON ........................................ 262 EFFECT ........................................................... 262 EXTENSION OF PERSONALITY ................................. 262 THEORY OF IMPUTED KNOWLEDGE .......................... 262 DISTINGUISHED FROM OTHER CONTRACTS .. 263
Kinds of agency................. 264
KINDS OF AGENTS...........................................267 AS TO NATURE AND EXTENT OF AUTHORITY ................267 SPECIAL TYPES OF AGENTS .................................... 268
Powers of the agent ......... 268 AUTHORITY OF AN AGENT ............................. 268 KINDS OF AUTHORITY .................................... 268 SCOPE OF AUTHORITY ................................... 268 POWER TO BIND THE PRINCIPAL ................... 269 EFFECTS OF ACTS OF AN AGENT .................... 269
Obligations of the agent .. 269
OBLIGATIONS, IN GENERAL ........................... 269 GOOD FAITH AND LOYALTY TO HIS TRUST .................. 269 OBEDIENCE TO PRINCIPAL'S INSTRUCTIONS .............. 269 EXERCISE OF REASONABLE CARE ............................ 269 OBLIGATION TO CARRY OUT AGENCY ............ 269
OBLIGATION IN CASE HE DECLINES AGENCY ......................................... 269 OBLIGATION TO ADVANCE NECESSARY FUNDS ....................... 270 OBLIGATION TO ACT IN ACCORDANCE WITH INSTRUCTIONS ............................................... 270 OBLIGATION TO PREFER INTEREST OF PRINCIPAL ...................................................... 270 BASIS OF THE RULE .............................................. 270 APPLICATION ...................................................... 270 OBLIGATION TO ACCOUNT AND TO DELIVER THINGS RECEIVED ......................................... 270 WHAT TO DELIVER................................................. 271 LIABILITY FOR CONVERSION .................................... 271 EXEMPTING STIPULATION ....................................... 271 WHEN OBLIGATION NOT APPLICABLE......................... 271 RESPONSIBILITY FOR ACTS OF SUBSTITUTE ... 271 SUB-AGENCY ....................................................... 271 POWER TO APPOINT .............................................. 271 RELATIONS AMONG THE PARTIES ............................. 271 EFFECTS OF SUBSTITUTION ..................................... 271 RESPONSIBILITY OF TWO OR MORE AGENTS .. 271 OBLIGATION FOR SUMS APPLIED TO HIS OWN USE ................................................................. 272 OBLIGATIONS TO THIRD PERSONS ................ 272 LIABILITY OF AGENT FOR OBLIGATIONS CONTRACTED .. 272 VOID CONTRACTS ................................................ 272 PRESENTATION OF POWER OF ATTORNEY.................. 272 RATIFICATION BY PRINCIPAL .................................. 272 IGNORANCE OF AGENT .......................................... 272 OBLIGATIONS OF COMMISSION AGENT.......... 273 FACTOR OR COMMISSION AGENT ............................. 273 RESPONSIBILITY FOR GOODS RECEIVED .................... 273 SALE OF GOODS ON CREDIT WITHOUT AUTHORITY ....... 273 SALE OF GOODS ON CREDIT WITH AUTHORITY ............ 273 RESPONSIBILITY FOR FRAUD AND NEGLIGENCE........................................... 273
Obligations of the principal .......................274 OBLIGATIONS, IN GENERAL ........................... 274 OBLIGATION TO COMPLY WITH OBLIGATIONS CONTRACTED ................................................. 274
RATIFICATION ..................................................... SEPARATE CONTRACTS WITH PRINCIPAL AND AGENT... WHEN PRINCIPAL NOT LIABLE, IN SUMMARY..............
274 274 274
OBLIGATION FOR COMPENSATION OF AGENT ........................... 274 AMOUNT OF COMPENSATION ................................. 275 COMPENSATION OF BROKER .................................. 275 LIABILITY FOR EXPENSES AND DAMAGES ..... 275 NECESSARY FUNDS .............................................. 275 WHEN PRINCIPAL NOT LIABLE FOR EXPENSES ............ 275 DAMAGES .......................................................... 275 RIGHT OF RETENTION BY AGENT ............................. 275 MULTIPLE PRINCIPALS .......................................... 275 LIABILITY FOR QUASI-DELICT BY AGENT .................... 275
Extinguishment of agency ............................276 MODES OF EXTINGUISHING AGENCY, IN GENERAL.........................................................276 REVOCATION BY PRINCIPAL ...........................276 MULTIPLE PRINCIPALS ...........................................276 MANNER OF REVOCATION ......................................276 EFFECT OF REVOCATION IN RELATION TO THIRD PARTIES...............................276
WITHDRAWAL BY AGENT ................................ 277 LIABILITY FOR DAMAGES ........................................ 277 OBLIGATION TO CONTINUE AGENCY .......................... 277 DEATH, CIVIL INTERDICTION, INSANITY OR INSOLVENCY ................................................... 277 DEATH OF PRINCIPAL ............................................ 277 DEATH OF AGENT ................................................. 277 ACCOMPLISHMENT OF OBJECT OR PURPOSE . 277 DISSOLUTION OF FIRM OR CORPORATION ..... 277 EXPIRATION OF TERM ..................................... 277
CREDIT TRANSACTIONS
Credit Transactions ..........279 MEANING AND SCOPE OF CREDIT TRANSACTIONS ............................................. 279 TWO TYPES OF CREDIT TRANSACTIONS/CONTRACTS OF SECURITY . 279
Loan ...................................279
APPLICABLE LAW
................................................ 283
CHARACTERISTICS OF A LOAN ...................... 279 COMMODATUM V. MUTUUM .......................... 279 OBLIGATIONS OF BAILOR AND BAILEE .......... 279 WHO MAY BE A BAILOR IN COMMODATUM? ............... 279 WHAT ARE THE TWO (2) KINDS OF COMMODATUM? .... 280 OBLIGATIONS OF A BAILOR IN COMMODATUM ....................................................................... 280 OBLIGATIONS OF A BAILEE IN COMMODATUM ....................................................................... 280 INTEREST AND SUSPENSION OF USURY LAW 281 KINDS OF INTEREST ..............................................281 WHEN IS COMPOUND INTEREST ALLOWED? ...............281 REQUISITES FOR INTEREST TO BE CHARGEABLE ..........281 EXCEPTIONS TO REQUISITE OF EXPRESS STIPULATION ..281 RULES FOR AWARD OF INTEREST IN THE CONCEPT OF ACTUAL AND COMPENSATORY DAMAGES ...................281 ELEMENTS OF USURY ...........................................281
Deposit ............................. 282
Guaranty and Suretyship 283
GUARANTY DISTINGUISHED FROM SURETYSHIP ....................................... 284 NATURE AND EXTENT OF GUARANTY ........... 284 NATURE AND EXTENT OF GUARANTY ....................... 284 NATURE AND EXTENT OF SURETYSHIP ......... 286 EFFECT OF GUARANTY ................................... 287 EFFECTS OF GUARANTY BETWEEN THE GUARANTOR AND THE CREDITOR ................................................... 287 EFFECTS OF GUARANTY BETWEEN THE DEBTOR AND THE GUARANTOR ...................................................... 288 EFFECTS OF GUARANTY AS BETWEEN CO-GUARANTORS
....................................................................... 289 EXTINGUISHMENT OF GUARANTY ................. 289 LEGAL AND JUDICIAL BONDS ........................ 289 QUALIFICATIONS OF PERSONAL BONDSMAN ............. 289 PLEDGE OR MORTGAGE IN LIEU OF BOND ................. 290 BONDSMAN NOT ENTITLED TO EXCUSSION ............... 290
CHARACTERISTICS ........................................ 282 CONTRACT OF DEPOSIT IS GENERALLY GRATUITOUS .................................................. 282 ONLY MOVABLE THINGS MAY BE THE OBJECT OF A DEPOSIT ...................................................... 282 OBLIGATIONS OF DEPOSITOR ....................... 282 EXTINGUISHMENT OF DEPOSIT ..................... 282
Pledge .............................. 290
DEFINITION ................................................... 290 PROVISIONS APPLICABLE ONLY TO PLEDGE . 290 KINDS ............................................................ 290 ESSENTIAL REQUIREMENTS ......................... 290 ESSENTIAL REQUISITES COMMON TO PLEDGE AND MORTGAGE ....................................................... 290
EFFECT OF DEATH OF DEPOSITOR OR DEPOSITARY .................................................. 282
OBLIGATION OF PLEDGEE ............................. 290
KINDS OF DEPOSIT ........................................ 282
RIGHTS OF PLEDGOR .................................... 290
VOLUNTARY DEPOSIT .................................... 282
PERFECTION .................................................. 291 REQUISITES FOR PERFECTION ................................. 291
NECESSARY DEPOSIT .................................... 282 KINDS OF NECESSARY DEPOSITS ............................. 283 DEPOSITS BY TRAVELERS IN HOTELS AND INNS........... 283 EXTENT OF LIABILITY UNDER ART.1998 ................... 283 WHEN HOTEL-KEEPER LIABLE ................................ 283 WHEN HOTEL-KEEPER NOT LIABLE .......................... 283 HOTEL-KEEPER’S RIGHT TO RETENTION ................... 283 JUDICIAL DEPOSIT ......................................... 283 NATURE AND PURPOSE ........................................ 283 DEPOSITARY OF SEQUESTERED PROPERTY ................ 283
FORECLOSURE .............................................. 291 REQUIREMENTS IN SALE OF THE THING PLEDGED BY A CREDITOR, IF CREDIT IS NOT PAID ON TIME ............... 291 EFFECT OF THE SALE OF THE THING PLEDGED ............. 291
PLEDGE BY OPERATION OF LAW ................... 291 LEGAL PLEDGES/PLEDGE BY OPERATION OF LAW ........ 291 DISTINGUISHED FROM CHATTEL MORTGAGE ........................................................................ 291
Real Mortgage ................. 292 DEFINITION AND CHARACTERISTICS ............. 292 OBJECTS OF REAL MORTGAGE ................................ 292 CHARACTERISTICS ............................................... 292 KINDS ............................................................... 292 PRINCIPLE OF INDIVISIBILITY OF PLEDGE/MORTGAGE . 293 ESSENTIAL REQUISITES ................................. 293 ESSENTIAL REQUISITES COMMON TO PLEDGE AND MORTGAGE ........................................................ 293
FORECLOSURE ............................................... 293 FORECLOSURE OF MORTGAGE ................................ 293 KINDS OF FORECLOSURE ....................................... 293 JUDICIAL FORECLOSURE ....................................... 293 EXTRAJUDICIAL FORECLOSURE ............................... 293
Antichresis ........................ 295
DEFINITION AND CHARACTERISTICS ............. 295 CHARACTERISTICS ............................................... 295 SPECIAL REQUISITES ............................................ 295 OBLIGATIONS OF ANTICHRETIC CREDITOR ... 295 REMEDIES OF CREDITOR IN CASE OF NON-PAYMENT OF DEBT ................................................................ 295
Chattel Mortgage ............ 296
OBLIGATIONS OF A GESTOR ................................... 298 OBLIGATIONS OF THE OWNER OF THE PROPERTY OR BUSINESS ......................................................... 298 EFFECT OF RATIFICATION ...................................... 298 EXTINGUISHMENT OF MANAGEMENT ....................... 298
SOLUTIO INDEBITI (UNDUE PAYMENT) ........ 299 WHEN DEBT NOT YET DUE ..................................... 299 RESPONSIBILITY OF TWO OR MORE PAYEES ............... 299 WHEN MONEY OR THING DELIVERED IS OWNED BY THIRD PERSON ............................................................ 299 LIABILITY OF PAYEE ............................................ 299 EXEMPTION FROM THE OBLIGATION TO RESTORE THE PAYMENT UNDULY MADE ...................................... 299 PRESUMPTION OF PAYMENT BY MISTAKE, DEFENSE .... 299
OTHER QUASI-CONTRACTS ........................... 299
Concurrence and Preference of Credits .......................... 300 MEANING OF CONCURRENCE AND PREFERENCE ................ 300 PREFERRED CREDITS ON SPECIFIC MOVABLES ....................................................................... 300 PREFERRED CREDITS ON SPECIFIC IMMOVABLES AND REAL RIGHTS .......................................... 301
DEFINITION AND CHARACTERISTICS ............. 296 CHARACTERISTICS ............................................... 296
PREFERRED CREDITS ON OTHER PROPERTY, REAL AND PERSONAL .................................... 301
REGISTRATION .............................................. 296
EXEMPT PROPERTY ....................................... 302
PERIOD WITHIN WHICH REGISTRATION SHOULD BE MADE
....................................................................... 296 EFFECT OF REGISTRATION ..................................... 296 REGISTRATION OF ASSIGNMENT OF MORTGAGE NOT REQUIRED ......................................................... 296 VENUE OF REGISTRATION ...................................... 296
VALIDITY OF CHATTEL MORTGAGE ................ 296 FORMAL REQUISITES .................................... 296 DESCRIPTION OF PROPERTY .................................. 297 PROPERTY COVERED BY CM ................................... 297 DISPOSITION OF PROCEEDS .......................... 297
Quasi-Contracts ...............297 NEGOTIORUM GESTIO (UNAUTHORIZED
MANAGEMENT) ............................................. 298 THE OBLIGATION DOES NOT ARISE .......................... 298
CLASSIFICATION OF CREDITS ........................ 302 ORDER OF PREFERENCE OF CREDITS ........... 302 LAND TITLES & DEEDS
Torrens System ................. 304 THE TORRENS SYSTEM .................................. 304 PURPOSE........................................................... 304 ADVANTAGES ..................................................... 304 BACKGROUND .................................................... 304 CERTIFICATE OF TITLE ................................... 304 ORIGINAL CERTIFICATE OF TITLE OR OCT ................... 304 TRANSFER CERTIFICATE OF TITLE OR TCT .................. 304 PATENTS .......................................................... 304
Regalian Doctrine............. 305
EFFECTS ......................................................... 305
CONCEPT OF NATIVE TITLE, TIME IMMEMORIAL POSSESSION................................................... 305
Citizenship Doctrine ......... 305 INDIVIDUALS AND CORPORATIONS ............... 305 CONSTITUTIONAL REQUIREMENTS AND LIMITATIONS... 305 KRIVENKO DOCTRINE............................................ 305
REGISTRATION OF VOLUNTARY INSTRUMENTS IN GENERAL .................................... 317 REGISTRATION OF DEEDS OF SALE AND TRANSFERS ..... 318 MORTGAGES AND LEASES ...................................... 318 POWERS OF ATTORNEY; TRUSTS .............................. 318
Original Registration ........ 306
INVOLUNTARY DEALINGS ............................... 319 ATTACHMENT ...................................................... 319 EXECUTION AND TAX DELINQUENCY SALES ................ 320 NOTICE OF LIS PENDENS ....................................... 320 ADVERSE CLAIM .................................................. 320
WHO MAY APPLY ............................................ 306 UNDER PD 1529 .................................................. 306 UNDER CA 141 .................................................... 307 UNDER RA 8371 .................................................. 307
Non-registrable Properties ............................................ 321
REGISTRATION PROCESS AND REQUIREMENTS ..................................... 309 WHAT LANDS ARE REGISTRABLE ............................. 309 SURVEY ..............................................................310 APPLICATION .......................................................310 INITIAL HEARING ..................................................310 PUBLICATION .......................................................310 OPPOSITION ........................................................ 311 HEARING ............................................................ 311 JUDGMENT .......................................................... 311 ISSUANCE OF DECREE ............................................ 311 REMEDIES........................................................ 311 GROUND FOR REOPENING AND REVIEWING THE DECREE OF REGISTRATION ..................................................... 311 PERIODS ............................................................. 311 PROHIBITIONS ..................................................... 311
IMPRESCRIPTIBLE ........................................... 312 NOT SUBJECT TO COLLATERAL ATTACK ......... 312 JUDICIAL CONFIRMATION OF IMPERFECT OR INCOMPLETE TITLES ................................................................ 313
CADASTRAL REGISTRATION ...........................314 STEPS IN CADASTRAL REGION PROCEEDINGS .............. 315
Subsequent Registration .. 315 TWO TYPES OF DEALINGS ............................... 315 VOLUNTARY DEALINGS .......................................... 315 INVOLUNTARY DEALINGS........................................ 315
NON-REGISTRABLE LANDS ............................. 321
Dealings with Unregistered Lands ................................. 322 TORTS & DAMAGES
Principles of Torts ............. 324 ABUSE OF RIGHT ............................................ 324 ELEMENTS ......................................................... 324 ACTS CONTRARY TO LAW .............................. 324 REQUISITES........................................................ 324 ACTS CONTRARY TO MORALS ........................ 324 ELEMENTS ......................................................... 324 EXAMPLES ......................................................... 324 BREACH OF PROMISE TO MARRY, SEDUCTION AND SEXUAL ASSAULT ........................................................... 324 MALICIOUS PROSECUTION ..................................... 325 ELEMENTS ......................................................... 325 PUBLIC HUMILIATION ........................................... 325 UNJUSTIFIED DISMISSAL ....................................... 325 UNJUST ENRICHMENT ................................... 325 LIABILITY WITHOUT FAULT ..................................... 325 BASIS OF LIABILITY .............................................. 326 SCOPE OF LIABILITY ............................................. 326
NECESSITY AND EFFECTS OF REGISTRATION . 315
Classification of Torts ....... 326
WHEN SHOULD A PURCHASER INVESTIGATE? ........................................................................ 316
ACCORDING TO MANNER OF COMMISSION ... 326
VOLUNTARY DEALINGS ................................... 317
ACCORDING TO MANNER OF SCOPE ............. 326 GENERAL ........................................................... 326
SPECIFIC ............................................................ 326
The Tortfeasor .................. 326 THE DIRECT TORTFEASOR.............................. 326 PERSONS MADE LIABLE FOR OTHERS ........... 326 PRINCIPLE OF VICARIOUS LIABILITY; DEFINITION ......... 326 BASIS OF VICARIOUS LIABILITY ................................ 326 LIABILITY OF THE ACTUAL TORTFEASOR .................... 327 2 REQUISITES ACCORDING TO CHIRONI ..................... 327 PRESUMPTION OF NEGLIGENCE ON PERSONS INDIRECTLY RESPONSIBLE ..................................................... 327 NATURE OF LIABILITY ........................................... 327
PERSONS VICARIOUSLY LIABLE ..................... 327 WHO ARE LIABLE FOR MINORS ................................ 327 PARENTS AND ADOPTERS ............................. 327 BASIS OF LIABILITY ............................................... 327 WHEN RESPONSIBILITY CEASES............................... 327 MEANING OF “MINORITY” ..................................... 327 ADOPTED CHILDREN ............................................. 327 ILLEGITIMATE CHILDREN ....................................... 327 REASON FOR VICARIOUS LIABILITY........................... 327 REQUISITES FOR LIABILITY TO ATTACH...................... 328 PARENTAL AUTHORITY OVER FOUNDLINGS, ABANDONED, NEGLECTED OR ABUSED AND OTHER SIMILARLY SITUATED CHILDREN .......................................................... 328
GUARDIANS.................................................... 328 LIABILITY OF GUARDIANS....................................... 328 SCHOOL, TEACHERS AND ADMINISTRATORS 328 OWNERS AND MANAGERS OF ESTABLISHMENTS AND ENTERPRISES ......................................... 329 EMPLOYERS (IN GENERAL)............................. 329 MEANING OF EMPLOYER ........................................ 329 INDEPENDENT CONTRACTOR.................................. 330 REQUISITES ........................................................ 330 EMPLOYER NEED NOT BE ENGAGED IN BUSINESS OR INDUSTRY .......................................................... 330 DEFENSE OF DILIGENCE IN SELECTION AND SUPERVISION
Acts of Omission and its Modalities ........................... 333 Proximate Cause ............... 333 CONCEPT OF PROXIMATE CAUSE.................... 333 DEFINITION ..................................................... 333 PROXIMATE CAUSE ............................................... 333 PROXIMATE LEGAL CAUSE ...................................... 333 DIFFERENTIATED FROM ................................. 333 REMOTE CAUSE .................................................... 333 INTERVENING CAUSE ............................................. 333 EFFICIENT INTERVENING CAUSE .............................. 334 TESTS TO DETERMINE PROXIMATE CAUSE .... 334 CAUSE IN FACT .................................................... 334 EFFECTIVENESS OF THE CAUSE; “BUT FOR” RULE ....... 334 SUBSTANTIAL FACTOR TEST ................................... 334 FORESEEABILITY TEST .......................................... 334 NATURAL AND PROBABLE CONSEQUENCE TEST .......... 334 ORDINARY AND NATURAL OR DIRECT CONSEQUENCE TEST .................................. HINDSIGHT TEST ................................................. ORBIT OF THE RISK TEST .......................................
334 334 334
CAUSE V. CONDITION ..................................... 334 LEGAL CAUSE ................................................. 334 NATURAL AND PROBABLE CONSEQUENCES ............... 334 FORESEEABILITY ................................................. 334 DOCTRINE OF LAST CLEAR CHANCE .............. 335 ELEMENTS ......................................................... 335 COVERS SUCCESSIVE ACTS OF NEGLIGENCE ............... 335 INAPPLICABLE TO JOINT TORTFEASORS .................... 335 CONTRIBUTORY NEGLIGENCE........................ 335 WHEN IS IT A BAR TO RECOVERY.............................. 335
........................................................................ 331
Legal Injury........................ 336
THE STATE ...................................................... 332
ELEMENTS ..................................................... 336
INSTANCES WHERE THE STATE GIVES ITS CONSENT TO BE SUED ................................................................ 332
JOINT TORTFEASORS ..................................... 332 DEFINITION OF “JOINT TORTFEASORS”..................... 332 APPLICABILITY OF THE PROVISION ........................... 332 NATURE OF LIABILITY ........................................... 332
CLASSES OF INJURY ....................................... 336 INJURY TO PERSONS ............................................ 336 INJURY TO PROPERTY ........................................... 336 INJURY TO RELATIONS .......................................... 336
Intentional Torts ............... 336
CONCEPT ........................................................ 336 VIOLATIONS OF A PERSON’S SECURITY AND PHYSICAL INJURIES ....................................... 337 BATTERY (PHYSICAL INJURY) .................................. 337 INTERESTS PROTECTED BY LAW .............................. 337 ASSAULT (GRAVE THREAT)..................................... 337 FALSE IMPRISONMENT (ILLEGAL DETENTION) ............ 337 INTERFERENCE WITH PERSONAL PROPERTY 337 TRESPASS TO LAND .............................................. 337 TRESPASS TO CHATTELS........................................ 337 CONVERSION ...................................................... 337 INTENTIONAL NON-PHYSICAL HARMS....................... 337 VIOLATION OF PERSONAL DIGNITY ........................... 338 INFLICTION OF EMOTIONAL DISTRESS ....................... 338 VIOLATION OF PRIVACY ......................................... 338 DISTURBANCE OF PEACE OF MIND ........................... 339 MALICIOUS PROSECUTION ..................................... 339 DEFAMATION, FRAUD AND PHYSICAL INJURIES ................................ 340 DEFAMATION ...................................................... 340 DEFENSES ......................................................... 340 FRAUD OR MISREPRESENTATION (FORMERLY DECEIT) . 340 SEDUCTION ........................................................ 340 UNJUST DISMISSAL .............................................. 340 INTERFERENCE WITH RELATIONS ...................341 KINDS ................................................................ 341 FAMILY RELATIONS .........................................341 ALIENATION OF AFFECTION ..................................... 341 LIABILITY OF PARENTS, GUARDIANS OR KIN ................ 341 LOSS OF CONSORTIUM .......................................... 342 CRIMINAL CONVERSATION (ADULTERY) .................... 342 SOCIAL RELATIONS ........................................ 342 MEDDLING WITH OR DISTURBING FAMILY RELATIONS .. 342 INTRIGUING TO CAUSE ANOTHER TO BE ALIENATED FROM HIS FRIENDS ....................................................... 342
ECONOMIC RELATIONS .................................. 343 INTERFERENCE WITH CONTRACTUAL RELATIONS ........ 343 UNFAIR COMPETITION .......................................... 343 POLITICAL RELATIONS ................................... 343 VIOLATION OF RIGHT TO SUFFRAGE.......................... 343 VIOLATION OF OTHER POLITICAL RIGHTS (FREEDOM OF SPEECH, PRESS, ASSEMBLY AND PETITION, ETC.) ....... 344
Negligence ........................ 344
ELEMENTS ...................................................... 344 TEST OF NEGLIGENCE..................................... 344
GOOD FATHER OF A FAMILY (BONUS PATER FAMILIAS)....................................................... 345 WHAT CONSTITUTES THE CONDUCT OF A PRUDENT MAN IN A GIVEN SITUATION ............................................. 345
STANDARD OF CARE ...................................... 345 STANDARD OF CARE REQUIRED OF BANKS ................ 345 STANDARD OF CARE OF CHILDREN .......................... 345 STANDARD OF CARE OF EXPERTS/PROFESSIONALS .... 345 IN CASE OF INSANE PERSONS ................................. 346 EMERGENCY RULE OR SUDDEN PERIL DOCTRINE......... 346 UNREASONABLE RISK OR HARM ............................. 346 EVIDENCE ....................................................... 346 QUANTUM OF PROOF IN QUASI-DELICT VS. QUANTUM OF PROOF IN BREACH OF CONTRACT ........................... 346 PRESUMPTION OF NEGLIGENCE .................... 346 PRESUMED NEGLIGENCE OR NEGLIGENCE PER SE ........347 RES IPSA LOQUITUR ..............................................347 DEFENSES .......................................................347 DUE DILIGENCE ....................................................347 ACTS OF PUBLIC OFFICERS ......................................347 ACCIDENT OR FORTUITOUS EVENT ............................347 DAMNUM ABSQUE INJURIA .................................... 348 AUTHORITY OF LAW ............................................. 348 ASSUMPTION OF RISK (VOLENTI NON FIT INJURA) ....... 348 LAST CLEAR CHANCE ............................................ 349 PRESCRIPTION ................................................... 349 WAIVER ............................................................. 349 DOUBLE RECOVERY ............................................. 349 ACTIONS AVAILABLE TO VICTIMS OF NEGLIGENCE........ 350 EFFECT OF ACQUITTAL OF THE ACCUSED ON HIS CIVIL LIABILITY ........................................................... 350 NO RESERVATION IS REQUIRED IN THE CRIMINAL CASE FOR THE FILING OF CIVIL ACTION ARISING FROM QUASI-DELICT
....................................................................... 350
Special Liability in Particular Cases ................................. 350 PRODUCTS LIABILITY ...................................... 351 REQUISITES OF LIABILITY........................................ 351 BURDEN OF PROOF ............................................... 351 WHO MAY RECOVER .............................................. 351 CONSUMER ACT ................................................... 351 NUISANCE ...................................................... 354 LIABILITY FOR NEGLIGENCE VS. LIABILITY FOR NUISANCE ....................................................................... 354 NUISANCE PER SE ................................................ 354 NUISANCE PER ACCIDENCE .................................... 355
PUBLIC NUISANCE ................................................ 355 PRIVATE NUISANCE .............................................. 355 ATTRACTIVE NUISANCE ......................................... 355
THE DAMAGES MUST BE PROVEN BY COMPETENT EVIDENCE (ADMISSIBLE OR PROBATIVE) ................................................... 362
VIOLATION OF CONSTITUTIONAL RIGHTS ...... 356 VIOLATION OF CIVIL LIBERTIES ................................ 356
DEGREE OF CERTAINTY REQUIRED AS TO: FACT, CAUSE AND AMOUNT OF DAMAGES .............. 363
VIOLATIONS OF RIGHTS COMMITTED BY PUBLIC OFFICERS
....................................................................... 356 PROVINCES, CITIES, AND MUNICIPALITIES ................. 357 OWNERS OF MOTOR VEHICLES ................................ 357 PROPRIETOR OF BUILDING OR STRUCTURE ................ 358 HEAD OF FAMILY.................................................. 359
NOT SPECULATIVE ......................................... 363
Strict Liability .................... 359
ATTORNEY’S FEES AND EXPENSES OF LITIGATION..................................................... 363
POSSESSOR AND USER OF AN ANIMAL ......... 359 APPLICABILITY OF PROVISION ................................. 359 BASIS ................................................................ 359 POSSIBLE DEFENSES AGAINST THIS LIABILITY ............. 359 SCOPE OF PROVISION ........................................... 359
INTEREST ....................................................... 364 INTEREST ACCRUES WHEN ..................................... 364 COMPOUNDING OF INTEREST ................................. 364 DETERMINATION OF LEGAL INTEREST ...................... 364
COMPONENTS ................................................ 363 VALUE OF LOSS; UNREALIZED PROFIT .......... 363
START OF DELAY ............................................ 365 NUISANCE ...................................................... 359 CLASSES ............................................................ 359 EASEMENT AGAINST NUISANCE............................... 360 PRODUCTS LIABILITY .................................... 360
EXTENT OR SCOPE OF ACTUAL DAMAGES ..... 365 IN CONTRACTS AND QUASI-CONTRACTS....... 365 IN CRIMES AND QUASI-DELICTS .................... 366
CONSUMER ACT ............................................. 360
Damages ........................... 362
DEFINITION .................................................... 362
Moral Damages ................ 366 WHEN AWARDED ............................................367
DAMAGES VS. INJURY..................................... 362
REQUISITES FOR AWARDING MORAL DAMAGES........................367
ELEMENTS FOR RECOVERY OF DAMAGES ...... 362
GENERAL PRINCIPLES OF RECOVERY .............367
CLASSIFICATION ............................................. 362 ACCORDING TO PURPOSE ...................................... 362 ACCORDING TO MANNER OF DETERMINATION ............ 362 SPECIAL AND ORDINARY........................................ 362
WHEN RECOVERABLE .................................... 368 IN SEDUCTION, ABDUCTION, RAPE AND OTHER LASCIVIOUS ACTS ................................................................ 368 IN ACTS REFERRED TO IN ARTS. 21, 26, 27, 28, 29, 32, 34 &35, NCC ..................................................... 368 IN CASES OF MALICIOUS PROSECUTION .................... 370
Actual and Compensatory Damages ........................... 362 REQUISITES .................................................... 362 WHEN IS A PERSON ENTITLED ...................... 362 ALLEGED AND PROVED WITH CERTAINTY...... 362
Nominal Damages ............370 REQUISITES AND CHARACTERISTICS............. 370 WHEN AWARDED ........................................... 370
Temperate Damages ........370 REQUISITES ..................................................... 371
Liquidated Damages.......... 371 REQUISITES AND CHARACTERISTICS .............. 371 RULES GOVERNING BREACH OF CONTRACT ... 371
Exemplary Or Corrective Damages ............................. 371 WHEN RECOVERABLE..................................... 372 IN CRIMINAL OFFENSES ........................................ 372 IN QUASI-DELICTS................................................ 372 IN CONTRACTS AND QUASI-CONTRACTS.................... 372 REQUISITES ........................................................ 372 DAMAGES IN CASE OF DEATH RE. CRIMES AND QUASIDELICTS............................................................. 373
Graduation of Damages ... 373 DUTY OF THE INJURED PARTY........................ 373 BURDEN OF PROOF ........................................ 374 RULES ............................................................. 374 IN CRIMES .......................................................... 374 IN QUASI-DELICTS................................................ 374 CONTRIBUTORY NEGLIGENCE ................................. 374 PLAINTIFF’S NEGLIGENCE ...................................... 374 IN CONTRACTS, QUASI-CONTRACTS AND QUASI-DELICTS ....................................................................... 374 INSTANCES OF GROUNDS FOR MITIGATION OF DAMAGES
....................................................................... 374 RULE WHEN CONTRACTING PARTIES ARE IN PARI DELICTO
....................................................................... 375 LIQUIDATED DAMAGES .................................. 375 COMPROMISE ................................................. 375
Miscellaneous Rules ......... 375 DAMAGES THAT CANNOT CO-EXIST ............... 375 NOMINAL WITH OTHER DAMAGES ............................ 375 ACTUAL AND LIQUIDATED ...................................... 375 DAMAGES THAT MUST CO-EXIST ................... 375
EXEMPLARY WITH MORAL, TEMPERATE, LIQUIDATED OR COMPENSATORY ..................................................375
DAMAGES THAT MUST STAND ALONE ............375 NOMINAL DAMAGES ..............................................376
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Effect and Application of Laws
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(b) Impairment of contract (2) In case of remedial statutes (3) In case of curative statutes (4) In case of laws interpreting others (5) In case of laws creating new rights [Bona v. Briones (1918)] (6) Penal Laws favorable to the accused
The Civil Code took effect on August 30, 1950 WHEN LAWS TAKE EFFECT Art. 2. Laws shall take effect after fifteen days following the completion of their publication in the Official Gazette, unless it is otherwise provided. This Code shall take effect one year after such publication. (1a)
ACTS CONTRARY TO LAW Art. 5. Acts executed against the provisions of mandatory or prohibitory laws shall be void, except when the law itself authorizes their validity. (4a) WAIVER OF RIGHTS
Tañada v. Tuvera (1986): (a) The clause "unless it is otherwise provided" refers to the date of effectivity and not to the requirement of publication itself, which cannot in any event be omitted. (b) Publication is indispensable in every case, but the legislature may in its discretion provide that the usual fifteen-day period shall be shortened or extended. (c) EXCEPTION: interpretative regulations and those internal in nature
Art. 6. Rights may be waived, unless the waiver is contrary to law, public order, public policy, morals, or good customs, or prejudicial to a third person with a right recognized by law. (4a) Waiver – the relinquishment of a known right with both knowledge of its existence and an intention to relinquish it. [Portland v. Spillman] Exceptions: (1) If the waiver is contrary to law, public order, public policy, morals or good customs (2) If the waiver prejudices a third person (3) If the alleged rights do not yet exist (4) If the right is a natural right
IGNORANCE OF THE LAW Art. 3. Ignorance of the law excuses no one from compliance therewith. (2) (a) Conclusive Presumption – That everyone knows the law, even if they have no actual knowledge of the law (b) Mistake of Fact & Difficult Questions of Law These may excuse a party from the legal consequences of his conduct; but not ignorance of law. (c) In specific instances provided by law, mistake as to difficult legal questions has been given the same effect as a mistake of fact. (Tolentino) (d) The laws referred to by this article are those of the Philippines. There is no conclusive presumption of knowledge of foreign laws. (Tolentino)
REPEAL OF LAWS Art. 7. Laws are repealed only by subsequent ones, and their violation or non-observance shall not be excused by disuse, or custom or practice to the contrary. When the courts declared a law to be inconsistent with the Constitution, the former shall be void and the latter shall govern. Administrative or executive acts, orders and regulations shall be valid only when they are not contrary to the laws or the Constitution. (5a)
RETROACTIVITY OF LAWS Art. 4. Laws shall have no retroactive effect, unless the contrary is provided. (3)
TWO KINDS OF REPEAL OF LAW [Tolentino]
(1) Express or Declared – contained in a special provision of a subsequent law (2) Implied or Tacit – takes place when the provisions of the subsequent law are incompatible or inconsistent with those of an earlier law.
General Rule: All statutes are to be construed as having only prospective operation
JUDICIAL DECISIONS
Exceptions (1) When the law itself expressly provides Exceptions to Exception: (a) Ex post facto law
Art. 8. Judicial decisions applying or interpreting the laws or the Constitution shall form a part of the legal system of the Philippines. (n)
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(a) Jurisprudence cannot be considered as an independent source of law; it cannot create law. (1 Camus 38 as cited in Tolentino) (b) But the Court’s interpretation of a statute constitutes part of the law as of the date it was originally passed since the Court’s construction merely establishes contemporaneous legislative intent that the interpreted law carried into effect. [Senarillos v. Hermosisima (1956)]
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APPLICABILITY OF PENAL LAWS Art. 14. Penal laws and those of public security and safety shall be obligatory upon all who live or sojourn in the Philippine territory, subject to the principles of public international law and to treaty stipulations. (8a) EXEMPTIONS UNDER INTERNATIONAL LAW (THEORY OF EXTRATERRITORIALITY):
(1) When the offense is committed by a foreign sovereign while in Philippine territory (2) When the offense is committed by diplomatic representatives (3) When the offense is committed in a public or armed vessel of a foreign country.
DUTY TO RENDER JUDGMENT Art. 9. No judge or court shall decline to render judgment by reason of the silence, obscurity or insufficiency of the laws. (6) Exception: This article does not apply to criminal prosecutions because where there is no law punishing an act, the case must be dismissed. [Tolentino]
CONFLICT OF LAWS CONFLICT OF LAWS/ PRIVATE INTERNATIONAL LAW (a) It is a branch or part of Philippine Law which regulates the application of foreign law within Philippine jurisdiction in the resolution of cases involving foreign elements. (b) It is that part of municipal law which governs cases involving a foreign element. (c) Private International Law is more commonly known in other jurisdictions as conflict of laws
PRESUMPTION AND APPLICABILITY OF CUSTOM Art. 10. In case of doubt in the interpretation or application of laws, it is presumed that the lawmaking body intended right and justice to prevail. (n) Art. 11. Customs which are contrary to law, public order or public policy shall not be countenanced. (n)
SOURCES
(1) Codes and statutes (2) Treaties and international conventions (3) Treatises, commentaries, and studies of learned societies (4) Judicial decisions
Art. 12. A custom must be proved as a fact, according to the rules of evidence. (n) LEGAL PERIODS Art. 13. When the laws speak of years, months, days or nights, it shall be understood that years are of three hundred sixty-five days each; months, of thirty days; days, of twenty-four hours; and nights from sunset to sunrise.
EXAMPLES OF CONFLICT OF LAW RULES IN THE PHILIPPINES
(1) Art. 15 CC: Lex Patriae (2) Art. 1251 (par. 3) CC: Lex Domicili (3) Art. 16 CC: Lex Situs/ Lex Rei Sitae (4) Art. 17 (par. 1) CC: Lex Loci Contractus (5) Art. 71 CC: Lex Loci Celebrationis (6) Art. 26 (par. 1) FC: Lex Loci Celebrationis (7) Art. 1306 CC: Lex Loci Intentionis
If months are designated by their name, they shall be computed by the number of days which they respectively have.
Art. 15. Laws relating to family rights and duties, or to the status, condition and legal capacity of persons are binding upon citizens of the Philippines, even though living abroad. (9a)
In computing a period, the first day shall be excluded, and the last day included. (7a) POLICY ON LAST DAY BEING A LEGAL HOLIDAY/SUNDAY
(a) If the period arises by statute or orders by the government, the last day will automatically be considered the next working day (b) If the period arises from a contractual relationship, the act will still be due on that Legal Holiday/Sunday
Most civil law countries such as the Philippines follow the National Law Theory: It is the nationality or citizenship of the individual, which regulates the following: (a) Civil status (b) Capacity (c) Condition (d) Family rights and duties
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(e) Laws on Succession (f) Capacity to succeed
itself, governing law is the law of the state which has real interest
According to the Supreme Court, it is a conflict of laws theory by virtue of which jurisdiction over the particular subject matter affecting a person is determined by the latter’s nationality. [Ellis vs. Republic (1963)]
RULE ON SUCCESSION
Filipino Testator
Extrinsic Validity [Arts. 17, 815-817, CC] Place of Applicable law execution
RULE ON PROPERTY
Controlling Law — Lex Situs/Lex Rei Sitae General Rule: Real and Personal Property is subject to the law of the country where it is situated (Art. 16) Application of the Doctrine of Lex Situs/Lex Rei Sitae (1) The capacity to transfer or acquire property is governed by Lex Situs.
Alien Testator
Note: Transfer of property to a foreigner who subsequently became a Filipino citizen shall be recognized [Llantino v Co Liong Chong] (2) The formalities of a contract to convey property are governed by Lex Situs Exceptions to Lex Situs (1) Transactions Not Affecting Transfer of Title or Ownership of Land: Lex Intentionis or Lex Voluntatis (2) Contracts where Real Property Offered as Security: The principal contract is the loan while the mortgage of the land is only an accessory (a) Mortgage - Lex Situs (b) Loan Contract - Rules on ordinary contracts
Philippines
Philippine Law
Foreign Country
(1) Law of the place where he may be (lex loci celebrationis) [Art 815] (2) Philippine law [see III Tolentino 117]
Philippines
(1) Philippine Law (Art. 17) (2) Law of the country in which he is a citizen or subject (lex nationali) [Art. 817]
Foreign Country (Arts. 816, 17)
(1) Law of the place in which he resides (lex domicilii) (2) Law of his country (lex nationali) (3) Philippine law (4) Law of the place where they were executed (lex loci celebrationis)
Note: Rule re: Joint Wills (1) Joint wills prohibited under Art. 818 executed by Filipinos in a foreign country shall not be valid in the Philippines even though authorized by the laws of the country where they were executed. (Art. 819) (2) Civil Code is silent as to the validity of a joint will executed by an alien in the Philippines. It is suggested that it should not be probated if it would affect the heirs in the Philippines.
(3) Intestate and Testamentary Succession: Intestate and testamentary successions shall be regulated by the national law of the decedent, with respect to the following [Art. 16(2); Art. 1039] (a) Order of succession (b) Amount of succession rights (c) Intrinsic validity of the testamentary provisions (d) Capacity to succeed
Intrinsic Validity Intestate and testamentary successions shall be regulated by the national law of the decedent, with respect to the following (Art. 16(2); Art. 1039) (1) Order of succession (2) Amount of successional rights (3) Intrinsic validity of the testamentary provisions (4) Capacity to succeed
(4) Under a Policy-centered Approach: Forum court is not bound to look to the law of the situs when the situs of the movable property is insignificant or accidental (a) Questions relating to the validity and effect of the transfer of the movable property are governed by the law of the place of principal use (b) Where the issue involves considerations other than the validity and effect of the transfer
Interpretation of Wills Governed by the National Law of the decedent.
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Revocation
Will is revoked in a Foreign Country
Will is revoked in the Philippines
Testator
Art. 17. The forms and solemnities of contracts, wills, and other public instruments shall be governed by the laws of the country in which they are executed.
Applicable Law
Philippine Domiciliary
When the acts referred to are executed before the diplomatic or consular officials of the Republic of the Philippines in a foreign country, the solemnities established by Philippine laws shall be observed in their execution.
Philippine Law Non-domiciliary [Art. 829] Philippine Domiciliary
Non-domiciliary [Art. 829]
(1) Philippine Law (2) Law of the place of revocation (lex loci actus) (1) law of the place where the will was made (2) law of the place in which the testator had his domicile at the time of the revocation
Prohibitive laws concerning persons, their acts or property, and those which have, for their object, public order, public policy and good customs shall not be rendered ineffective by laws or judgments promulgated, or by determinations or conventions agreed upon in a foreign country. (11a) RULE ON EXTRINSIC VALIDITY OF CONTRACTS
General Rule: Lex Loci Celebrationis The forms and solemnities of contracts xxx shall be governed by the laws of the country in which they are executed [Art. 17]
Probate of wills Controlling Law: The probate of a will being essentially procedural in character, the law of the forum (lex fori) governs.
Note: (1) Contracts Before Diplomatic/ Consular Officials: The solemnities established by Philippine laws shall be observed with respect to contracts executed before diplomatic or consular officials of the Republic of the Philippines in a foreign country [Art. 17(2), FC] (2) Contracts entered Into by Letter/ Cablegram, etc.: A contract accepted by letter or cablegram is presumed to have been entered into the place where the offer was made. [Art. 1319(2)]
Wills Proved and Allowed in a Foreign Country (1) A will proved and allowed in a foreign country in accordance with the laws of that country may be allowed, filed, and recorded in the proper Regional Trial Court in the Philippines (RULES OF COURT, Rule 77, Sec.1) (2) Requisites for Reprobate [Vda de Perez v Tolete, 232 SCRA 722] The following must be proved by competent evidence: (a) due execution of the will in accordance with the foreign laws (b) the testator had his domicile in the foreign country and not in the Philippines (c) the will has been admitted to probate in such country (d) the laws of the foreign country on procedure and allowance of wills
Three possible laws: (1) Lex Loci Contractus (Asked in 95, 02 BAR EXAMINATIONS) (a) Law of the place where the contract is made (b) Merits (i) Relative ease in establishing (ii) Certainty and stability (c) Demerit - Unjust results when place of making entirely incidental Note: To determine where the contract is made, we look to the place where the last act is done which is necessary to bring the binding agreement into being so far as the acts of the parties are concerned.
Administration of Estates Territorial: governed by the law of the place where the administration takes place, and that is the law of the country from which the administrator derives his authority.
(2) Lex Loci Solutionis (a) Law of the place of performance governs (b) Merit - Always connected to the contract in a significant way
Trusts Extrinsic validity: Rule governing wills apply intrinsic validity: lex situs since a trust involves property cf Art. 17
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(c) Demerit - Not helpful when the contract is performed in 2 or more states with conflicting laws
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(2) Determination of Extrinsic Validity Art. 26, FC. All marriages solemnized outside the Philippines in accordance with the laws in force in the country where they were solemnized, and valid there as such, shall also be valid in this country. Xxx
(3) Lex Loci Intentionis (a) Law intended by the parties (b) Basis: The contracting parties may establish such stipulations, clauses, terms and conditions as they may deem convenient, provided they are not contrary to law, morals, good customs, public order, or public policy [Art. 1306] (c) May be express or implied (i) Express - when the parties stipulate that the contract be governed by a specific law, such law will be recognized unless there are cogent reasons for not doing so. (ii) Implied (a) Based on the contemporaneous and subsequent acts of the parties (b) Often upheld with reference to the rule of validity of contracts which presumes that the parties contemplate to enter into a valid contract
Art. 2, Hague Convention. Formal requirements for marriage are governed by the law of the state of celebration. General Rule: Lex Loci Celebrationis Exceptions: The following marriages are void even if valid in the country where celebrated [Art. 26, FC]: (a) Those contracted by any party below 18 years of age even with the consent of parents or guardians [Art. 35(1), FC] (b) Bigamous or polygamous marriages not falling under Art. 41, FC [Art. 35 (4), FC] (c) Those contracted thru mistake of one contracting party as to the identity of the other [Art. 35(5), FC] (d) Those subsequent marriage without recording in the civil registry the judgment of annulment or declaration of nullity, partition and distribution of properties and the delivery of the children’s presumptive legitimes [Art. 35(6), FC] (e) A marriage contracted by any party who, at the time of the celebration, was psychologically incapacitated to comply with the essential marital obligations of marriage, even if such incapacity becomes manifest only after solemnization [Art. 36, FC] (f) Incestuous marriages [Art. 37, FC] (i) Marriages between ascendants and ascendants of any degree, whether legitimate or illegitimate; and (ii) Marriages between brothers and sisters, whether of the full or half-blood (g) Void marriages for reasons of public policy (Art. 38, FC) (i) Marriages between collateral blood relatives, whether legitimate or illegitimate, up to the th 4 civil degree (ii) Marriages between step-parents and stepchildren. (iii) Marriages between the adopting parent and adopted child (iv) Marriages between the surviving spouse of the adopting parent and the adopted child (v) Marriages between the surviving spouse of the adopted child and the adopter (vi) Marriages between an adopted child and a legitimate child of the adopter (vii) Marriages between adopted children of the same adopter
Art. 18. In matters which are governed by the Code of Commerce and special laws, their deficiency shall be supplied by the provisions of this Code. SPECIAL CONFLICT OF LAW RULES MARRIAGE
Definition: Art. 1, FC. Marriage is a special contract of permanent union between a man and a woman entered into in accordance with law for the establishment of conjugal and family life. It is the foundation of the family and an inviolable social institution whose nature, consequences, and incidents are governed by law and not subject to stipulation, except that marriage settlements may fix the property relations during the marriage within the limits provided by this Code. Extrinsic Validity of Marriage (1) Formal Requisites of Marriage under Philippine Law [Art. 3, FC] (a) Authority of the solemnizing officer (b) Valid marriage license except in the cases provided for in Chapter 2 of Title I (c) A marriage ceremony which takes place with the appearance of the contracting parties before the solemnizing officer and their personal declaration that they take each other as husband and wife in the presence of not less than two witnesses of legal age.
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(viii) Marriages between parties where one, with the intention to marry the other, killed that other person's spouse, or his or her own spouse.
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(2) Consular Marriages Marriages between Filipino citizens abroad may be solemnized by a consul-general, consul or vice consul of the Republic of the Philippines [Art. 10, FC].
Note: These exceptions put into issue the capacity of the parties to enter into the marriage and therefore relate to the substantive requirement for marriage and is governed by lex nationalii.
Effects of Marriage (1) Personal relations between the spouses (a) Governed by the national law of the parties
Intrinsic Validity of Marriage (refers to capacity of a person to marry) (1) Intrinsic validity is determined by the parties’ personal law, which may be their domiciliary or national law.
NOTE: If the spouses have different nationalities, generally the national law of the husband may prevail as long as it is not contrary to law, customs and good morals of the forum. (b) Under Philippine law, personal relations between the spouses include [Arts. 68, 70-71, FC] (i) mutual fidelity (ii) respect (iii) cohabitation (iv) support (v) right of the wife to use the husband’s family name
Note: (a) Laws relating to Family rights and duties, Status, Condition or Legal capacity of persons are binding on citizens of the Philippines, even though living abroad [Art. 15] (b) When either or both of the contracting parties are citizens of a foreign country, it shall be necessary for them before a marriage license can be obtained to submit a certificate of legal capacity to contract marriage, issued by their respective diplomatic or consular officials [Art. 21, FC] (c) Marriages enumerated under Art. 26(2), FC are void even if valid in the country where celebrated.
(2) Property relations (a) The Hague Convention declares that the governing law on matrimonial property is: (i) The internal law designated by the spouses before the marriage (ii) In the absence thereof, the internal law of the state in which the spouses fix their habitual residence (b) Rule under Philippine law [Art. 80, FC] (i) In the absence of a contrary stipulation in the marriage settlements, the property relations of the spouses shall be governed by Philippine laws, regardless of the place of the celebration of the marriage and their residence.
(2) Intrinsic requirements of marriage under Philippine Law [Art. 2, FC] (3) The Hague Convention on Validity of Marriages allows a contracting state to refuse recognition of 3 the marriage in the ff. Cases (CR-M ): (a) One of the parties did not freely Consent (b) Spouses were Related, by blood or adoption (c) One of the parties did not have the Mental capacity to consent (d) One of the spouses was already Married (e) One of the parties has not attained the Minimum age, nor acquired the necessary dispensation
(ii) Rule is inapplicable: (1) If both spouses are aliens (2) With respect to the extrinsic validity of the contracts affecting property not situated in the Philippines and executed in the country where the property is located (3) With respect to the extrinsic validity of contracts entered into in the Philippines but affecting property situated in a foreign country whose laws require different formalities for its extrinsic validity.
Note: (1) Rule on Proxy Marriages: (a) Proxy marriages, where permitted by the law of the place where the proxy participates in the marriage ceremony, are entitled to recognition in countries adhering to the lex loci celebrationis rule, at least insofar as formal validity is concerned (b) Internal Philippine law, however, does not sanction proxy marriages.
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(c) Doctrine of Immutability of Matrimonial Property Regime: The change of nationality on the part of the husband or wife does not affect the original property regime EXCEPT when the law of the original nationality itself changes the marital regime, hence, the property regime has to change accordingly.
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Republic v. Orbecido (2005): Paragraph 2 of Article 26 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 remarry as if the other party were a foreigner at the time of the solemnization of the marriage. The reckoning point is not the citizenship of the parties at the time of the celebration of the marriage, but their citizenship at the time a valid divorce is obtained abroad by the alien spouse capacitating the latter to remarry.
DIVORCE AND SEPARATION
Rule under the Hague Convention The granting of divorce or separation must comply with the national law of the spouses and lex fori (law of the place where the application for divorce is made).
Validity of Foreign Divorce Between Foreigners (1) A foreign divorce will be recognized in all contracting states if, at the date of the institution of the proceedings (Hague Convention on the Recognition of Divorce and Legal Separation): (a) either spouse had his habitual residence there; (b) both spouses were nationals of that state; or (c) if only the petitioner was a national, he should have his habitual residence there
Divorce Decrees Obtained by Filipinos General Rule: Decrees of absolute divorce obtained by Filipinos abroad have no validity and are not recognized in Philippine Jurisdiction. Note: Statutory Bases (a) Laws relating to Family rights and duties, or to the Status, Condition and Legal capacity of persons are binding upon citizens of the Philippines, even though living abroad [Art. 15, CC] (b) Prohibitive laws concerning persons, their acts or property, and those which have for their object public order, public policy and good customs, shall not be rendered ineffective by laws or judgments, or by determinations or conventions agreed upon in a foreign country. [Art. 17(3), CC]
(2) While there is no provision of law requiring Philippine courts to recognize a foreign divorce decree between non-Filipinos such will be recognized under the principle of international comity, provided that it does not violate a strongly held policy of the Philippines. ANNULMENT AND DECLARATION OF NULLITY
Jurisdiction to Annul (1) Vested in the court of the domicile of the parties (2) Jurisdiction over the non-resident defendant is not essential
Exception: Art. 26(2), FC Where a marriage between a Filipino citizen and a foreigner is validly celebrated and a divorce is thereafter validly obtained abroad by the alien spouse capacitating him or her to remarry, the Filipino spouse shall have capacity to remarry under Philippine law
Governing Law (1) Lex loci celebrationis —determines the consequences of any defect as to form (2) In general, the same applies with reference to substantive or intrinsic validity. But with regard to capacity of the parties to marry, national law is determinative.
Van Dorn v. Romillo, Jr. (1985): Owing to the Nationality Principle, only Philippine nationals are covered by the policy against absolute divorces, the same being considered contrary to our concept of public policy and morality. However, aliens may obtain divorces abroad, provided they are valid according to their national law.
Human Relations ABUSE OF RIGHT
Llorente v. Court of Appeals (2000): Divorce obtained by Petitioner from his first wife, after he was admitted to US citizenship, is valid and recognized in our jurisdiction as a matter of comity.
Art. 19. Every person must, in the exercise of his rights and in the performance of his duties, act with justice, give everyone his due, and observe honesty and good faith.
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ACTS CONTRARY TO LAW Art. 20. Every person who, contrary to law, wilfully or negligently causes damage to another, shall indemnify the latter for the same. ACTS CONTRA BONUS MORES Art. 21. Any person who wilfully causes loss or injury to another in a manner that is contrary to morals, good customs or public policy shall compensate the latter for the damage. Breach of promise to marry is not an actionable wrong. [De Jesus vs. Syquia, 58 Phil., 866] BUT damages may be recoverable Wassmer v. Velez (1964): Mere breach of promise to marry is not an actionable wrong. But to formally set a wedding and go through all the above-described preparation and publicity, only to walk out of it when the matrimony is about to be solemnized, is quite different. This is palpably and unjustifiably contrary to good customs for which defendant must be held answerable in damages in accordance with Article 21 aforesaid. Baksh vs. Court of Appeals (1993): Article 21 may also be applied in a breach of promise to marry where the woman is a victim of moral seduction. Award of damages pursuant to Article 21 is justified not because of such promise to marry but because of the fraud and deceit behind it and the willful injury to her honor and reputation which followed thereafter. Tanjanco v. Court of Appeals (1966): The conduct of a woman of adult age, maintaining intimate sexual relations with appellant, with repeated acts of intercourse is incompatible with the idea of seduction. PRINCIPLE OF UNJUST ENRICHMENT Art. 22. Every person who through an act of performance by another, or any other means, acquires or comes into possession of something at the expense of the latter without just or legal ground, shall return the same to him. Art. 22 (Accion in Rem Verso) Not necessarily a mistake in payment
Art. 2154 (Solutio Indebiti) Payment should be made by mistake
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Persons and Personality
General rule: Incapacitated persons are not exempt from certain obligations arising from his acts or property relations.
CAPACITY TO ACT CIVIL PERSONALITY
Minority RA 6809 (1989): An act lowering the age of majority from twenty-one to eighteen years.
Art. 37. Juridical capacity, which is the fitness to be the subject of legal relations, is inherent in every natural person and is lost only through death. Capacity to act, which is the power to do acts with legal effect, is acquired and may be lost. Juridical Capacity
Capacity to Act
Fitness of man to be the subject of legal relations Passive Aptitude for the Holding and Enjoyment of rights Inherent in every natural person Lost upon death
Power to do acts with legal effect Active Aptitude for the Exercise of rights Must be acquired
Can exist without capacity to act Cannot be limited or restricted
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Effects on Contracts (1) They cannot give consent to a contract [Art. 1327 (1)] (2) A contract where one of the parties is a minor is voidable [Art. 1390(1)] (3) A contract is unenforceable when both of the parties are minors (incapable of giving consent) [Art. 1403(3)] (4) Minority cannot be asserted by the other party in an action for annulment [Art. 1397] (5) Not obliged to make restitution except insofar as he has been benefited [Art. 1399] (6) Minor has no right to demand the thing/price voluntarily returned by him [Art. 1426] (7) Minor has no right to recover voluntarily paid sum or delivered thing, if consumed in good faith [Art. 1427] (8) Must pay reasonable amount for necessaries delivered to him [Art. 1489]
Lost through death and other causes Must exist with juridical capacity May be restricted or limited
Mercado v. Espiritu, (1918): Estoppel works against minors who misrepresent their ages in a contract and are compelled to comply with its terms. (active misrepresentation done by minors).
Note: Juridical capacity can exist even without capacity to act; the existence of the latter implies that of the former. RESTRICTIONS ON CAPACITY TO ACT
Bambalan v. Maramba, (1928): When a minor made no active misrepresentation as to his minority and such minority is known to the other party, the contract is voidable (Art. 1403) as to the minor.
Art. 38. Minority, insanity or imbecility, the state of being a deaf-mute, prodigality and civil interdiction are mere restrictions on capacity to act, and do not exempt the incapacitated person from certain obligations, as when the latter arise from his acts or from property relations, such as easements.
Braganza v. Villa Abrille, (1959): Minors are obliged to make restitution insofar as they have been benefited (Art. 1399).
Art. 39. The following circumstances, among others, modify or limit capacity to act: age, insanity, imbecility, the state of being a deaf-mute, penalty, prodigality, family relations, alienage, absence, insolvency and trusteeship. The consequences of these circumstances are governed in this Code, other codes, the Rules of Court, and in special laws.
Effects on Marriage (1) May not yet contract marriage [Art. 5, FC]. (2) Marriages, where one of the parties is below 18, even with the consent of parents/guardians, are VOID [Art. 35, FC]
Capacity to act is not limited on account of religious belief or political opinion.
Insanity Insanity includes many forms of mental disease, either inherited or acquired. A person may not be insane but only mentally deficient (idiocy, imbecility, feeble-mindedness).
A married woman, twenty-one years of age or over, is qualified for all acts of civil life, except in cases specified by law.
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Effect on Contracts (1) Incapacity to give consent to a contract [Art. 1327(2)] (2) Contracts entered into during lucid intervals are valid [Art. 1328] (3) Restitution of benefits [Art. 1399] (4) Voidable if one of the parties is insane [Art. 1390] (5) Unenforceable if both of the parties are insane (Art. 1403 (3))
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Civil interdiction (1) It is an accessory penalty imposed upon persons who are sentenced to a principal penalty not lower than reclusion temporal (Art. 41, RPC). (2) Offender is deprived of rights of parental authority, or guardianship, of marital authority, of the right to manage his property and of the right to dispose of such (Art. 34, RPC) (3) For the validity of marriage settlements, the participation of the guardian shall be indispensable (Art. 123)
Effect on Crimes (1) General rule: EXEMPTED from criminal liability (2) Exception: Acted during lucid interval
Family relations (1) Justifying circumstance if acted in defense of person/rights of spouse, ascendants, descendants, brothers/sisters, and other relatives th up to the 4 civil degree [Art. 11(2), RPC] (2) Mitigating circumstance if acted in the immediate vindication of a grave offense/felony committed against his spouse, ascendants or relatives of the same civil degree [Art. 13(5), RPC] (3) Incestuous and void marriages: (a) Between ascendants and descendants of any degree; (b) Between brothers and sisters, whether full or half-blood. [Art. 37, FC] (4) Donations/grants of gratuitous advantage between spouses during the marriage shall be VOID, except moderate gifts during family occasions [Art. 87, FC] (5) Descendants cannot be compelled to testify in a criminal case, against his parents and grandparents (a) UNLESS: crime was against the descendant OR by one parent against the other [Art. 215, FC] (6) Spouses cannot sell property to each other, except: (a) Absolute separation is agreed upon in the marriage settlements (b) Judicial separation of property [Art. 1490]
Effect on Marriage (1) May be annulled if either party was of unsound mind unless the such party after coming to reason, freely cohabited with the other [Art. 45(2), FC] (2) Action for annulment of marriage must be filed by the sane spouse who had no knowledge of the other’s insanity, or by any relative/guardian of the insane before the death of either party; or by the insane spouse during a lucid interval or after regaining sanity [Art. 47(2), FC] State of Being Deaf-Mute (1) Cannot give consent to a contract if he/she also does not know how to write (Art. 1327(2), CC) (2) Can make a valid WILL, provided: he must personally read the will. The contents of the same have either been read personally by him or otherwise communicated to him by 2 persons (Art. 807, CC) (3) Cannot be a witness to the execution of a will (Art. 820, CC) (4) Voidable if one of the parties is deaf-mute and does not know how to write (5) Unenforceable if both of the parties are deafmutes and does not know how to write Prodigality Martinez v. Martinez, (1902): A spendthrift or a prodigal is “a person, who, by excessive drinking, gambling, idleness or debauchery of any kind shall so spend, waste or lessen his estate as to expose himself or his family to want or suffering.” The acts of prodigality must show a morbid state of mind.
Absence Art. 390. After an absence of seven years, it being unknown whether or not the absentee still lives, he shall be presumed dead for all purposes, except for those of succession. The absentee shall not be presumed dead for the purpose of opening his succession till after an absence of ten years. If he disappeared after the age of seventy-five years, an absence of five years shall be sufficient in order that his succession may be opened. (n)
Note: It is not the circumstance of prodigality, but the fact of being under guardianship that restricts capacity to act.
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Period of Conception = the first 120 days of the 300 days preceding the birth of the child.
Art. 391. The following shall be presumed dead for all purposes, including the division of the estate among the heirs:
A conceived child can acquire rights while still in the mother’s womb. It can inherit by will or by intestacy.
1. A person on board a vessel lost during a sea voyage, or an aeroplane which is missing, who has not been heard of for four years since the loss of the vessel or aeroplane;
Geluz v CA, (1961): An aborted fetus had conditional personality but never acquired legal rights/civil personality because it was not alive at the time of delivery from the mother’s womb. No damages can be claimed in behalf of the unborn child.
2. A person in the armed forces who has taken part in war, and has been missing for four years; 3. A person who has been in danger of death under other circumstances and his existence has not been known for four years.
Complete respiration = test/sign of independent life Death Art. 42. Civil personality is extinguished by death. The effect of death upon the rights and obligations of the deceased is determined by law, by contract and by will
Article 124, FC: (1) Administration and enjoyment of the CPG shall belong to both spouses jointly. (2) In case of disagreement, husband’s decision shall prevail, subject to recourse to the court by the wife for proper remedy (within 5 years from date of contract implementing such decision) (3) If one spouse is incapacitated/unable to administer, sole powers of administration may be assumed by the other spouse. (4) General Rule: This power does not include disposition/encumbrance.
Criminal liability ends with death BUT civil liability may be charged against the estate [People v. Tirol, (1981)]. Art. 43. If there is a doubt, as between two or more persons who are called to succeed each other, as to which of them died first, whoever alleges the death of one prior to the other, shall prove the same; in the absence of proof, it is presumed that they died at the same time and there shall be no transmission of rights from one to the other.
Exception: Judicial authority or written consent of other spouse. Birth General Rule: Birth determines personality [Art. 40]. Death extinguishes civil personality [Art. 42].
Note: Article 43 provides a statutory presumption when there is doubt on the order of death between persons who are called to succeed each other (only).
Exception: A “conceived child shall be considered born for all purposes that are FAVORABLE to it, provided it be born later” [Art. 40, 2nd clause] with the following circumstances: Intra-Uterine Life 7 months or more Less than 7 months
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The statutory presumption of Article 43 was not applied due to the presence of a credible eyewitness as to who died first [Joaquin v. Navarro, (1948)] Compare Art. 43 with Rule 131, Sec. 3 (jj), presumption of Survivorship.
When Considered Born Alive upon delivery Alive only after completion of 24 hours from delivery
Art. 43
Rule 131, Sec. 3 (jj)
Only use the presumptions when there are no facts to get inferences from Only use for succession Cannot be used for purposes succession purposes In any circumstance Only during death in calamities, wreck, battle or conflagration
Birth = complete removal of the fetus from the mother’s womb; before birth, a fetus is merely part of the mother’s internal organs. Personality of Conceived Child (1) Limited = only for purposes FAVORABLE to it. (2) Conditional = it depends upon the child being born alive later. PAGE 12
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Presumption of Survivorship in the Rules of Court (Rule 131, sec. 3, (jj.) Age
The Family Code took effect on August 3, 1988.
Marriage
Presumed Survivor
Both under 15 Both above 60 One under 15, the other above 60 Both over 15 and under 60; different sexes
Older Younger One under 15
Both over 15 and under 60; same sex One under 15 or over 60, the other between those ages
Older
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REQUISITES NATURE OF MARRIAGE, ART. 1
Art. 1, FC. Marriage is a special contract of permanent union between a man and a woman entered into in accordance with law for the establishment of conjugal and family life. It is the foundation of the family and an inviolable social institution whose nature, consequences, and incidents are governed by law and not subject to stipulation, except that marriage settlements may fix the property relations during the marriage within the limits provided by this Code.
Male
One between 15 and 60
DOMICILE AND RESIDENCE OF PERSON FOR NATURAL PERSONS: The place of their habitual residence [Art. 50]
KINDS OF REQUISITES
(1) Essential Requisites (Art. 2) (a) Legal Capacity of the contracting parties, who must be a male and a female (b) Consent (of the parties) freely given in the presence of a solemnizing officer.
FOR JURIDICAL PERSONS:
The place where their legal representation is established, or where they exercise their primary functions, unless there is a law or other provision that fixes the domicile [Art. 51]
(2) Formal Requisites (Art. 3) (a) Authority of solemnizing officer (b) A valid marriage license (c) Except: Marriages in articulo mortis or when one or both parties are at the point of death (d) Marriage Ceremony: (i) Appearance of contracting parties in the presence of a solemnizing officer (ii) Personal declaration that they take each other as husband and wife in the presence of not less than 2 witnesses
DOMICILE VS. RESIDENCE
While domicile is permanent (there is intent to remain), residence is temporary and may be changed anytime (there is no necessary intent to remain). REQUISITES OF DOMICILE [Callejo v. Vera]
(1) Physical Presence in a fixed place (2) Intent to remain permanently (animus manendi) KINDS OF DOMICILE
(1) Domicile of Origin - domicile of parents of a person at the time he was born. (2) Domicile of Choice (a) Domicile chosen by a person, changing his domicile of origin. (b) A 3rd requisite is necessary – intention not to return to one’s domicile as his permanent place. (3) Domicile by Operation of Law (i.e., Article 69, domicile of minor) (a) A married woman does not lose her domicile to her husband. (Romualdez-Marcos vs. Comelec (1995))
EFFECT OF ABSENCE OF REQUISITES
Absence
Defect or Irregularity Effect
Void
Voidable
ESSENTIAL REQUISITES
Age Legal Capacity [Art. 5] Male or female 18 years old and above, not under any impediments mentioned in Art. 37 (incestuous marriage) & Art. 38 (marriage against public policy), may contract marriage.
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Note: In a marriage in articulo mortis, when one or both parties are unable to sign the marriage certificate, it shall be sufficient for one of the witnesses to write the name of said party, which shall be attested by the solemnizing officer. (Art. 6, par. 2)
Must be male and female Jones v Hallahan, (1973): Application for marriage license was denied since marriage is defined by law as a contract entered into between a man and a woman. Goodridge v. Dept. of Public Health, (2003): Same-sex couples should not be denied the same benefits as heterosexual couples; the right to marry includes the right to choose who to marry.
Places where marriage SHALL be publicly solemnized: (CCO) (1) Chambers of the judge or in open court (2) Church, chapel, or temple (3) Office of the consul-general, consul, or viceconsul [Art. 8]
Silverio v Republic, (2007): Changing of gender in one’s birth certificate was denied; otherwise, it would result in confusion and would allow marriage between persons of the same sex which is in defiance of the law, as marriage is a union between a man and a woman.
Exceptions: (1) Marriages performed in articulo mortis or in remote places. [Art. 29] (2) Where both parties request in writing that marriage be solemnized at a place designated by them.
Note: The best source for citing the requirement (of male/female) is still statutory, as provided explicitly in the Family Code.
Non-compliance with this requirement does not invalidate the marriage (premise: more witnesses = more people can notify officer of impediments to marriage).
Consent freely given People v. Santiago, (1927): A marriage entered into by a person whose real intent is to avoid prosecution for rape is void for total lack of consent. The accused did not intend to be married. He merely used such marriage to escape criminal liability.
Who may solemnize marriages Who may solemnize marriage: (JC-SPAMM) (1) Incumbent member of the Judiciary within his jurisdiction. [Art. 7] (2) Priest, Rabbi, Imam or Minister of any Church or Religious Sect. Must be: (a) Duly authorized by his church or religious sect (b) Registered with the civil registrar general (c) Acting within the limits of the written authority granted to him by his church or religious sect. (d) At least one of the contracting parties belongs to the solemnizing officer’s church or religious sect. [Art. 7] (3) Ship Captain or Airplane Chief may solemnize a marriage in articulo mortis between passengers or crew members [Art. 7, 31] (4) A Military commander of a unit may solemnize marriages in articulo mortis between persons within the zone of military operation. (Art. 7, 32) (5) Consul-general, consul or vice-consul may solemnize marriages between Filipino citizens abroad. (Art. 7, 10) (6) Municipal and City Mayors (LGC sec. 444 and 455)
Eigenmann v. Guerra (1964): There was no reasonable and well-grounded fear of an imminent and grave evil upon him or his property, father-in-law’s words were merely an admonition typical of concerned parents. Ceremony Marriage Ceremony No prescribed form or religious rite for the solemnization of marriage is required. (Art. 6) The couple's written agreement where they declare themselves as husband and wife, signed by them before a judge and two capable witnesses, even though it was independently made by them, still counts as a valid ceremony. [Martinez v Tan, (1909)] Minimum requirements prescribed by law: (AP-PMS) (1) Appearance of contracting parties personally before the solemnizing officer [Art. 3] (2) Personal declaration that they take each other as husband and wife. [Art. 3] (3) Presence of at least two witnesses of legal age. [Art. 3] (4) The declaration shall be contained in the Marriage certificate. [Art. 6] (5) Marriage certificate shall be Signed by the contracting parties and their witnesses and attested by the solemnizing officer. [Art. 6]
Exceptions – Art. 35 (1) Marriage is void when solemnized by any person not legally authorized to perform marriages unless either or both parties believed in good faith that the solemnizing officer had legal authority to do so. [Art. 35 (2)]
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(2) Absence & Irregularity of Authority of a solemnizing officer
marry each other. [Art. 34, Ninal vs. Badayog (2000)]
Lack of valid notification of both parties desiring a ceremony in a remote place was held to be only a mere IRREGULARITY [Navarro vs. Domagtoy (1996)]
Requisites for the 5-year cohabitation to be valid for the exemption from acquiring a marriage license (1) The man and woman must have been living together as husband and wife for at least five years before the marriage; (2) The parties must have no legal impediment to marry each other; (3) The fact of absence of legal impediment between the parties must be present at the time of marriage; (4) The parties must execute an affidavit stating that they have lived together for at least five years [and are without legal impediment to marry each other]; and (5) The solemnizing officer must execute a sworn statement that he had ascertained the qualifications of the parties and that he had found no legal impediment to their marriage. [Borja-Manzano vs. Judge Sanchez (2001)]
Respondent judge was faulted for solemnizing a marriage outside his territorial jurisdiction. Also, presentation of the marriage license subsequent to the solemnization of marriage will not cure the defect. [Arañes v. Occiano (2002)] License required General Rule: License required Article 9 - Issued by local registrar of city or municipality where either contracting party habitually resides Article 11 - Each contracting party should file separately. Article 20 - License valid in any part of the Philippines for 120 days from date of issue, automatically cancelled at the expiration of such period.
Marriage certificate Absence and irregularity of marriage license and contract Republic v. CA and Castro (1994): Issuance of the Civil Registrar of a Certificate of Due Search and Inability to Find the application of a marriage license certifies the license’s inexistence, thus rendering the marriage VOID.
Foreign National When either or both parties are foreign nationals: Certificate of legal capacity to contract marriage, issued by a diplomatic or consular official, shall be submitted before a marriage license can be obtained [Art. 21]
Moreno v. Bernabe (1995): Before a marriage can be solemnized, a valid marriage license must be presented first, otherwise, the marriage is VOID.
Stateless persons or refugees from other countries: affidavit stating circumstances showing capacity to contract marriage, instead of cert. of legal capacity [Art. 21]
People v. Borromeo (1984): Non-existence of a marriage contract does not invalidate the marriage as long as all the requisites for its validity are properly complied with.
Exceptions (1) Marriage in articulo mortis [Art. 27] (a) The marriage may be solemnized without the necessity of a marriage license. (b) It remains valid even if ailing party survives. (2) Between passengers or crew members in a ship or airplane [Art. 31] (3) Persons within a military zone [Art. 32] (4) Marriage in Remote and inaccessible places [Art. 28] (5) Marriages by Muslims and Ethnic cultural minorities provided they are solemnized in accordance with their customs, rites or practices. [Art. 33] (6) Marriage by parties who have Cohabited for at least 5 years without any legal impediment to
Things to do at the local civil registrar: (1) File an application of marriage license at the proper local civil registrar. [Art. 11] (2) Present birth or baptismal certificate for proof of age. [Art. 12] (3) If aged 18-21 years, present parental consent. [Art. 14] (4) If aged 21-25, present parental advice. [Art. 15] (5) If aged 18-25, present certificate of marriage counseling from your priest. [Art. 16] (6) (PD 965) Attend family planning seminar or get a brochure regarding family planning (7) Pay the required fees. [Art 19]
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(8) If foreigner, present certificate of legal capacity issued by diplomat or consular officials. (Art. 21) Marriage Certificate Where parties declare that they take each other as husband and wife; contains the ff: (1) Full name, sex, age of party (2) Citizenship, religion, habitual residence (3) Date and precise time of celebration of marriage (4) That marriage license was properly issued (except in marriages exempt from ML req’t) (5) That parental consent was secured, when required (6) That requirement as to parental advice was complied with, when required (7) That parties have entered into marriage settlements, if any [Art. 22]
Van Dorn v. Romillo (1985): A divorce obtained by the foreign spouse in accordance with the said spouse’s national law is recognized in the Philippines and releases Filipino spouse from their marriage.
General Rule: Marriages solemnized abroad in accordance with the laws in force in that country shall be valid in the Philippines. [Art 26]
Quita v. Dandan (1998): The citizenship of the spouses at the time of the divorce determines their capacity to obtain a valid divorce. Since the divorce and the naturalization of W occurred within the same year, the case was remanded to determine which occurred first.
Exceptions: (1) Marriage between persons below 18 years old [Art. 35(1)] (2) Bigamous or polygamous marriage [Art. 35(4)] (3) Mistake in identity [Art. 35 (5)] (4) Marriages void under Article 53 [Art. 35 (6)] (5) Psychological incapacity [Art. 36] (6) Incestuous marriages [Art. 37] (7) Marriage void for reasons of public policy [Art. 38]
Lex Nationalii – Laws relating to family rights and duties, or to the status, condition, and legal capacity of persons are binding upon Phil citizens even though living
(Art. 26, CC) Foreign marriages may be void under Phil law due to absence of a formal requisite under foreign laws.
(1) Those obtained by Filipino citizens are void under Philippine law. (2) If the foreign spouse obtains a valid foreign divorce, the Filipino spouse shall have capacity to remarry under Philippine law. (Art. 26)
MARRIAGES CELEBRATED ABROAD
Requirements independent of the parties Lex loci celebrationis- if valid where celebrated, then valid everywhere; forms of contracting marriage are to be regulated by the law where it is celebrated.
abroad (Art 15, CC) Foreign marriages void under Phil law due to lack of an essential requisite, even if valid under foreign laws, will not be recognized
FOREIGN DIVORCES
EFFECT OF MARRIAGES CELEBRATED ABROAD AND FOREIGN DIVORCE
Inherent in the parties, carried everywhere
Formal requisites
in order that it may be upheld: (1) Provisions of the foreign law (2) Celebration of the marriage in accordance with said provisions
Best evidence that a marriage does exist. [Tenebro v. CA (2004)]
Formal requisites
Essential requisites
PROOF OF FOREIGN MARRIAGE
Note: Not an essential or formal requisite without which the marriage will be void [Madridejo v. de Leon (1930)]
Essential requisites
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Llorente v. CA (2000): Citizenship at the time the divorce is obtained determines its validity. Since H was no longer a Filipino citizen when he divorced W, the nationality principle did not apply to him anymore and the divorce is valid. Garcia v. Recio (2001): A divorce decree obtained by the foreign spouse is recognized under Phil law if it is executed in accordance with the foreigner’s national law. The party must prove divorce as a fact and that said divorce is obtained in conformity with the law allowing it, before the Philippine courts can take judicial notice. VOID AND VOIDABLE MARRIAGES PRESUMPTION OF MARRIAGE
(1) Presumption in favor of a valid marriage [Art 220, CC]
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(2) The presumption that a man and a woman deporting themselves as husband and wife have entered into a lawful contract of marriage is satisfactory if uncontradicted. [Sec. 3 (aa), Rule 131, ROC] (3) In marriages of exceptional character, the existence of the marriage is presumed, even in the TOTAL ABSENCE of a marriage license. [Vda. De Jacob v CA (1999)] (4) If a marriage certificate is missing, and all means HAVE NOT YET BEEN EXHAUSTED to find it, then the marriage is presumed to exist [Sevilla v Cardenas (2006)]
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(4) Bigamous or polygamous marriages not falling
under Article 41 (Art. 41: subsequent marriage by present spouse who obtained a declaration of presumptive death for absent spouse prior to the subsequent marriage) (5) There is a mistake as to the identity of the other contracting party (6) Subsequent marriages that are void under Article 53 (Non-compliance with Art. 52) Psychological incapacity Contracted by any party who, at the time of the celebration, was psychologically incapacitated to comply with the essential marital obligations of marriage, even if such incapacity becomes manifest only after its solemnization [Art. 36]
Absence of a marriage certificate is not proof of absence of marriage. To prove the fact of marriage, the following would constitute competent evidence: (1) the testimony of witnesses to matrimony; (2) the couple’s public cohabitation; and (3) birth and baptismal certificates of children born during the union. [Trinidad v CA (1998)]
Republic v. Molina, (1997): (1) The burden of proof to show the nullity of the marriage belongs to the plaintiff. (2) The root cause of the psychological incapacity must be: (a) medically or clinically identified, (b) alleged in the complaint, (c) sufficiently proven by the experts, (d) clearly explained in the decision. (3) The incapacity must be proven to be existing at “the time of the celebration” of the marriage. (4) Such incapacity must also be shown to be medically or clinically permanent or incurable. (5) Such illness must be grave enough to bring about the disability of the party to assume the essential obligations of marriage. (6) The essential marital obligations must be those embraced by Articles 68 up to 71 of the Family Code as regards the husband and wife as well as Articles 220, 221, and 225 of the same Code in regard to parents and their children. (7) Interpretations given by the National Appellate Matrimonial Tribunal of the Catholic Church in the Philippines, while not controlling/decisive, should be given great respect by our courts. (8) The trial court must order the prosecuting attorney or fiscal and the Solicitor General to appear as counsel for the state. No decision shall be handed down unless the Solicitor General issues a certification.
VOID MARRIAGES
Type of Void Marriages (1) Absence of any formal/essential requisites (2) Psychologically Incapacitated spouse (3) Incestuous Marriages (4) Marriages contrary to public policy (5) Void subsequent marriages Absence of Requisites Art. 4(1): The absence of any essential or formal requisites shall render the marriage void ab initio, except as stated in Article 35 (a). Art. 5: Any male or female of the age of eighteen years or upwards not under any of the impediments mentioned in Articles 37 and 38, may contract marriage. Void from the Beginning [Art. 35]. – (1) Marriage where any party is below eighteen years of age even with the consent of parents or guardians (2) Marriage solemnized by any person not legally authorized to perform marriages unless such marriages were contracted with either or both parties believing in good faith that the solemnizing officer had the legal authority to do so. Note: One’s belief in good faith that the solemnizing officer has the required authority is a mistake of fact, and not of law. (3) Marriage solemnized without a valid marriage license, except in marriages under exceptional circumstances
Santos v. Bedia-Santos, (1995): Laid down 3 characteristics for determining psychological incapacity: gravity, antecedent, and incurability. Tsoi v. CA, (1997): Refusal of husband to have sex was interpreted to be PI. “A man who can but won’t is PI”
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Marcos vs. Marcos (2000): Psychological incapacity maybe established by the totality of the evidence presented. Personal medical examination could be dispensed with.
Article 41 (Presumptive Death) Failure of the present spouse to obtain a judicial declaration of presumptive death before entering a subsequent marriage
Republic vs. San Jose (2007): There is no requirement that the respondent be medically examined first.
Article 44 (Bad Faith of both spouses) Both spouses entering a subsequent marriage after presumptive death, who acted in bad faith
Antonio v. Reyes, (2006): “Pathological liar” considered as incapacity, Molina guidelines met.
Article 53 (Non-Recording): Subsequent marriage of spouses, where the requirements of recording under Art. 52 have not have been complied with, shall be null and void.
psychological
Incestuous marriages Article 37 (Incestuous): (1) Between ascendants and descendants of any degree, legitimate or illegitimate (2) Between brothers and sisters, whether of the full or half blood, legitimate or illegitimate
Art. 52. The judgment of annulment or of absolute nullity of the marriage, the partition and distribution of the properties of the spouses and the delivery of the children's presumptive legitimes shall be recorded in the appropriate civil registry and registries of property; otherwise, the same shall not affect third persons.
Against Public Policy Article 38 (Against Public Policy): (1) Between collateral blood relatives, legitimate or illegitimate, up to the fourth civil degree. (2) Between step-parents and step-children. Note: Stepbrothers and stepsisters can marry because marriages between them are not among those enumerated in Article 38. (3) Between parents-in-law and children-in-law. (4) Between adopting parent and adopted child. (5) Between the surviving spouse of the adopting parent and the adopted child. (6) Between the surviving spouse of the adopted child and the adopter. (7) Between an adopted child and a legitimate child of the adopter. (8) Between adopted children of the same adopter. (9) Between parties where one, with the intention to marry the other, killed that other person's spouse, or his or her own spouse.
Previous marriage declared void ab initio or annulled Art. 40. The absolute nullity of a previous marriage may be invoked for purposes of remarriage on the basis solely of a final judgment declaring such previous marriage void. In order to have a subsequent marriage: (1) The previous marriage should be judicially declared void or annulled (final judgment) (Terre v. Terre (1992), Atienza v. Brillantes (1995)) (2) Must comply with the requirements of Art. 52 Under the Civil Code (superseded by the Family Code), there was no need for a judicial declaration of nullity of a previous marriage for a subsequent marriage to be valid [People v. Mendoza (1954)] Terre v. Terre, (1998): A lawyer was disbarred for grossly immoral conduct by convincing the other party that a judicial declaration of nullity was not required and subsequently contracting another marriage while his first marriage was subsisting.
Relationships outside of Art. 37 and 38 which are not impediments to marriage: brother-in-law with sisterin-law, stepbrother with stepsister, guardian with ward, adopted with illegitimate child of the adopter, adopted son of the husband with adopted daughter of the wife, parties who have been convicted of adultery
If there is no Judicial Declaration of Nullity, subsequent marriage void for being bigamous. Atienza v. Brillantes, (1995): Even if the judge’s first marriage contracted in 1965 was void for not having a marriage license, the requirement for a judicial declaration of nullity in Art. 40 still applies for his subsequent marriage contracted in 1991.
Void subsequent marriages Article 40 (No Judicial Declaration of Nullity) A person entered into a subsequent marriage without first getting a judicial declaration of nullity of the first void marriage
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Apiag v. Cantero, (1997): Where both marriages were contracted prior to the effectivity of the FC, the requirement of Art. 40 does not apply to the second marriage where a right is already vested and which the FC cannot have retroactive effect.
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Notes: (1) Institution of a summary proceeding is not sufficient. There must also be a summary judgment. (Balane) (2) Only the deserted/present spouse can file or institute a summary proceeding for the declaration of presumptive death of the absentee. (Bienvenido case) (3) There must have been diligent efforts on the part of the deserted spouse to locate the absent spouse. These diligent efforts correspond to the requirement of the law for a well-founded belief.
Domingo v. CA, (1993): The judicial declaration of nullity can be invoked for purposes other than remarriage. Article 40 was interpreted as being a requirement for purposes of remarriage but not limited for that purpose. Separation of property is also a valid purpose for filing for a judicial declaration of nullity.
Effect of Reappearance of Absent Spouse General Rule: The subsequent marriage remains valid.
The word “solely” in Art. 40 referred to validating subsequent marriages but NOT to limiting the purposes for which a judicial declaration of nullity can be invoked.
Exception: It is automatically terminated by the recording of the affidavit of reappearance of the absent spouse at the instance of any interested person, with due notice to the spouses of the subsequent marriage. [Art. 42]
Borja-Manzano v. Sanchez, (2001): Legal separation does not severe marital bonds. Cohabitation under Art. 34 merely exempts the spouses from obtaining a marriage license, and is not met when there exists legal impediment to marry during the period of cohabitation.
Note: It is the recording of the affidavit of reappearance that automatically terminates the subsequent marriage. Hence, if absentee spouse reappears without recording affidavit of reappearance, then there is no legal effect. Meanwhile, absentee spouse cannot remarry. (Tolentino)
Subsequent Marriage when one spouse is absent Requirements for Subsequent Marriage to be Valid When Prior Spouse is Absent [Art. 41]: (1) Subsequent marriage due to ordinary absence where: (a) Absent spouse had been absent for 4 consecutive years; (b) The spouse present had a well-founded belief that absent spouse is dead; and (c) Judicial declaration of presumptive death was secured (no prejudice to the effect of the reappearance of the absent spouse). (2) Subsequent marriage due to extraordinary absence where: (a) Absent spouse had been missing for 2 consecutive years; (b) There is danger of death under the circumstances set forth in the provisions of Art. 391 CC attendant to the disappearance; (c) The spouse present had a well-founded belief that the missing person is dead; and (d) Judicial declaration of presumptive death was secured (no prejudice to the effect of the reappearance of the absent spouse).
Exception to the exception: If there is a judgment annulling the previous marriage or declaring it void ab initio. [Art. 42] Good Faith: PERIOD of absence for PRESUMPTIVE DEATH is MANDATORY thus cannot be shortened by good faith and if be done so will be VOID. Burden of Proof: Two successive marriages, nd presumption of validity on 2 marriage and burden ND on party ATTACKING VALIDITY OF 2 MARRIAGE. PRESUMPTION in favor of INNOCENCE prevails over ST PRESUMPTION of CONTINUANCE OF LIFE OF 1 SPOUSE & MARITAL RELATIONS. Difference between Absence in the Civil Code and Family Code Family Code
Civil Code As to period
Extraordinary circumstances [Art. 391, CC]: (a) ON BOARD VESSEL lost at sea voyage, airplane, (b) ARMED FORCES in war, or (c) DANGER OF DEATH under other circumstances, existence not known
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4 years under normal circumstances;
Absent for at least 7 years;
2 years under extraordinary
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Family Code makes an exception for the purpose of remarriage by limiting such requirement to 4 years.
Civil Code
circumstances
circumstances
Article 43 and 44 (Effects of Termination of Bigamous Marriage under Art. 42)
As to remarriage In order to remarry, summary proceeding is necessary
Declaration of presumptive death is not necessary
Art. 43: (1) Children of subsequent marriage – conceived prior to its termination considered legitimate; custody and support decided by court in a proper proceeding (2) Property Regime – dissolved and liquidated (party in bad faith shall forfeit his/her share in favor of the common children or if there are none, children of the guilty spouse by a previous marriage, and in case there are none, to the innocent spouse) (3) Donation propter nuptias – remains valid, (but if the donee contracted marriage in bad faith, donations will be revoked) (4) Insurance benefits – innocent spouse may revoke designation of guilty party as beneficiary, even if such designation is stipulated as irrevocable (5) Succession Rights – Party in bad faith disqualified to inherit from innocent spouse, whether testate or intestate
As to who can institute the action Can be instituted by the present spouse, any interested party, and the subsequent spouse
The spouses themselves
As to effect on subsequent marriage Subsequent marriage is automatically terminated by the recording of an affidavit of reappearance of the absent spouse
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Upon reappearance, judicial proceeding is necessary to declare marriage null and void
As to ground Well founded belief that Generally believed to be the absent spouse is dead dead
Article 44: Donations: If both parties of subsequent marriage acted in bad faith, any donations and testamentary dispositions made by one party to the other by reason of marriage will be revoked
Connected Provisions Art. 390, Civil Code. After an absence of 7 years, it being unknown whether or not the absentee still lives, he shall be presumed dead for all purposes, except for those of succession.
ACTION OR DEFENSE OF NULLITY
Prescription Art. 39. The action or defense for the declaration of absolute nullity of a marriage shall not prescribe. (as amended by RA 8533)
The absentee shall not be presumed dead for the purpose of opening his succession till after an absence of 10 years. If he disappeared after the age of 75 years, an absence of 5 years shall be sufficient in order that his succession may be opened.
It must be noted that under the new Supreme Court Rule on Declaration of Absolute Nullity of Void Marriages and Annulment of Voidable Marriages A.M. No. 02-11-10-SC, effective March 15, 2003, nullity of the marriage can still be collaterally attacked.
Art. 391, Civil Code. The following shall be presumed dead for all purposes, including the division of the estate among the heirs: (SAAD) (1) A person on board a vessel lost during a sea voyage, or an aeroplane which is missing, who has not been heard of for four years since the loss of the vessel or aeroplane; (2) A person in the armed forces who has taken part in war, and has been missing for four years; (3) A person who has been in danger of death under other circumstances and his existence has not been known for four years.
Who may file the petition for nullity? As to the parties allowed to file the action: Only an aggrieved or injured spouse may file a petition for annulment of voidable marriages or declaration of absolute nullity of void marriages. Such petition cannot be filed by compulsory or intestate heirs of the spouses or by the State. The Committee is of the belief that they do not have a legal right to file the petition. Compulsory or intestate heirs have only inchoate rights prior to the death of their predecessor, and, hence, can only question the validity of the marriage of the spouses upon the death of a
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spouse in a proceeding for the settlement of the estate of the deceased spouse filed in the regular courts. (Enrico v. Heirs of Sps. Medinaceli (2007)), also reiterated in (Carlos vs. Sandoval (2008))
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(b) Through concealment by the wife of the fact that at the time of the marriage she was pregnant by another man; (c) Through concealment of a sexuallytransmitted disease, regardless of its nature, existing at the time of marriage; (d) Through concealment of drug addiction, habitual alcoholism or homosexuality/lesbianism. (Art.46) (4) The consent of either party was obtained through force, intimidation, or undue influence. (5) Either party is physically incapable of consummating the marriage (impotence; this is different from sterility, which is the inability to produce offspring). (6) Either party has a serious and incurable sexuallytransmissible disease, even if not concealed.*
How to attack a void marriage? General Rule: Void Marriages may be attacked collaterally or directly. Exception: A person in a void marriage must first file for a declaration of nullity in order to subsequently marry ANNULLABLE MARRIAGE
(Note: Although the Supreme Court in its syllabus seems to make a distinction between annullable and voidable marriages by the fact that they made two separate categories for the two, Tolentino makes no mention of any such difference.)
Action to Annul: Action in rem, concerns status of parties; res is relation between parties or marriage tie; jurisdiction depends on nationality or domicile not the place of celebration.
Art. 14: In case either or both of the contracting parties, not having been emancipated by a previous marriage, are between the ages of eighteen and twenty-one, In addition to the requirements of the preceding articles: (a) Exhibit to the local civil registrar the consent to their marriage of their father, mother, surviving parent or guardian, or persons having legal charge of them, in the order mentioned (b) Manifested in writing by the interested party, who personally appears before the proper local civil registrar, or (c) In the form of an affidavit made in the presence of two witnesses and attested before any official authorized by law to administer oaths (d) The personal manifestation shall be recorded in both applications for marriage license, and the affidavit, if one is executed instead, shall be attached to said applications.
Grounds for Annulment explained: (1) Lack of parental consent (a) 18 ≤ x < 21 without parental consent (b) Ratified by party 18 or above but below 21 upon free cohabitation upon reaching 21. (c) TOLENTINO: parents whose consents were wanting may ratify before 21; this right can be waived; however, the Code Commission believes that no such ratification can be made by the parent. (2) Insanity (a) Mental incapacity or insanity is a vice of consent; insanity (1) of varying degrees, (2) curable being an illness, capable of ratification or convalidation, (3) has lucid intervals, (4) ground only for annulment in many countries (b) Can be ratified by cohabitation after insanity is cured or during a lucid interval (c) Mere mental weakness is not a ground for annulment, but if found grave enough may amount to psychological incapacity. (d) Intoxication, somnambulism where one had no mental capacity to give consent is equivalent to insanity (e) Must EXIST AT THE TIME of the celebration of the marriage. (f) Law presumes SANITY, burden of proof on party alleging insanity
Grounds for Annulment Article 4 states that “xxx A defect in any of the essential requisites shall render the marriage voidable as provided in Article 45.” Article 45. Marriage may be annulled on the following grounds existing at time of marriage: (PIFFIS) (1) One of the parties is 18 or above but below 21 years old, and there is no parental consent. (2) Either party was of unsound mind (insanity). (3) The consent of either party was obtained through fraud (different from mistake in identity): (a) Through non-disclosure of a previous conviction of a crime involving moral turpitude;
(3) Fraud (a) Only those enumerated in Art. 46:
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(b)
(c)
(d)
(e)
(f)
PERSONS & FAMILY RELATIONS
(1) Non-disclosure of previous CONVICTION by final judgment of a crime involving MORAL TURPITUDE (2) Concealment by wife at the time of marriage, that she was pregnant by another man (3) Concealment of STD regardless of nature existing at time of marriage (4) Concealment of drug addiction, habitual alcoholism, homosexuality, lesbianism existing at time of marriage NO other misrepresentation or deceit of CHARACTER, HEALTH, RANK, FORTUNE OR CHASTITY shall constitute FRAUD. Conviction of Crime: requisites are (1) Moral turpitude (2) Conviction Concealment of Pregnancy (1) Fraud against very essence of marriage; importance of procreation of children; an assault to the integrity of the union by introducing ALIEN BLOOD (2) If husband knew of pregnancy, the marriage cannot be annulled on the ground of concealment Marriage cannot be annulled on the ground that wife concealed the fact that she had been lewd & corrupt and had illegitimate child. (Shrady v. Logan (1896)) Maybe ratified upon free cohabitation after knowledge of fraud. Art. 45 STD
Ground for annulment Does not have to be concealed Must be serious and incurable The STD itself is the ground for annulment
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when wife had been at least 6 months pregnant prior to marriage. Aquino v. Delizo, (1960): The Supreme Court granted annulment because the wife concealed the fact that she was 4 months pregnant during the time of the marriage. It argued that since Delizo was “naturally plump,” Aquino could hardly be expected to know, by mere looking, whether or not she was pregnant at the time of the marriage. Almelor v. RTC, (2008): It is the concealment of homosexuality, and not homosexuality per se, that vitiates the consent of the innocent party. Such concealment presupposes bad faith and intent to defraud the other party in giving consent to the marriage. Corpuz v. Ochoterena, (2004): In a legal separation or annulment case, the prosecuting attorney must first rule out collusion as a condition sine qua non for further proceedings. A certification by the prosecutor that he was present during the hearing and even cross-examined the plaintiff does not suffice to comply with the mandatory requirement. (4) Force, intimidation, undue influence (a) FORCE must be one as to prevent party from acting as a free agent; will destroyed by fear/compulsion (b) INTIMIDATION must be one as to compel the party by reasonable/well-grounded fear/evil imminent upon person/properties (c) DEGREE OF INTIMIDATION: age, sex, condition of person borne in mind (d) Threat or intimidation as not to act as FREE AGENT; threatened of armed demonstrations by brother is ANNULLABLE (Tiongco v Matiga) (e) Man rapes a girl, marries her to conceal the rape & has no intention to live with the girl; marriage is annullable (People v Santiago (1927)) (f) Committee added “undue influence”, maybe compelled to enter out of REVERENTIAL FEAR e.g., fear of causing distress to parents, grandparents, etc. (g) May be ratified upon cohabitation after force, intimidation, or undue influence has ceased or disappeared.
Art. 46 STD The STD is a type of fraud which is a ground for annulment Must be concealed Need not be serious nor incurable It is the concealment that gives rise to the annulment
Effect of Cure to Fraud in Art. 46: Recovery or rehabilitation from STD, drug addiction, and habitual alcoholism will NOT BAR ACTION for annulment; The defect is not the disease, but the FRAUD which VITIATED CONSENT.
(5) Impotency (a) Must exist at time of marriage, must be continuous, must be incurable; thus if incapacity can be remedied or is removable by
Buccat v. Mangonon de Buccat, (1941): Wife gave birth 3 months after marriage celebration. Husband filed for annulment. Denied. Ground: Concealment of non-virginity. Court held that it was unbelievable that husband could not have noticed PAGE 22
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operation, NOT ANNULLABLE (Sarao v Guevarra(1940)) (b) Should be unknown to the other party (c) Physical condition: sexual intercourse with a person of the opposite sex is impossible, not mere sterility (d) When both spouses are impotent, marriage cannot be annulled because neither spouse is aggrieved (e) POTENCY PRESUMED; party who alleges impotency has burden of proof (Jimenez v Canizares (1960)) (f) Although potency is presumed, there is a doctrine in England called TRIENNIAL COHABITATION that if wife remains virgin after 3 yrs, husband presumed impotent & has burden to prove otherwise (Tompkins v Tompkins) (g) REFUSAL of wife to be examined DOES NOT PRESUME impotency because Filipino women are inherently shy & bashful; TC must order physical examination because w/o proof of impotency, she is presumed potent; to order her to undergo physical exam does not infringe constitutional rights against selfincrimination (Jimenez v Canizares) (h) Villanueva vs. CA (2006): Absence of cohabitation is not a ground for annulment. (i) NOTE: if wife continues to refuse to undergo physical exam, she can be held for CONTEMPT & ordered to be confined in jail until she does so Who may file, Prescription, Ratification Ground Who can file (Art. 45) (Art. 47) Lack of Under-aged party (18 or above parental but below 21) consent Parent or guardian without consent Insanity Sane spouse with no knowledge of the other’s insanity Legal guardian of insane party Insane party
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(j) RELATIVE IMPOTENCY: may now be invoked because there are cases where one is impotent with respect to his spouse but not with other men or women. (k) EXAMPLE: penile erection to other women possible; unusually large penis cannot fit with abnormally small vagina (6) Sexually-transmissible disease serious and incurable (a) Should exist at the time of the marriage (b) Should be found serious (c) Should appear to be incurable (d) Should be unknown to other party (e) Reason: danger to the health of spouse & offspring/s (f) Same as incurable impotency (g) Not subject to ratification cannot be ratified or convalidated by prescription or cohabitation: (a) Prior subsisting marriage; would result in anomalous relationship (b) Vitiated by impotency remains as long as afflicted (c) Vitiated by affliction of STD remains as long as afflicted (d) Affliction of STD is unknown to the other spouse (Balane) (e) The other spouse must also be free from a similar STD. (Balane) (h) 2 & 3 above prescribe w/in 5 yrs by Art. 47(5)
Prescription (Art. 47) Within 5 years after attaining 21. Before party below 21 reaches 21. Any time before the death of either party
During lucid interval or after regaining sanity, and before death Within 5 years after discovery of fraud Within 5 years after disappearance of force, undue influence, or intimidation
Fraud
Injured party (defrauded party)
Force, intimidation, undue influence Impotence
Injured party
Potent spouse
Within 5 years after marriage
STD
Healthy party
Within 5 years after marriage PAGE 23
Ratification (Art. 45) Free cohabitation after attaining age of 21. Free cohabitation of insane party after insane party comes to reason
Free cohabitation after having full knowledge of fraud Free cohabitation after the force or intimidation or undue influence has ceased or disappeared Cannot be ratified but action prescribes Cannot be ratified but action
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Ground (Art. 45)
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Who can file (Art. 47)
Prescription (Art. 47)
Marriages Not Subject to Ratification/ Convalidation by cohabitation (1) One spouse is incurably impotent (Art. 47 – prescription: 5 years) (2) One spouse has an incurable STD (Art. 47 – prescription: 5 years) (3) Sane spouse marries an insane spouse w/o knowledge of insanity
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Ratification (Art. 45) prescribes
in the proper cases to marriages which are declared ab initio or annulled by final judgment under Articles 40 and 45 (Art. 50(1)). Final judgment in such cases shall provide for the liquidation, partition, and distribution of the: (1) Properties of the spouses (2) Custody and support of the common children (3) Delivery of their presumptive legitimes (a) Unless such matters had been adjudicated in previous judicial proceedings (Art. 50(2)) (b) All creditors (of the spouses/property regime) shall be notified of the proceedings for liquidation (Art. 50(2 and 3))
Presence of Prosecutor Art. 48: To prevent collusion between the parties, fabrication or suppression of evidence, the prosecuting attorney or fiscal shall appear on behalf of the State. EFFECT OF PENDING ACTIONS/DECREE
In the partition, the conjugal dwelling and lot shall be adjudicated to the spouse with whom majority of the common children remain (Art. 102 and 129) (Art. 50(4)
Art. 49: During the pendency of the action and in the absence of adequate provisions in a written agreement between the spouses, the Court shall provide for the support of the spouses and the custody and support of their common children. The Court shall give paramount consideration to the moral and material welfare of said children and their choice of the parent with whom they wish to remain as provided for in Title IX. It shall also provide for appropriate visitation rights of the other parent.
Presumptive legitimes, computed as of the date of the final judgment, shall be delivered in cash, property or sound securities: (1) Unless the parties, by mutual agreement judicially approved, had already provided for such (Art. 51(1)) (2) The children/guardian/trustee of property may ask for the enforcement of the judgment (Art. 51(2)) (3) The delivery of the presumptive legitimes shall not prejudice the ultimate successional rights, but the value of the properties already received shall be considered as advances on their legitime (Art. 51(3))
(1) The court shall provide for the support of the spouses, (2) The custody and support of the common children, giving paramount consideration to their moral and material welfare, their choice of parent with whom they wish to remain. (3) The court shall also provide for visitation rights of other parent.
Generally, children born or conceived within void marriages are illegitimate.
Decisions on the nullification of the marriage Art. 48 (2): In the cases referred to in the preceding paragraph, no judgment shall be based upon a stipulation of facts or confession of judgment.
Exceptions: (a) Children conceived or born before the judgment under Article 36 has become final and executor (Art. 54) (b) Children conceived or born of subsequent marriages under Article 53 (Art. 54)
Stipulation of Facts: An admission by both parties after agreeing to the existence of any of the grounds or facts that would constitute a void/voidable marriage Confession of judgment: The admission by one party admitting his/her fault to cause the invalidity of the marriage.
Legal Separation GROUNDS FOR LEGAL SEPARATION Note: The grounds for legal separation are exclusive. (Article 55) (RPC Final DH BSAA)
EFFECTS OF NULLITY
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These must be filed within 5 years after occurrence of cause (Article 57) (1) Repeated physical violence or grossly abusive conduct directed against the petitioner, a common child, or a child of the petitioner; (2) Physical violence or moral Pressure to compel the petitioner to change religious or political affiliation; (3) Attempt of respondent to Corrupt or induce the petitioner, a common child, or a child of the petitioner, to engage in prostitution, or connivance in such corruption or inducement; (4) Final judgment sentencing the respondent to imprisonment of more than six years, even if pardoned; (5) Drug addiction or habitual alcoholism of the respondent; (6) Lesbianism or Homosexuality of the respondent; (7) Contracting by the respondent of a subsequent Bigamous marriage, whether in the Philippines or abroad; (8) Sexual infidelity or perversion; (9) Attempt by the respondent Against the life of the petitioner; or (10) Abandonment of petitioner by respondent without justifiable cause for more than one year.
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(2) Threatening to cause the woman or her child physical harm; (3) Attempting to cause the woman or her child physical harm; (4) Placing the woman or her child in fear of imminent physical harm; (5) Attempting to compel or compelling the woman or her child to engage in conduct which the woman or her child has the right to desist from or desist from conduct which the woman or her child has the right to engage in, or attempting to restrict or restricting the woman's or her child's freedom of movement or conduct by force or threat of force, physical or other harm or threat of physical or other harm, or intimidation directed against the woman or child. This shall include, but not limited to, the following acts committed with the purpose or effect of controlling or restricting the woman's or her child's movement or conduct: (a) Threatening to deprive or actually depriving the woman or her child of custody to her/his family; (b) Depriving or threatening to deprive the woman or her children of financial support legally due her or her family, or deliberately providing the woman's children insufficient financial support; (c) Depriving or threatening to deprive the woman or her child of a legal right; (d) Preventing the woman in engaging in any legitimate profession, occupation, business or activity or controlling the victim's own money or properties, or solely controlling the conjugal or common money, or properties; (6) Inflicting or threatening to inflict physical harm on oneself for the purpose of controlling her actions or decisions; (7) Causing or attempting to cause the woman or her child to engage in any sexual activity which does not constitute rape, by force or threat of force, physical harm, or through intimidation directed against the woman or her child or her/his immediate family; (8) Engaging in purposeful, knowing, or reckless conduct, personally or through another, that alarms or causes substantial emotional or psychological distress to the woman or her child. This shall include, but not be limited to, the following acts: (a) Stalking or following the woman or her child in public or private places; (b) Peering in the window or lingering outside the residence of the woman or her child; (c) Entering or remaining in the dwelling or on the property of the woman or her child against her/his will;
People v. Zapata and Bondoc (1951): Adultery is not a continuing crime, but is consummated and exhausted at the moment of carnal union. Each sexual act constitutes one act of adultery. As such, every sexual act is a ground for legal separation. Gandioco v. Peñaranda (1989): In sexual infidelity as a ground for legal separation, there is no need for prior conviction for concubinage, because legal separation only requires a preponderance of evidence, as opposed to proof beyond reasonable doubt required in concubinage. Lapuz Sy v. Eufemio (1972): The death of one party in a legal separation case abates the action. This is because the death of either spouse automatically dissolves the marriage. An action for legal separation is also purely personal between the spouses. Dela Cruz. v. Dela Cruz (1968): Abandonment is not mere physical estrangement but also financial and moral desertion. There must be an absolute cessation of marital relations, duties, and rights with the intention of perpetual separation. ACTS OF VIOLENCE ACCORDING TO RA 9262
(1) Causing physical harm to the woman or her child;
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(d) Destroying the property and personal belongings or inflicting harm to animals or pets of the woman or her child; and (e) Engaging in any form of harassment or violence; (9) Causing mental or emotional anguish, public ridicule or humiliation to the woman or her child, including, but not limited to, repeated verbal and emotional abuse, and denial of financial support or custody of minor children of access to the woman's child/children.
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apply in cases where violence, as used in RA 9262 (Anti-Violence Against Women and their Children), is alleged. The case should be heard as soon as possible by the court. CONFESSION OF JUDGMENT No decree of legal separation shall be based upon a stipulation of facts or a confession of judgment (Art. 60, par. 1. FC). Note: Art. 60 par. 1 applies only if the judgment was based solely on the stipulation of facts or solely on the confession of judgment. Thus, if other grounds were used, Art. 60 par. 1 is not applicable. (Balane)
DEFENSES GROUNDS FOR DENYING LEGAL SEPARATION (ARTICLE 56) (4CMPRD):
(1) Condonation by aggrieved party (2) Consent by aggrieved party to the commission of the offense (3) Connivance between parties in the commission of the offense (4) Mutual guilt or Recrimination between spouses in the commission of any ground for legal separation (5) Collusion between parties to obtain decree of legal separation (6) Prescription of action for legal separation (Art. 57: 5 years from occurrence of the cause of action) (7) Reconciliation of parties during pendency of action (Art. 66 par.1) (8) Death of either party during pendency of action (Lapuz-Sy vs. Eufemio)
Ocampo v Florenciano (1960): The prohibition on confession of judgment does not mean that the Court will not grant petition if one party admits to being guilty of the charges of adultery. The point of this provision is that the Court should still admit evidence, not decide just based on an admission of guilt. Because what is prohibited is handing down a decree of legal separation based solely on a confession of judgment. EFFECTS OF FILING PETITION (1) The spouses are entitled to Live separately, but the marital bond is not severed. (Art. 61 (1) (2) Administration of Community or Conjugal Property – If there is no written agreement between the parties, the court shall designate one of them or a third person to administer the ACP or CPG. (Art. 61, par. 2)
COOLING-OFF PERIOD AND RECONCILIATION EFFORTS Action cannot be tried before six months have elapsed from the filing of the petition (Art. 58).
EFFECTS OF PENDENCY The Court shall provide for: (Art. 62, cf. Art. 49. FC) (a) Support of spouses (b) Custody of children The court shall give custody of children to one of them, if there is no written agreement between the spouses. It shall also provide for visitation rights of the other spouse. (c) Visitation rights of the other spouse
Action cannot be tried unless the court has attempted to reconcile the spouses, and determined that despite such efforts, reconciliation is highly improbable (Art. 59) Note: This is without prejudice to judicial determination of custody of children, alimony, and support pendente lite.
EFFECTS OF LEGAL SEPARATION (1) The spouses can live separately (Art. 63) but the marriage bonds are not severed. (2) The ACP or CPG shall be dissolved and liquidated, and the share of the guilty spouse shall be forfeited in favor the common children, previous children, or innocent spouse, in that order (Art. 63. cf. Art. 43, par. 2). (3) Custody of the minor children shall be awarded to the innocent spouse (Art. 63, cf. Art 213) (4) Guilty spouse shall be disqualified from Inheriting from innocent spouse by intestate succession.
Araneta vs. Concepcion, (1956): Courts can still resolve other issues, pending the waiting period or cooling off period. In resolving issues, try not to touch, as much as possible, on the main issue (i.e. adultery if that is the ground used). However, Court must still receive evidence if just to settle incidental issues of support and custody. Note: This provision of the Family Code dictating a mandatory 6-month cooling-off period does not
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The provisions in favor of the guilty party in the will of the innocent spouse shall also be revoked by operation of law. (Art. 63) (5) Donations in favor of the guilty spouse may be revoked (Art. 64) but this action prescribes after 5 years from the decree of legal separation. (6) Innocent spouse may also revoke designation of guilty spouse as beneficiary in an Insurance policy, even if such stipulations are irrevocable. (Art. 64. FC, cf. PD 612, sec. 11) (7) Obligation for Mutual support ceases, but the court may order the guilty spouse to support the innocent spouse. (Art. 198) (8) The wife shall continue to use the Surname of the husband even after the decree for legal separation. (Art. 372, CC)
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RECONCILIATION HOW DONE
Should the spouses reconcile, they should file a corresponding joint manifestation under oath of such reconciliation. (Art. 65) EFFECTS OF RECONCILIATION
(1) Proceedings for legal separation shall be terminated at whatever stage. (Art. 66) (2) If there is a final decree of legal separation, it shall be set aside. (Art. 66) (3) The separation of property and forfeiture of share of guilty spouse shall subsist, unless the spouses agree to revive their former property regime or to institute another property regime. (Art. 66 cf. Art. 67) (4) Joint custody of children is restored. (5) The right to intestate succession by guilty spouse from innocent spouse is restored. The right to testamentary succession depends on the will of the innocent spouse.
ANNEX TO VOID AND VOIDABLE MARRIAGES AND LEGAL SEPARATION GROUNDS
Void Marriages
Voidable Marriages
One is a minor No authority to marry
Lack of parental consent Insanity
No valid marriage license Bigamous and polygamous marriages Mistake of identity Void subsequent marriage
Fraud Force, Intimidation or Undue Influence Impotence Serious and Incurable STD
Psychological incapacity Incestuous Marriages Marriages against public policy
Legal Separation Repeated Physical Violence Pressure to compel to change religious/political affiliations Corruption / Inducement to engage in prostitution Final judgement with sentence of more than 6 yrs. Drug Addiction / Habitual Alcoholism Homosexuality / Lesbianism Bigamous marriage (engaging in) Sexual Infidelity Attempts against the life Abandonment without just cause for more than 1 year
EFFECTS OF FILING / PENDING DECREE
Void/Voidable Marriages
Legal Separation
Support for the spouses Custody and support for the children Visitation rights to the other spouse No right to live separately Spouses to live separately Properties are still managed by both parties Designation of an administrator of the properties
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EFFECTS OF AFFIDAVIT OF REAPPEARANCE, JUDICIAL DECLARATION OF NULLITY, ANNULMENT AND LEGAL SEPARATION
Void Marriages
Terminated Marriage (Art. Voidable Marriages Legal Separation 41) Status of Marital ties Severed Severed Severed Not Severed Status of Marriage Void ab initio Subsequent marriage is Void Valid terminated (not invalidated) Status of Children born and conceived before termination Illegitimate Legitimate Legitimate Legitimate EXCEPT: Art. 36 and 35 conceived and born before judgement (legitimate) Custody of Children Court Proceeding Court Proceeding Court Proceeding Innocent Spouse Property Relations (1) Dissolution and Liquidation of properties (a) Guilty/Bad Faith spouse will forfeit his/her share from the Net Profits to the (in order): (i) Common children (ii) Children of the guilty spouse (iii) Children of the innocent spouse (2) Notification of creditors with the proceedings for liquidation (3) Conjugal dwelling to be adjudicated to the spouse who has majority custody of common children (4) Insurance policy may be revoked only by the innocent spouse (Legal Separation: Only within 5 years) (5) Spouse in bad faith/guilty shall be disqualified to inherit (testate and intestate) Donation Propter Nuptias Valid, but if donee contracted marriage in bad faith, revoked by operation of law May be revoked within 5 years
sexual acts. The wife refused but the husband kept insisting. The wife left the family home. Wife petitioned for support/ separate maintenance.
Rights and Obligations between Husband and Wife
SC: Court cannot compel the woman to go back to the husband. The duty of the husband to support the wife is also not terminated because she left the house, when it is the husband’s fault she left in the first place.
ESSENTIAL OBLIGATIONS (1) Live together (cohabitation – Art. 68) Exemption: One spouse living abroad or there are valid and compelling reasons (Art. 69 (2)) Exemption To Exemption: Incompatibility with the solidarity of the family (Art. 69 (2)) (2) Observe mutual love, respect, and fidelity (3) Render mutual help and support (Art. 68)
Husband is compelled, in this case, to give support for separate maintenance (outside family home). Arroyo v. Vasquez de Arroyo (1921): A court cannot compel a married woman to go back to her husband.
Ilusorio v. Bildner (2000): A person has a purely personal right to consortium (Constitutional right to liberty). Court cannot order a man to go back to the conjugal dwelling. (Shows that what is in Family Code is not the former spousal unity doctrine (Old England)).
FAMILY DOMICILE The husband and wife shall fix the family domicile. (Art. 69) In case of disagreement, the court shall decide. (Art. 69 (1))
Goitia v. Campos Rueda (1916): The husband demanded the wife perform ‘unchaste and lewd’
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(2) Benefit has accrued to the family before OR after the objection. If BEFORE the objection, enforce resulting obligation against the separate property of the spouse who has not obtained consent.
SUPPORT From the conjugal property; If none, income or the fruits of their separate properties; if none, from their separate properties (liable in proportion to their properties). MANAGEMENT OF HOUSEHOLD This is the right and duty of both spouses.
Property Relations of the Spouses
EFFECT OF NEGLECT OF DUTY In case the other spouse neglects his or her duties or commits acts which tend to bring danger, dishonor or injury to the family, the aggrieved party may apply to the court for relief. (Art. 72)
MARRIAGE SETTLEMENTS Art. 75. Future spouses may agree upon, in the marriage settlement, which property regime will govern their marriage (ACP, CPG, complete separation of property, other regimes). However, in the absence of a marriage settlement, or when the regime agreed upon is void, the system of absolute community of property as established by this Code shall govern.
Injury contemplated is physical, moral, emotional or psychological, not financial. EXERCISE OF PROFESSION Either spouse may exercise any legitimate profession, without need for consent of the other. (a) The other spouse may only object on valid, serious, and moral grounds. (b) In case of disagreement, the Court shall decide whether: (1) The objection is proper, and
Marriage settlements are considered accessory to the marriage, therefore as per Art. 81, stipulations in consideration of future marriage and donations will be void if the marriage does not take place.
MARRIAGE SETTLEMENT RULES
When modifications can be made
Requirements of marriage settlements and any modification thereof [Art. 77]
General rule: Before marriage is celebrated [Art. 76] Art. 63(2) – Property regime is dissolved Arts. 66 and 67 - Reconciliation in case of legal separation Art. 128 - When spouse leaves family without just cause Art. 135 - Sufficient cause for judicial separation of property Art. 136 - Voluntary dissolution of ACP or CPG by the spouses If a spouse petitions the court for: (1) Receivership; (2) Judicial separation of property; or, (3) Authority to be the sole administrator of the conjugal partnership, if he or she is abandoned by the other without just cause or fails to comply with his or her obligations to the family [Art. 128] Made in writing Signed by the parties Executed before the marriage celebration Registered in the local civil registry where the marriage is recorded and in registries of property in order to prejudice third persons If executed by a person below 21 y.o., valid only when persons required to give consent to the marriage (father, mother, or guardian, respectively) are made parties to the agreement [Art. 78] If executed by a person upon whom civil interdiction has been pronounced or who is subject to any other disability, valid only when his guardian is made party to the agreement [Art. 79]
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DONATIONS BY REASON OF MARRIAGE Solis v. Barroso (1928): In donations propter nuptias, the marriage is really a consideration, but not in the sense of giving birth to the obligation. There can be a valid donation even if the marriage never took place, but the absence of marriage is a ground for the revocation fo the donation. Mateo v. Lagua (1969): Donations propter nuptias are without onerous consideration, marriage being merely the occasion or motive for the donation, not its cause. Being liberalities, they remain subject to reduction for inofficiousness upon the donor’s death, if they should infringe the legitime of a forced heir. Requisites of donations propter nuptias
Donations excluded
Who may donate Sources of rules governing donations propter nuptias
Rules for donations before marriage
Grounds for revocation of donation propter nuptias [Art. 86]
Effects of judicial declaration of nullity
Made before the celebration of marriage Made in consideration of marriage In favor of one or both of the future spouses Donor must be one of the betrothed or any third person Ordinary wedding gifts given after the celebration of the marriage Donations in favor of future spouses made before marriage but not in consideration thereof Donations made in favor of persons other than the spouses even if founded on the intended marriage Spouses to each other Parents of one or both spouses Third persons to either or both spouses Family code provisions [Arts. 82-87] Ordinary donation provisions [Art. 83; Title III of Book III, NCC] Provisions on testamentary succession and the formalities of wills for donations on future property [Art. 84, par. 2] General rule: Future spouses cannot donate to each other more than 1/5 of their present property (excess shall be considered void). [Art. 84] Exception: If they are governed by ACP Donations of property subject to encumbrances (1) Are considered valid. (2) In case of foreclosure: (a) if property value < obligation, donee shall not be liable for the deficiency (b) if property value > obligation, donee shall be entitled to the excess (Art. 85) (1) If the marriage is not celebrated or judicially declared void ab initio, except donations made in settlements. (2) When the marriage takes place without the consent of the parents or guardians, as required by law. (3) When the marriage is annulled, and the donee acted in bad faith. (4) Upon legal separation, if the donee is the guilty spouse. (5) If there is a resolutory condition, and it is not complied with. 1. When donee has committed an act of ingratitude: [Art. 765, CC] a. An offense against person or property of donor, or his wife or children under parental authority. b. An imputation to the donor of any criminal offense, or any act involving moral turpitude, even if proven, unless the crime is committed against the donee, his wife or children under his authority. c. Refusing to support the donor, if he/she is legally required to do so. Donations by reason of marriage shall remain valid except that if the donee contracted marriage in bad faith, such donations made to said donee are revoked by operation of law. [Art. 43 (3)] Revocation by operation of law - Thus, even if spouse in good faith condones the donee, the donation propter nuptias is still forfeited. Effects provided for by Art. 43(2), (3), (4), and (5) and by Art. 44 shall also apply to marriages that are declared void ab initio or annulled by final judgment under Article 40 (Judicial declaration of nullity) and 45 (Voidable marriages). [Art. 50]
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Rules for donations during marriage
Rules for donations between common-law spouses
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General rule: Spouses cannot donate to each other, directly or indirectly (donations made by spouses to each other during the marriage are void). [Art. 87] Exception: Moderate gifts on the occasion of any family rejoicing. Harding v. Commercial Union, (1918): The prohibition on donations can only be assailed by persons who bear such relation to the parties or the property itself, that their rights are being interfered with. Here, the insurance company of the donated car cannot assail the validity of the donation. In addition, the codal exception of “moderate gifts” depends on the income class of the spouses and a car could be considered a “moderate gift” that does not infringe the prohibition of donation between spouses. Matabuena v Cervantes, (1971): The donation between common-law spouses falls within the provision prohibiting donations between spouses during marriage. Sumbad v. CA, (1999): The donation made by a man to a woman was held valid because no proof was shown that they were still living in a common-law relationship at the time of the donation.
DISTINGUISHED FROM ORDINARY DONATIONS
Donations Propter Nuptias Does not require express acceptance May be made by minors (Art. 78) May include future property If present property is donated and property is not absolute community, limited to 1/5 (Art. 84) Grounds for revocation - In Art. 86
Ordinary Donations Express acceptance necessary Cannot be made by minors Cannot include future property No limit to donation of present property provided legitimes are not impaired Grounds for revocation - in donation laws
ABSOLUTE COMMUNITY OF PROPERTY AND CONJUGAL PARTNERSHIP OF GAINS Art. 80. Property relations between Filipino spouses are governed by Philippine laws, regardless of the place of marriage and their residence. By the Nationality Rule [Art. 15], the rule that Absolute Community Property (ACP) is the default mode of property relations absent any marriage settlement applies to all Filipinos, regardless of the place of the marriage and their residence. Exceptions: (1) Where both spouses are aliens (2) As to the extrinsic validity of contracts (3) Contrary stipulation Art. 81. Everything stipulated in marriage settlements in consideration of a future marriage are void if marriage does not take place. However, stipulations that do not depend upon the celebration of marriage (e.g.: recognition of paternity of illegitimate child) remain valid. Art. 89. As a general rule, a waiver of rights is not allowed, except in the following cases: (1) When there is judicial separation of property (2) When there is legal separation (3) When the marriage is dissolved by death of one of the spouses (4) When the marriage is annulled Art. 90. Co-ownership rules shall apply to ACP in matters not provided by the Family Code. COMPARISON OF ACP AND CPG
Absolute Community Property At the precise moment of the celebration of the marriage [Art. 88]
Conjugal Partnership Of Gains When it commences Default property regime for marriages celebrated before the Family Code took effect (1988) For marriages after the Family Code, if agreed to by the parties through a marriage settlement.
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Conjugal Partnership Of Gains What it consists of All the property owned by the spouses at Proceeds, products, fruits, and income of their separate properties the time of the celebration of the Everything acquired by them within marriage through their own marriage or acquired thereafter [Art. 91] efforts Under the ACP, spouses cannot exclude Everything acquired by them by chance specific properties from the regime. Acquired by onerous title during the marriage at the expense of the common fund Winnings from gambling shall accrue to Acquired through the labor, industry, work, or profession of either or the community property [Art. 95] both spouses Fruits from common property and net fruits of the exclusive property of each spouse Share of either spouse in hidden treasure, whether as finder or owner of property where treasure was found Acquired through occupation such as fishing or hunting Livestock existing at dissolution of partnership in excess of what is brought by either spouse to the marriage Acquired by chance, such as winnings from gambling or betting Moral damages arising from a contract paid from the CPG [Zulueta v. Pan Am (1973)] Loans contracted during the marriage are conjugal, and so is any property acquired therefrom [Mendoza v. Reyes (1983)] Property purchased by installment, paid partly with conjugal funds and partly with exclusive funds, if full ownership was vested during the marriage; the CPG shall reimburse the owner-spouse [Art. 118] If a winning ticket is bought by conjugal funds, the prize is conjugal (otherwise, the prize is exclusive property of the spouse who owns the ticket) Improvement on exclusive property: if original value < new value (where new value = value of land + value of improvements + net change in value), then land becomes conjugal property, subject to the reimbursement of the value of the property of the ownerspouse at the dissolution of the CPG Property belonging to one spouse converted into another kind totally different in nature from its original form during marriage becomes conjugal in the absence of proof that the expenses of the conversion were exclusively for the account of the original ownerspouse, subject to reimbursement of the value of the original property from the conjugal partnership What remains exclusive property Properties acquired before the marriage, Property brought into a marriage by each spouse as his/her own for those with legitimate descendants with a former marriage (to protect rights of children by a former marriage) Properties acquired by a gratuitous title, Property acquired by either spouse during the marriage by i.e. donation, inheritance by testate and gratuitous title intestate succession, including the fruits of such properties Except: When expressly provided by the donor or testator that the property shall form part of the ACP Properties for personal use Property acquired by right of redemption, by barter, or by exchange Except: Jewelry with property belonging to either spouse Plata v. Yatco: Plata purchased property when she was single. When married, she and her husband Bergosa co-signed a mortgage on the property. Upon foreclosure, Bergosa was
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All properties acquired during the marriage form part of the ACP, unless it be proven that they are excluded. [Art. 93]
Art. 94 Support of the following: (1) Spouses (a) Even if not living together, except when a spouse leaves conjugal home without just cause (b) Even during pendency of action for legal separation/annulment of
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Conjugal Partnership Of Gains sued for illegal detainer. A writ of execution on the property was carried out but Plata refused to leave the premises. SC ruled that Plata cannot be held in contempt. Property is not conjugal. Her husband signing as co-mortgagor does not convert it to CPG. She could ignore execution because the decision was for her husband alone. Property purchased with exclusive money of either spouse Property purchased by installment, paid partly with conjugal funds and partly with exclusive funds, if full ownership was vested before the marriage [Art. 118] Even if the installment is completed after the marriage, the property is exclusive if ownership was vested in one spouse before the marriage [Lorenzo v. Nicolas (1952)] Improvement on exclusive property: if original value > new value (where new value = value of land + value of improvements + net change in value), then land remains exclusive property of the owner-spouse, subject to the reimbursement of the cost of improvement Money received under the Social Security Act is not conjugal, although the employee-spouse contributes to the SS with his salaries, but belongs to the designated beneficiary under the Social Security Law. SSA governs, not FC. Intellectual property, like copyright or patent, should, according to Tolentino, be considered separate property Business property (e.g. trademarks, trade names, service marks, business goodwill) are merely accessories to some commercial establishment or product, so that if such establishment or product is separate property of one spouse, then all the business property is separate property; but all benefits or earnings derived from these during the marriage should belong to the conjugal property (Tolentino) Collection of credits belonging to one spouse exclusively but the interests shall belong to the CPG [Art. 119] Sale of separate property of a spouse Indemnity paid in case of expropriation of separate property or under an insurance policy covering separate property Presumption All property acquired during the marriage, whether made, contracted, or registered in the name of one spouse, are presumed conjugal unless the contrary is prove. [Art 116] As a condition sine qua non in favor of the conjugal partnership, the party who invokes the presumption must first prove that the property was acquired during the marriage [Acabal v. Acabal (2005)] Charges and obligations Arts. 121-123 Debts and obligations (1) Parag. 2: Debts incurred (a) By administrator-spouse for the benefit of the family (b) By both spouses (c) By one spouse with the consent of the other (2) Parag. 3: By one spouse without the consent of the other for the benefit of the family
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Absolute Community Property marriage (2)Common children (3) Legitimate children of previous marriage (4)Illegitimate children – follow the provisions on Support and parag. 9 Debts and obligations contracted during the marriage (1) Either by both spouses or one of them, with the consent of the other (2)In parags. 2 and 3, creditors need not prove that the debts benefited the family Debts contracted by one spouse without consent of the other – ACP is liable only to the extent that the debt benefited the family
Tax, liens, repairs (both major and minor) on community property Taxes and expenses for mere preservation of separate properties - Applies only to separate properties by either spouse being used by the family, not those that do not benefit the family - Expenses limited to minor repairs only Expenses for professional, vocational, or self-improvement courses of spouses Ante-nuptial debts that benefited the family – if the ante-nuptial debt did not benefit the family, the applicable rule is parag. 9 Donations by both spouses to common legitimate children, for purposes of professional/vocational courses or activities for self-improvement Ante-nuptial debts not under parag. 7, support of illegitimate children, and liabilities of either spouse arising from crime/quasi-delict - Only if the debtor-spouse has no exclusive property or his/her property is insufficient - The payments by the ACP are deemed advances to be deducted from the share of the guilty spouse upon the liquidation of the absolute community Expenses of litigation between spouses, except when suit is groundless If community property is insufficient except in parag. 9, the spouses are solidarily liable for the unpaid balance
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Conjugal Partnership Of Gains (3) Parag. 7: Ante-nuptial debts for the benefit of the family
Taxes and expenses (1) Parag. 4: Maintenance of the CPG properties (2) Parag. 5: Mere preservation of all exclusive properties (3) Parag. 9: Litigation expenses, unless the suit is groundless
Support (1) Parag. 1: Support of spouses and common children (2) Parag. 6: Education of spouses, absolute (3) Parag. 8: Education of common children, only for value of donation Support to surviving spouse & children during liquidation is charged against the fruits or income of their shares in the properties. [Art. 133] Debts incurred in the exercise of a spouse’s profession [Javier v. Osmeña (1916)] Loan contracts signed by both spouses are conjugal, and they are jointly liable for payment, even if only one spouse signs a subsequent promissory note [DPB v. Adil (1988)]
Debts incurred during the marriage are presumed to be conjugal and thus are charged to the CPG [Cobb-Perez v. Latin (1968)]
Ayala Investment v. Ching (1998): The Supreme Court ruled that indirect benefits that might accrue to a husband in signing as a surety or guarantee agreement not in favor of the family but in favor of his employer corporation are not benefits that can be considered as giving a direct advantage accruing to the family. Hence, the creditors cannot go against the conjugal partnership property of the husband in satisfying the obligation subject of the surety agreement. A contrary view would put in peril the conjugal partnership by allowing it to be given gratuitously as in cases of donation of conjugal partnership property, which is prohibited
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Absolute Community Property Conjugal Partnership Of Gains from their separate properties Gambling losses shall be borne by the losing spouse’s separate property [Art. 95] Ownership, administration, enjoyment, and disposition Art. 96: Administration of property Art. 124, par. 1: Administration of property belongs to both spouses, belongs to both spouses, jointly. If they jointly. In case of disagreement, the husband’s decision shall disagree, the husband’s decision prevails. prevail, subject to recourse by the wife for proper remedy, which However, the wife has 5 years to seek must be availed of within 5 years from the date of the contract recourse from the court. Otherwise, it is implementing such decision presumed she agreed to his decision. Sale by the husband of property belonging to the conjugal partnership without the consent of the wife, when there is no Exception: When the other spouse is showing that the latter is incapacitated, is void ab initio [Abalos v. incapacitated, or unable to participate in Macatangay (2004)] the administration, e.g. when abroad. Uy v. CA (2000): Capacitated spouse may assume sole FC124 contemplates a situation where one spouse is absent, or powers of administration. However, separated in fact or has abandoned the other or consent is power is limited to administration. withheld or cannot be obtained. Such rules do not apply to cases where the non-consenting spouse is incapacitated or incompetent to give consent ie, in coma. The proper remedy is to file for guardianship under the ROC. Even assuming that the rules on summary proceedings apply, the power of the administrator is the same as a guardian. So a spouse who desires to sell conjugal property as administrator must still observe the procedure for the sale of the ward’s estate required of judicial guardians under ROC not the summary judicial proceedings under FC. De Ansaldo v. Sheriff of Manila (1937): Spouses are not co-owners of CPG during the marriage and cannot alienate the supposed ½ interest of each in the said properties. The interest of the spouses in the CPG is only inchoate or a mere expectancy and does not ripen into title until it appears after the dissolution and liquidation of the partnership that there are net assets. [ Either spouse may, through a will, Art. 124, par. 2: Disposition or encumbrance of conjugal property dispose of his or her interest in the requires the following: community property. [Art. 97] However, (1) Consent or approval by both spouses, or the will should refer only to his or her (2) Judicial authority secured in court share in the community property. Donation of one spouse without the Donation of CPG must be with the consent of the other spouse consent of the other is not allowed. [Art. except moderate donations for charity, on occasions of family 98] rejoicing, or family distress [Art. 125; cf. Art. 98] Exceptions: (1) Moderate donations to charity due to family rejoicing or distress (2) Moderate gifts by each spouse to the other due to family rejoicing Moderation depends on the family’s socio-economic status. ACP allows donations in excess of onefifth of present property of future spouses because the donation would form part of the community property once the marriage is celebrated. [Art. 84] Mere awareness of a transaction is NOT consent [Jader-Manalo v. Camaisa (2002)] Homeowner’s Savings & Loan Bank v. Dallo (2005):
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Absolute Community Property Conjugal Partnership Of Gains In the absence of (court) authority or written consent of the other spouse, any disposition or encumbrance of the conjugal property shall be void. Cheeseman v. IAC (1991): If however, one of the spouses is an alien, the Filipino spouse may encumber or dispose of the property w/o the consent of the former. The property is presumed to be owned exclusively by the Filipino spouse. Dissolution of the regime Terminates upon [Art. 99]: Terminates upon [Art. 126; cf. Art. 99]: (1) Death of either spouse – follow rules (1) Death in Art. 103 (2) Legal separation (2) Legal separation – follow rules in (3) Annulment or judicial declaration of nullity Arts. 63 and 64 (4) Judicial separation of property (3) Annulment or judicial declaration of nullity – follow rules in Arts. 50 and 52 (4) Judicial separation of property during marriage – follow rules in Arts. 134 to 138 Rules on de facto separation [Art. 100] Not affected by de facto separation [Art. 128; cf. Art. 100] De facto separation does not affect the ACP, except that: (1) Spouse who leaves the conjugal home without just cause shall not be entitled to support; however, he/she is still required to support the other spouse and the family (2) If consent is necessary for transaction but is withheld or otherwise unobtainable, authorization may be obtained from the court (3) Support for family will be taken from the ACP (4) If ACP is insufficient, spouses shall be solidarily liable (5) If it is necessary to administer or encumber separate property of spouse who left, spouse present may ask for judicial authority to do this (6) If ACP is not enough and one spouse has no separate property, spouse who has property is liable for support, according to provisions on support Abandonment [Art. 101] Abandonment and absence [cf. Art. 101] Present/aggrieved spouse may petition the court for: (1) Receivership (2) Judicial separation of property Partosa-Jo v. CA (1992): (3) Authority to be the sole administrator Physical separation of the spouses, coupled with the husband’s of the absolute community, subject to refusal to give support to the wife, sufficed to constitute precautionary conditions that the abandonment as a ground for an action for the judicial separation court may impose of their conjugal property. A spouse is deemed to have abandoned the other when he or she has left the conjugal dwelling without any intention of returning. Spouse is prima facie considered to have PAGE 36
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Absolute Community Property Conjugal Partnership Of Gains abandoned the other spouse and the family if he or she has: (1) Left for a period of 3 months (2) Failed to inform the other spouse of his or her whereabouts for a period of 3 months Liquidation of assets and liabilities Procedure [Art. 102] Procedure [Art. 129] (a) Inventory of assets of ACP and of (1) Prepare an inventory of all properties spouses, with market values (2) Amounts advanced by CPG in payment of personal debts and (b) Obligations are paid with community obligations shall be credited to the CPG property, and separate obligations not (3) Reimburse each spouse for the use if his/her exclusive funds in charged to ACP paid by respective the acquisition of property or for the value of his or her assets of spouses exclusive property, the ownership of which has been vested by If obligations exceed the assets of the law in the conjugal partnership ACP, nothing is divided. Creditors can (4) Debts and obligations of CPG shall be paid out of the conjugal go after the separate properties of the assets, otherwise both spouses are solidarily liable with their spouses, which are solidarily liable for exclusive property the deficiency (5) Remains of the exclusive properties shall be delivered to (c) Delivery of whatever remains in their respective owner-spouses exclusive property (6) Indemnify loss/deterioration of movables belonging to either (d) Balance, or net remainder is divided spouse, even due to fortuitous event, used for the benefit of the equally between the spouses, family irrespective of how much each (7) Net remainder of CPG shall constitute the profits which shall brought into the community be divided equally between husband and wife except when: (e) If personal obligations of a spouse (a) A different proportion or division was agreed upon in the exceed his/her separate property, marriage settlements creditor can go after the share of the (b) There has been a voluntary waiver or forfeiture of such share spouse on the net remainder of the as provided in the FC ACP, without prejudice to the (8) Presumptive legitimes are delivered to common children provisions of law on forfeitures and (9) Conjugal dwelling goes to: delivery of presumptive legitimes (a) Spouse with whom majority of common children choose to (f) After covering all community remain (below 7 y.o. = deemed to have chosen the mother) obligations and obligations of (b) Whoever the court chooses in case of lack of majority spouses, balance of separate properties shall be delivered to respective spouses or their heirs, and they will also divide into two equal shares whatever is left of the community assets, without prejudice to the provisions of law on forfeitures and delivery of presumptive legitimes Rules in case of termination of marriage by death of one of the spouses [Art. 104]: (1) The community property shall be liquidated in the same proceeding for the settlement of the estate of the deceased spouse. (2) If no such judicial settlement proceeding is instituted, surviving spouse shall liquidate the community property either judicially or extra-judicially within one year from the death of the deceased spouse. (a) If no liquidation is made within the period, any disposition or encumbrance involving community property of the terminated marriage shall be void. (b) Non-compliance with liquidation procedures would mean that a subsequently contracted marriage will follow a regime of complete separation of property. Procedure for liquidation of properties of two marriages [Art. 104]: (1) Determine the capital, fruits, and income of each community upon such proof as may be considered according to the rules of evidence. (2) In case of doubt as to which community the existing properties belong, they shall be divided between two communities in proportion to the capital and duration of each. PAGE 37
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SEPARATION OF PROPERTY OF THE SPOUSES AND ADMINISTRATION OF COMMON PROPERTY BY ONE SPOUSE DURING THE MARRIAGE Art. 134. In the absence of an express declaration in the marriage settlements, the separation of property between spouses during the marriage shall not take place except by judicial order. Such judicial separation of property may either be voluntary or for sufficient cause. JUDICIAL SEPARATION OF PROPERTY MAY EITHER BE (1) VOLUNTARY OR (2) FOR SUFFICIENT CAUSE. (a) Sufficient Causes and Grounds for Return to Previous Regime Sufficient Causes for Judicial Separation of Property (Art. Grounds for Return to Previous Regime 135) (CALASA) (Art. 141) (1) Spouse of petitioner has been sentenced to a (1) Termination of the civil interdiction penalty which carries with it the penalty of civil interdiction (2) Spouse of petitioner is judicially declared an (2) Reappearance of absentee spouse absentee (3) Loss of parental authority of the spouse of (5) Restoration of parental authority to the spouse petitioner has been decreed by the court previously deprived of it (4) Spouse of petitioner has abandoned the latter or (4) When the spouse who left the conjugal home without failed to comply with his or her obligations to the legal separation resumes common life with the other family (5) The spouse granted the power of administration in (3) When the court, being satisfied that the spouse the marriage settlements has abused that power granted the power of administration in will not again abuse that power, authorizes the resumption of said administration (6) At the time of the petition, the spouses have been (6) Reconciliation and resumption of common life of the separated in fact for at least 1 year and spouse who have separated in fact for at least 1 year reconciliation is highly improbable. (7) When after voluntary dissolution of the ACP or CPG has been judicially decreed upon the joint petition of the spouses, they agree to the revival of the former property regime. No voluntary separation of property may thereafter be granted. Separation of Property Agreed upon in the marriage settlements by the spouses Mandatory under Arts. 103 & 130 (subsequent marriages contracted by a surviving spouse When it applies without judicial settlement of previous property regime) Default property regime when there is reconciliation between spouses after judicial separation of property Present or future property or both Each spouse’s earnings from his or her own profession, business, or industry What it consists Natural, industrial or civil fruits of spouse’s separate properties of May be total or partial If partial, property not considered separate is presumed to pertain to the ACP Family expenses: Both spouses are liable in proportion to their income; if insufficient, based on the current value of their separate properties Liabilities Creditors for family expenses: Spouses solidarily liable Spouses may own, dispose, possess, and administer separate estates without the consent of the other Ownership, Administration of exclusive properties may be transferred between spouses when: administration, 1. One spouse becomes the other spouse’s guardian enjoyment, and 2. One spouse is judicially declared an absentee disposition 3. One spouse is given the penalty of civil interdiction 4. One spouse becomes a fugitive Conveyance between the spouses is allowed under Art. 1490, NCC.
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In Re: voluntary dissolution of CPG of spouses Bernas (1965): A voluntary separation of properties is not perfected by mere consent but upon the decree of the court approving the st nd same. The petition for voluntary separation of property was denied because the children of the 1 and 2 marriages were not informed; the separation of property may prejudice the rights and shares of the children. Maquilan v. Maquilan (2007): A compromise agreement with judicial recognition is valid, pending petition for declaration of nullity of marriage. PROPERTY REGIME OF UNIONS WITHOUT MARRIAGE, ARTS. 147-148 Art. 147 Man and woman living together as husband and wife, with capacity to marry (Art.5, without any legal impediment) (a) at least 18 years old (b) not Art. 37 (incestuous void marriage) (c) not Art. 38 (void marriage by reason of public policy) (d) not bigamous Other void marriages due to absence of formal requisite
Art. 148 Applicability Man and woman living together as husband and wife, NOT capacitated to marry (a) Under 18 years old (b) Adulterous relationship (c) Bigamous/polygamous marriage (d) Incestuous marriages under Art. 37 (e) Void marriages by reason of public policy under Art. 38
Salaries and wages Separately owned by parties Properties acquired through exclusive funds Remains exclusive, provided there is proof Remains exclusive Villanueva v. CA (2004): Transfer of certificate Juaniza v. Jose (1979): Property acquired by a married party during and tax declarations are not sufficient proof cohabitation with another not his spouse belongs to the CPG of of joint contribution. the marriage, and the other party cannot be held jointly/severally liable for it Properties acquired by both through work and industry Governed by rules on co-ownership Owned in common in proportion to respective contribution Properties acquired while living together Owned in equal shares since it is presumed to No presumption of joint acquisition. When there is evidence of have been acquired through joint efforts joint acquisition but none as to the extent of actual contribution, there is a presumption of equal sharing. If one party did not participate in acquisition, Joaquina v. Reyes (2004): Prohibitions against donations between presumed to have contributed through care spouses must likewise apply to donations between persons living and maintenance of family and household together in illicit relations Forfeiture (1) In favor of their common children If one party is validly married to another his/her share in the co(2) In case of default of or waiver by any or all owned properties will accrue to the ACP/CPG of his/her existing of the common children or their valid marriage descendants, each vacant share shall belong to the respective surviving If the party who acted in bad faith is not validly married to another, descendants his/her share shall be forfeited in the same manner as that In the absence of such descendants, such provided in Art 147. share belongs to the innocent party The same rules on forfeiture shall apply if both parties are in bad faith. Owned in equal shares
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Yaptinchay v. Torres (1969): Application of Article 148; there was no proof of actual contribution, while there was a subsisting marriage apart from the union without marriage, therefore, the N. Forbes house goes to the CPG of subsisting marriage Juaniza v. Jose (1979): Property acquired by a married party during cohabitation with another not his spouse belongs to the CPG of the marriage, and the other party cannot be held jointly/severally liable for it Villanueva v. CA (2004): Transfer of certificate and tax declarations are not sufficient proof of joint contribution. Joaquino v. Reyes (2004): Prohibitions against donations between spouses must likewise apply to donations between persons living together in illicit relations; Valdez vs. QC-RTC (1996): Marriages that have been declared void come under the rules of co-ownership under FC147/148 regardless of the reason.
The Family
Except: For a suit between members of the same family to prosper, the following are required: (1) Earnest efforts towards a compromise have been made (2) Such efforts have failed (3) Such earnest efforts and the fact of failure must be alleged
Art. 149. The family, being the foundation of the nation, is a basic social institution which public policy cherishes and protects. Consequently, family relations are governed by law and no custom, practice or agreement destructive of the family shall be recognized or given effect.
Note: The case will be dismissed if it is shown that no such efforts were made.
THE FAMILY AS AN INSTITUTION
The rules shall not apply to cases, which may not be the subject of compromise.
ASPECTS OF FAMILY RELATIONS
(1) External Aspect (a) Governed by law (Art. 149) (b) Only in this aspect can third persons and the public interest be concerned (2) Internal Aspect (a) Sacred to the family and inaccessible to law because law must respect the freedom of action of man (b) E.g. spiritual relations, sexual relations of spouses, career or profession of spouses, profession and career of spouses, practices and customs of family
EXCEPTIONS TO THE GENERAL RULE – CANNOT BE SUBJECT OF COMPROMISE (ART 2035, CC; VJLAFF)
(1) Civil status of persons, (2) Validity of marriage or a legal separation, (3) Any ground for legal separation, (4) Future support, (5) Jurisdiction of courts, (6) Future legitime Hontiveros v. RTC (1999): Whenever a stranger is a party in a case involving family members, the requisite showing of earnest efforts to compromise is no longer mandatory, as such inclusion of a stranger takes the case out of the ambit of Art. 151.
FAMILY RELATIONS INCLUDE:
(1) Between husband and wife (2) Between parents and children (3) Among other ascendants and descendants (4) Among brothers and sisters, full or half blood.
THE FAMILY HOME CONSTITUTED BY: (1) Jointly by the husband and the wife (2) By an unmarried head of a family;
General rule: (Art. 151): No suit between members of the same family shall prosper.
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INCLUDES:
REQUISITES TO BE A BENEFICIARY (RLD)
(1) Dwelling house where they and their family reside (2) The land on which it is situated (Art. 152)
(1) The relationship is within those enumerated (2) They live in the family home (3) They are dependent for legal support on the head of the family
The actual value of the family home shall not exceed, at the time of the constitution, the amount of Three hundred thousand pesos (P300,000.00) in urban areas, and Two hundred thousand pesos (P200,000.00) in rural areas or such amounts as may hereafter be fixed by law. (Art. 157)
REQUIREMENTS FOR THE SALE, ALIENATION, DONATION, ASSIGNMENT, OR ENCUMBRANCE OF THE FAMILY HOME (ART. 158)
(1) the written consent of the person constituting it, (2) his/her spouse, and (3) majority of the beneficiaries of legal age
A person may constitute and be the beneficiary of only one family home (Art. 161)
Note: If there is a conflict, the Court will decide. The provisions of the Chapter on Family Home shall govern existing family residences insofar as said provisions are inapplicable (Art. 162)
In case of death of one or both spouses or the unmarried head of the family (Art. 159): The family home shall continue despite the death of one or both spouses or of the unmarried head of the family for a period of ten years, or as long as there is a minor beneficiary.
GUIDELINES:
(1) It is deemed constituted from time of actual occupation as a family residence (2) It must be owned by person constituting it (3) It must be permanent (4) Rule applies to valid and voidable and even to common-law marriages under Arts.147 and 148 (5) It continues despite death of one or more spouses or unmarried head of family for 10 years or as long as there is a minor beneficiary (Art.159) (6) Can only constitute one family home
The heirs cannot partition the home unless the court finds compelling reasons therefore. REQUISITES FOR CREDITOR TO AVAIL OF THE RIGHT UNDER ARTICLE 160 (If a claim of a creditor is not among the
exceptions mentioned in Art. 155 and has reasonable grounds to believe that the family home is worth more than the amount fixed in Art. 157)
General rule: The family home is exempt from (EFA) from the time of its constitution and so long as any of its beneficiaries actually resides therein (Art. 153): (1) Execution (2) Forced sale (3) Attachment
Requisites: (1) He must be a judgment creditor; (2) His claim is not among those excepted under Article155, and (3) He has reasonable grounds to believe that the family home is worth more than the maximum amount fixed in Art. 157.
Exceptions in the exemption of the family home from execution (Art. 155) (1) Nonpayment of taxes. (2) Debts incurred prior to the constitution of the family home. (3) Debts secured by mortgages on the premises before or after such constitution. (4) Debts due to laborers, mechanics, architects, builders, materialmen and others who have rendered service or furnished material for the construction of the building. BENEFICIARIES OF THE FAMILY HOME (ART. 154) (1) Husband and wife, or an unmarried person who is the head of the family (2) Parents (may include parent-in-laws), ascendants, descendants, brothers and sisters (legitimate/illegitimate), who are living in the family home and who depend on the head of the family for support
Procedure to avail of right under Art. 160 (1) The creditor must file a motion in the court proceeding where he obtained a favorable decision for a writ of execution against the family home. (2) There will be a hearing on the motion where the creditor must prove that the actual value of the family home exceeds the maximum amount fixed by the FC either at the time of its constitution or as a result of improvements introduced thereafter its constitution. (3) If the creditor proves that the actual value exceeds the maximum amount the court will order its sale in execution. (4) If the family home is sold for more than the value allowed, the proceeds shall be applied as follows: (a) First, the obligation enumerated in Article 157 must be paid
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(b) Then the judgment in favor of the creditor will be paid, plus all the costs of execution (c) The excess, if any, shall be delivered to the judgment debtor
(1) Executed & signed by husband and wife before the birth of the child. (2) Recorded in the civil registry together with the birth certificate of the child.
Versola v. Mandolaria (2006): The proof that the house is the family home must be alleged against creditors; Applied the rule in Art. 160, FC.
[Tolentino]: Dual consent is required whether the semen used comes from the husband or a third person donor
Patricio v. Dario III (2006): WON the grandson of the deceased is a beneficiary according to Art. 154 FC. The beneficiary should satisfy all requisites; he must be dependent on the head of the family.
General rule: Those conceived and born outside of a valid marriage. [Art. 165]
WHO ARE ILLEGITIMATE CHILDREN
Arriola v. Arriola (2008): This case involves half-brothers and a second wife; the family home includes the land it is built on. The rule in Art. 159 of the FC regarding the 10 year period is applied, the parties involved must wait.
Exceptions: (1) Children of marriages void under Art. 36 (psychological incapacity). (2) And under Art. 53 (the second marriage of a widow or widower who has not delivered to his or her children by his or her first marriage the legitime of said children). (Sempio-Dy)
Paternity and Filiation
De Castro v. Assidao-De Castro, (2008): Common children born before the annulment are legitimate, and therefore entitled to support from each of the spouses.
KINDS OF FILIATION (ARTS. 163, 164, 165): (1) Natural (a) Legitimate (b) Illegitimate (2) Legal Fiction (Adoption)
IMPUGNING LEGITIMACY
Grounds for impugning legitimacy of a child are [Art. 166]: (1) Physical impossibility for the husband to have sexual intercourse with his wife within the first 120 days of the 300 days which immediately preceded the child's birth due to: (a) Physical incapacity of the husband to have sexual intercourse with his wife (b) Husband and wife were living separately as to make sexual intercourse impossible (c) Serious illness of the husband absolutely preventing sexual intercourse (2) Other biological or scientific reasons, except Artificial Insemination (3) And in case of Artificial Insemination, the written consent of either parent was vitiated through fraud, violence, mistake, intimidation, or undue influence
LEGITIMATE CHILDREN WHO ARE LEGITIMATE CHILDREN (ART. 164)
Those conceived or born during the marriage of parents either by natural means or by artificial insemination Natural/Biological [Liyao v. Liyao (2002)]: A child conceived or born during a valid marriage is presumed to belong to that marriage, regardless of the existence of extramarital relationships. Artificial Insemination (Art. 164) Requisites to be considered legitimate: (a) Artificial insemination made on wife (b) Sperm comes from any of the following: (1) Husband (2) Third Person Donor (3) Husband and third person donor (c) In case of donor sperm, husband and wife must authorize/ratify insemination in a written instrument
Macadangdang v. CA (1980): Mere proximate separation between the spouses is not sufficient physical separation as grounds for impugning legitimacy. Andal v. Macaraig (1951): Serious illness of the husband which absolutely prevented him from having sexual intercourse with his wife, like if the husband was already in comatose or a
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vegetable, or sick with syphilis in the tertiary stage so that copulation was not possible. But tuberculosis, even in its most crucial stage, does not preclude copulation between the sick husband and his wife.
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(2) Within 2 years if the husband or all heirs live in the Philippines but do not reside in the same city or municipality where the child's birth took place or was recorded (3) Within 3 years if the husband or all heirs live outside the Philippines when the child's birth took place or was recorded in the Philippines
Jao v. CA (1987): Blood-type matching is an acceptable means of impugning legitimacy, covered by Art. 166(2), under "biological or other scientific reasons." But this is only conclusive of the fact of non-paternity.
If the birth of the child has been concealed or was unknown to the husband, the above periods shall be counted: (1) From the discovery or knowledge of the birth of the child, or (2) From the discovery or knowledge of its registration, (3) Whichever is earlier.
Legitimacy with regard to the mother: (1) Child considered legitimate although [Art. 167]: (a) Mother may have declared against its legitimacy (b) Mother may have been sentenced as an adulteress (also applies to wife who was raped) (2) If the marriage is terminated and the mother contracted another marriage within 300 days after the termination of the former marriage, the rules shall govern in the absence of proof to the contrary [Art 168]: (a) If child born before 180 days after the solemnization of the subsequent marriage – child is considered conceived during the former marriage, provided it be born within 300 days after termination of the former marriage (b) If child born after 180 days following the celebration of the subsequent marriage – child is considered conceived during such marriage, even if it be born within 300 days after the termination of the former marriage
General rule: Only the husband can impugn the legitimacy of a child. If he does not bring an action within the prescribed periods, he cannot file such action anymore thereafter, and this is also true with his heirs. Exception: That the heirs of the husband may file the action or continue the same within the periods prescribed in Art. 170 [Art. 171]: (a) If the husband died before the expiration of the period fixed for bringing his action (b) If he should die after the filing of the complaint without having desisted therefrom (c) If the child was born after the death of the husband. Sayson v. CA (1992): Legitimacy can only be attacked directly.
Note: The legitimacy or illegitimacy of a child born after 300 days following the termination of the marriage – burden of proof upon whoever alleges the status. [Art. 169]
PROOF OF FILIATION Legitimate children may establish their filiation by any of the following [Art. 172]: (1) Primary Evidence (a) Their record of birth appearing in the civil registry. (b) An admission of his filiation (legitimate or illegitimate) by his parent or parents in a public document or a private handwritten instrument and signed by said parent or parents
[Tolentino:] If nobody asserts the legitimacy or illegitimacy of the child described in Art. 169, the child should be considered illegitimate unless legitimacy is proved. Legitimacy cannot be presumed here since the birth was beyond the 300-day period of gestation. While it goes against the policy of law to lean in favor of legitimacy, this interpretation is better than the anomalous situation created by Art. 169, which is a child without a status.
(2) Secondary Evidence (a) Proof of open and continuous possession of status as legitimate or illegitimate child (b) Any other means stated by the rules of court or special laws
ACTION FOR IMPUGNING LEGITIMACY [ARTS. 170 AND 171]
May be brought within 1, 2, or 3 years from the knowledge of the birth, or the knowledge of registration of birth. (1) Within 1 year if husband or any heirs reside in the same city or municipality where the child was born or his birth was recorded.
Note: Only in the absence of primary evidence can secondary evidence be admitted
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ACTION FOR CLAIMING FILIATION [ART. 173]:
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reputation or tradition regarding pedigree like inscriptions on tombstones, monuments, or coffin plates.
(a) The child can bring the action during his or her lifetime, and once commenced such action survives even after the death of the parents. The action does not prescribe as long as he lives. (b) If the child dies during minority or in a state of insanity, such action shall be transmitted to his heirs, who shall have a period of five years within which to institute the action.
Eceta v. Eceta (2004): Signature of the father on the birth certificate is considered as an acknowledgement of paternity and mere presentation of a duly authenticated copy of such certificate will successfully establish filiations.
RIGHTS OF LEGITIMATE CHILDREN [ART. 174]:
Heirs of Rodolfo Bañas v. Heirs of Bibiano Bañas (1985): "Su padre [Your father]" ending in a letter is only proof of paternal solicitude and not of actual paternity. Signature on a report card under the entry of "Parent/Guardian" is likewise inconclusive of open admission.
(a) To bear the surnames of the father and the mother, in conformity with the provisions of the Civil Code on Surnames (b) To receive support from their parents, their ascendants, and in proper cases, their brothers and sisters, in conformity with the provisions of this Code on Support (c) To be entitled to the legitimate and other successional rights granted to them by the Civil Code
De Jesus v. Syquia (1933): By "open and continuous possession of the status of a legitimate child" is meant the enjoyment by the child of the position and privileges usually attached to the status of a legitimate child, like bearing the paternal surname, treatment by the parents and family of the child as legitimate, constant attendance to the child's support and education, and giving the child the reputation of being a child of his parents.
ILLEGITIMATE CHILDREN Illegitimate children may establish their illegitimate filiation in the same way and on the same evidence (primary or secondary) as legitimate children. [Art. 175] ACTION FOR CLAIMING FILIATION [ART. 175]:
Agustin v. CA (2005): DNA evidence can be used as proof of paternity.
(a) For actions based on primary evidence, the same periods stated in Art. 173 apply. (b) For actions based on secondary evidence, the action may only be brought during the lifetime of the alleged parent.
De Jesus v. Estate of Decedent Juan Gamboa Dizon (2001): The due recognition of an illegitimate child in a record of birth, a will, a statement before a court of record, or in any authentic writing, is in itself a consummated act of acknowledgement of the child, and no further court action is required.
Mendoza v. Melia (1966): Baptismal certificates are given probative value only for births before 1930. Birth certificates must be signed by the parents and sworn for it to be admitted as evidence.
Gono-Javier vs. Court of Appeals (1994): Mere possession of status as an illegitimate child does not make a recognized illegitimate child but is only a ground for bringing an action to compel judicial recognition by the assumed parent.
Baluyut v. Baluyut (1990): Unsigned birth certificates are not evidence of recognized filiation.
Herrera v. Alba (2005): In assessing the probative value of DNA evidence, therefore, courts should consider, among other things, the following data: (a) How the samples were collected, (b) How they were handled, (c) The possibility of contamination of the samples, (d) The procedure followed in analyzing the samples, (e) Whether the proper standards and procedures were followed in conducting the tests, (f) The qualification of the analyst who conducted the tests.
Acebedo v. Arquero (2003): Baptismal certificates are only conclusive of the sacrament administered, and cannot be used as proof of filiation. Lim v. CA (1975): Marriage certificates cannot be used as proof of filiation. Jison v. CA (1998): Rule 130, Sec. 40 is limited to objects commonly known as family possessions reflective of a family's PAGE 44
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governing successional rights shall remain in force.
Estate of Rogelio Ong v. Diaz (2007): DNA evidence can still be used even after the death of the parent.
LEGITIMATED CHILDREN "Legitimated" children are illegitimate children who because of the subsequent marriage of their parents are, by legal fiction, considered legitimate.
Gotardo v. Buling (2012): There are four significant procedural aspects of a traditional paternity action that parties have to face: a prima facie case, affirmative defenses, presumption of legitimacy, and physical resemblance between the putative father and the child. A prima facie case exists if a woman declares — supported by corroborative proof — that she had sexual relations with the putative father; at this point, the burden of evidence shifts to the putative father. Further, the two affirmative defenses available to the putative father are: (1) incapability of sexual relations with the mother due to either physical absence or impotency, or (2) that the mother had sexual relations with other men at the time of conception.
TO BE CAPABLE OF LEGITIMATION:
(1) The child must have been conceived and born outside of wedlock; and (2) General rule: The parents, at the time of the child's conception, were not disqualified by any impediment to marry each other (Art. 177). Exception: RA 9858 - Children born to parents who were so disqualified only because either or both of them were below eighteen (18) years of age at the time of child’s conception may be legitimated.
Perla v. Baring and Perla (2012): To prove open and continuous possession of the status of an illegitimate child, there must be evidence of the manifestation of the permanent intention of the supposed father to consider the child as his, by continuous and clear manifestations of parental affection and care, which cannot be attributed to pure charity.
PROCEDURE:
(a) Legitimation shall take place by a subsequent valid marriage between the parents. The annulment of a voidable marriage shall not affect the legitimation. [Art. 178] (b) Effects of legitimation shall retroact to the time of the child’s birth [Art. 180] (c) Legitimation of children who died before the celebration of the marriage shall benefit their descendants [Art. 181]
Meanwhile, the lack of participation of the supposed father in the preparation of a baptismal certificate renders this document incompetent to prove paternity. Baptismal certificates are per se inadmissible in evidence as proof of filiation and they cannot be admitted indirectly as circumstantial evidence to prove the same
GROUNDS FOR IMPUGNING LEGITIMATION:
(1) The subsequent marriage of the child's parents is void. (2) The child allegedly legitimated is not natural. (3) The child is not really the child of the alleged parents. (Sempio-Dy)
RIGHTS OF ILLEGITIMATE CHILD [ART. 176]:
RIGHTS:
(a) Use the surname and be under the parental authority of the mother (b) However, may use the surname of their father if (1) Their filiation has been expressly recognized by the father through the record of birth appearing in the civil register. (2) There is an admission in a public document or private handwritten instrument made by the father. (3) Provided, the father has the right to institute an action before the regular courts to prove non-filiation during his lifetime [RA 9255] (c) Shall be entitled to support in conformity with the Family Code (d) Legitime shall consist of one-half of the legitime of a legitimate child. Except for such modification, all other provisions of the Civil Code
The same as those of legitimate children [Art. 179] IMPUGNING LEGITIMATION [ART. 182]
(1) May be made only by those who are prejudiced in their rights (2) Within five years from the time their cause of action accrues
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Adoption Legitimation
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emergency reasons are allowed) in RP prior to the filing of application and maintains such residence until the decree is entered (4) Has been certified by his/her diplomatic or consular office or any appropriate government agency that he/she has the legal capacity to adopt in his/her country (5) His/her government allows the adoptee to enter his/her country as his/her adoptee (6) Has submitted all the necessary clearances and such certifications as may be required
Adoption
Legal effect The law merely makes The law merely creates by legal what exists by fiction a relation which nature did not in fact exist Persons affected Natural Children Strangers (generally) Procedure Extrajudicial acts of Always by judicial decree parents Who should apply Both parents Both parents, but with exceptions allowing only one of them to apply [RA 85520] Effect on parent-child relationship Same status and rights Creates a relationship with that of a legitimate only between the child child not only in relation and the adopting parents to the legitimizing parents but also to other relatives
**Items 3, 4 and 5 may be waived under the following circumstances: (a) Adopter is a former Filipino Citizen who seeks to th adopt a relative within the 4 degree of consanguinity or affinity (b) Adopter seeks to adopt the legitimate or illegitimate child of his/her Filipino spouse (c) Adopter is married to a Filipino Citizen and seeks to adopt jointly with his/her spouse a relative th within the 4 degree of consanguinity or affinity of the Filipino spouse (3) Guardians With respect to theirs ward after the termination of the guardianship and clearance of his/her accountabilities.
ADOPTION is a juridical act, which creates between two persons a relationship similar to that which results from legitimate paternity and filiation.
Husband and wife shall adopt jointly, EXCEPT: (1) If one spouse seeks to adopt the legitimate child of the other (2) If one of the spouse seeks to adopt his/her illegitimate child provided that other spouse has signified his/her consent (3) If spouses are legally separated from each other
RA 8552 – DOMESTIC ADOPTION LAW WHO CAN ADOPT
(1) Filipino Citizens (a) Of legal age (b) With full civil capacity and legal rights (c) Of good moral character (d) Has not been convicted of any crime involving moral turpitude (e) Emotionally and psychologically capable of caring for children (f) At least sixteen (16) years older than adoptee, except when adopter is biological parent of the adoptee or is the spouse of the adoptee’s parent (g) In a position to support and care for his/her children in keeping with the means of the family (2) Aliens Same for Filipinos provided further that: (1) At least 27 years old (2) His/her country has diplomatic relations with the Philippines (3) Has been living continuously for 3 years (provided that absences not exceeding 60 days per 1 year for professional, business, or
Note: If spouses jointly adopt, parental authority shall be exercised jointly WHO CAN BE ADOPTED
(a) Minor who has been administratively or judicially declared available for adoption (b) Legitimate child of one spouse by another (c) Illegitimate child by a qualified adopter to improve the child’s status to that of legitimacy (d) A person of legal age if, prior to the adoption, said person has been consistently considered and treated by the adopter(s) as his/her child since minority (e) A child whose previous adoption has been rescinded (f) A child whose biological or adoptive parent(s) has died, provided that no proceedings shall be initiated within 6 months from the time of death of said parent(s)
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Persons whose written consent is necessary for adoption [Sec. 9] (1) The prospective adoptee if 10 years or older (2) The prospective adoptee’s biological parents, legal guardian or the government instrumentality or institution that has custody of the child (3) The prospective adopters’ legitimate and adopted children who are 10 years or older (4) The prospective adopters’ illegitimate children, if any, who are 10 years or older and living with them (5) The spouse, if any, of the person adopting or to be adopted.
Posting of the petition, then recommendation by the Regional Director of the DSWD (5 days each) Issuance of certification by DSWD Secretary declaring the child legally available for adoption Notes: (1) Abandoned child – no proper parental care/guidance; or parents have deserted him/her for at least 3 continuous months, including foundlings
Note: A decree of adoption shall be effective as of the date the original petition was filed. It also applies in case the petitioner dies before the issuance of the decree of adoption to protect the interest of the adoptee.
(2) Neglected child – his basic needs have been deliberately unattended or inadequately attended within 3 continuous months either by: (a) Physical Neglect – child is malnourished, illclad, without proper shelter, or without proper provisions (b) Emotional Neglect – child is maltreated, raped, seduced, exploited, overworked, or in moral danger
PRE-ADOPTION PROCEDURES
(1) Voluntary Commitment of biological mother wanting to put her child up for adoption Counseling on her options other than adoption
(3) Required supporting documents for a petition for the declaration of involuntary commitment: (a) Social Case Study Report by DSWD / LGU / institution charged with child’s custody (b) Proof of efforts to locate the child’s parents/known relatives (1) Written certification that a local/national radio/TV case was aired on 3 different occasions (2) Publication in 1 newspaper of general circulation (3) Police report / barangay certification of due diligence (4) Returned registered mail to last known address of parents (c) Birth certificate, if available (d) Recent photo and photo upon abandonment of child
Explaining to her the implications of losing her parental authority over the child Continuing services shall be provided after relinquishment to cope with feelings of loss, etc. and other services for his/her reintegration to the community Biological parent(s) who decide to keep the child shall be provided with adequate services and assistance to fulfill their parental responsibilities Biological parent(s) who decide to put the child for adoption shall sign the Deed of Voluntary Commitment (DVC), which shall be rescissible within 3 months from signing of the same (2) Involuntary Commitment neglected child
of
abandoned
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ADOPTION PROCEDURES
Inquiry of prospective adopters at DSWD or
Attendance of DSWD Adoption Fora and Seminars (include counseling)
Filing of a petition at Regional DSWD in the form of an affidavit and with the required supporting documents
Application for Adoption
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RIGHTS OF AN ADOPTED CHILD
Case Study Report
(a) Parental Authority All legal ties between biological parents and adoptee are severed, and the same shall be vested on the adopter, except if the biological parent is the spouse of the adopter. [Art. 189 as amended] (b) Legitimacy The adoptee shall be considered legitimate son/daughter of the adopter for all intents and purposes, and shall be entitled to all the rights and obligations provided by law to legitimate children born to them without discrimination of any kind. [Art. 189 as amended] (c) Succession Adopter and adoptee shall have reciprocal rights of succession without distinction from legitimate filiation, in legal and intestate succession. If adoptee and his/her biological parents had left a will, the law on testamentary succession shall govern. [Art. 189 as amended]
Certificate of Availability for Adoption
Matching
Placement
Supervised Trial Custody
Home Study Report
Recommendation and Consent of DSWD
Art. 190 as amended. Rules on legal or intestate succession to the estate of the adoptee:
Petition for Adoption
(1) Legitimate and illegitimate children, descendants and the surviving spouse of the adoptee shall inherit in accordance with the ordinary rules of legal/intestate succession
Adoption Decree
(2) When the surviving spouse OR illegitimate children AND adopters concur, they shall inherit on a 50-50 basis
Note: After the decree of adoption, the court may also issue a travel authority, if needed; DSWD to provide post adoption services
(3) When the surviving spouse AND illegitimate children AND adopters concur, they shall inherit on a 1/3-/1/3-1/3 basis
WHO MAY NOT ADOPT/ BE ADOPTED
Art. 184 (as amended by RA 8552) The following may not adopt: (1) The guardian, with respect to the ward prior to the approval of the final accounts rendered upon the termination of the guardianship (2) Any person convicted of a crime of moral turpitude
(4) When only adopters survive, they shall inherit 100% of the estate (5) When only collateral blood relatives survive, ordinary rules of legal or intestate succession shall apply
Art. 187 The following may not be adopted: (1) A person of legal age unless he is a natural child of the adopter or of his/her spouse; or he was treated as a natural child since minority (2) An alien whose government has no diplomatic relations with the Philippines (3) A person already adopted unless his adoption has been previously revoked/rescinded
Art. 365, NCC. An adopted child shall bear the surname of the adopter. RESCISSION OF ADOPTION
Adoptee may request for rescission, with the assistance of DSWD if he/she is a minor or over 18 but incapacitated, based on the ff. grounds: (1) Repeated physical and verbal maltreatment by adopters despite having undergone counseling (2) Attempt on life of adoptee (3) Sexual assault or violence
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(4) Abandonment or failure to comply with parental obligations
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Sec. 22 (RA 8552) A person who has, prior to the effectivity of RA 8552, simulated the birth of a child shall not be punished for such act, PROVIDED: (a) The simulation was for the child’s best interest (b) Child has been treated consistently as his own (c) Petition filed within 5 years of RA 8552’s effectivity (2003)
Note: Adoption, being in the best interest of the child, shall not be subject to rescission by the adopter(s). However, the adopter(s) may disinherit the adopted based on causes enumerated in Art. 919 of the NCC: (1) Conviction of an attempt on the life of the adopter (2) Having accused, without grounds, the adopter of a crime punishable by imprisonment for more than 6 years (3) Conviction of adultery/concubinage with the adopter’s spouse (4) Having caused the adopter to make or change a will by force, intimidation or undue influence (5) Refusal without just cause to support the adopter (6) Maltreatment of the adopter by word/deed (7) Living a dishonorable/disgraceful life (8) Conviction of a crime which carries with it the penalty of civil interdiction
Three-in-one Procedure (a) Correction of entries in birth certificate (b) Declaration of abandonment (c) Adoption decree RA 8043 – THE LAW ON INTER-COUNTRY ADOPTION INTER-COUNTRY ADOPTION refers to the socio-legal process of adopting a Filipino child by a foreigner or a Filipino citizen permanently residing abroad where the petition is filed, the supervised trial custody is undertaken, and the decree of adoption is issued outside the Philippines
Effects of Rescission [Sec. 20]: (1) Parental authority of the adoptee's biological parents, if known, OR the legal custody of the DSWD shall be restored if the adoptee is still a minor or incapacitated (2) Reciprocal rights and obligations of the adopters and the adoptee shall be extinguished (3) Court shall order the Civil Registrar to cancel the amended certificate of birth of the adoptee and restore his/her original birth certificate (4) Succession rights shall revert to its status prior to adoption, but only as of the date of judgment of judicial rescission (5) Vested rights prior to judicial rescission shall be respected
WHO CAN ADOPT
Any foreign national or a Filipino citizen permanently residing abroad who has the qualifications and none of the disqualifications under the Act may file an application if he/she: (a) Is at least 27 years of age and at least 16 years older than the child to be adopted, at the time of application unless the adopter is the parent by nature of the child to be adopted or the spouse of such parent (b) If married, his/her spouse must jointly file for the adoption (c) Has the capacity to act and assume all rights and responsibilities of parental authority under his national laws, and has undergone the appropriate counseling from an accredited counselor in his/her country (d) Has not been convicted of a crime involving moral turpitude (e) Is eligible to adopt under his/her national law (f) Is in a position to provide the proper care and support and to give the necessary moral values and example to all his children, including the child to be adopted (g) Agrees to uphold the basic rights of the child as embodied under Philippine laws, the U.N. Convention on the Rights of the Child, and to abide by the rules and regulations issued to implement the provisions of this Act (h) Comes from a country with whom the Philippines has diplomatic relations and whose government maintains a similarly authorized and accredited agency and that adoption is allowed under his/her national laws
Note: Rescission contemplates a situation where the adoption decree remains valid until its termination RECTIFICATION OF SIMULATED BIRTH
Simulation of birth is the tampering of LCR records to make it appear that a certain child was born to a person who is not his/her biological parent, causing said child to lose his true identity/status Sec. 21-b (RA 8552) Any person who shall cause the fictitious registration of the birth of a child under the name(s) of a person(s) who is not his/her biological parent(s) shall be guilty of simulation of birth, and shall be punished by prision mayor in its medium period and a fine not exceeding Fifty thousand pesos (P50,000.00).
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Landingin v. Republic (2006) Consents for adoption must be written and notarized.
WHO CAN BE ADOPTED
(a) Only a legally-free child may be the subject of inter-country adoption. (b) A legally-free child is one who has been voluntarily or involuntarily committed to the DSWD of the Philippines, in accordance with the Child and Youth Welfare Code. (c) No child shall be matched to a foreign adoptive family unless it is satisfactorily shown that the child cannot be adopted locally. (d) In order that such child may be considered for placement, the following documents must be submitted to the Board: (a) Child study (b) Birth Certificate / Foundling Certificate (c) Deed of Voluntary Commitment/ Decree of Abandonment/ Death Certificate of parents (d) Medical Evaluation / History (e) Psychological Evaluation, as necessary (f) Recent photo of the child
Sayson v. CA (1992): Adopted children have a right to represent their adopters in successional interests. (“Although an adopted child shall be deemed to be a legitimate child and have the same rights as the latter, these rights do not include the right of representation. The relationship created by the adoption is between only the adopting parents and the adopted child. It does not extend to the blood relatives of either party.”) Republic v. Hernandez (1996): The change of surname of the adoptee as a result of the adoption and to follow that of the adopter does not lawfully extend to or include the proper or given name. The birth certificate, as it appears in the civil register, contains the official name. It does not matter if the mother, with all intention to abandon it later, named the child for the sake of naming it. If they really want to change the name, they must institute another action under Rule 103 of the Rules of Court.
Tamargo v. CA (1992): Where the petition for adoption was granted after the child had shot and killed a girl, the Supreme Court did not consider that retroactive effect may be given to the decree of adoption so as to impose a liability upon the adopting parents accruing at a time when adopting parents had no actual or physically custody over the adopted child. Retroactive effect may perhaps be given to the granting of the petition for adoption where such is essential to permit the accrual of some benefit or advantage in favor of the adopted child. In the instant case, however, to hold that parental authority had been retroactively lodged in the adopting parents so as to burden them with liability for a tortuous act that they could not have foreseen and which they could not have prevented would be unfair and unconscionable.
Support WHAT IT COMPRISES Consists of everything indispensable for sustenance, dwelling, clothing, medical attendance, education and transportation, in keeping with the financial capacity of the family. [Art. 194] (a) Education includes a person’s schooling or training for some profession, trade or vocation. [Art. 194] (b) Transportation includes expenses in going to and from school, or to and from place of work. [Art. 194] (c) The right and duty to support, especially the right to education, subsists even beyond the age of majority. [Art. 194]
Lazatin v. Campos (1979): Adoption is a juridical act, proceeding in rem. Because it is artificial, the statutory requirements in order to prove it must be strictly carried out. Petition must be announced in publications and only those proclaimed by the court are valid. Adoption is never presumed.
WHO ARE OBLIGED TO SUPPORT EACH OTHER:
(a) Spouses; (b) Legitimate ascendants and descendants; (c) Parents and their children (legitimate and illegitimate) and the children of the latter (legitimate and illegitimate); (d) Legitimate brothers and sisters, whether of full or half-blood; [Art. 195] (e) Illegitimate brothers and sisters, whether of full or half-blood, EXCEPT when the need for support of one (of age) is due to a cause imputable to his/her fault or negligence. [Art. 196]
Santos v. Aranzanso (1966): Validity of facts behind a final adoption decree cannot be collaterally attacked without impinging on that court’s jurisdiction. DSWD v. Belen (1997): Participation of the appropriate government instrumentality in performing the necessary studies and precautions is important and is indispensable to assure the child’s welfare.
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Note: Both legitimate and illegitimate children are entitled to support.
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Lacson v. San Jose-Lacson (1968): Man is still liable for support in arrears since the mother advanced it from a stranger (the uncle of the daughters).
PROPERTIES ANSWERABLE FOR SUPPORT
From the separate property of the obligor. If no separate property, the ACP/CPG (if financially capable) shall advance the support, to be deducted from the obligor’s share upon liquidation of such regime. [Art. 197]
Lacson v. Lacson (2006): Acknowledgment of and commitment to comply with support obligation through a note in his own handwriting is proof that a demand was made. Gotardo v. Buling (2012): The amount of support is variable and, for this reason, no final judgment on the amount of support is made as the amount shall be in proportion to the resources or means of the giver and the necessities of the recipient.
ORDER OF SUPPORT
If there are multiple obligors (SDAB) (1) Spouses (2) Descendants, nearest in degree (3) Ascendants, nearest in degree (4) Brothers and Sisters [Art. 199] [Tolentino]: The order of liability among ascendants and descendants would be: (1) legitimate children and descendants, (2) legitimate parents and ascendants, (3) illegitimate children and their descendants.
STRANGER GIVES SUPPORT
When, WITHOUT THE KNOWLEDGE of the person obliged to give support, it is given by a stranger, the stranger has the right to claim the same from the person obliged, unless it appears that he gave it without intention of being reimbursed. [Art. 206]
When two or more are obliged to give support, the payment shall be divided between them IN PROPORTION to their resources;
PERSON OBLIGED REFUSES OR FAILS TO GIVE SUPPORT
When the person obliged to give support UNJUSTLY REFUSES OR FAILS to give support when urgently needed, any third person may furnish support to the needy individual, with right of reimbursement from the person obliged to give support. This particularly applies when the father or mother of a minor child unjustly refuses to support or fails to give support to the child when urgently needed. [Art. 207]
Also, in case of URGENT NEED and by special circumstances, judge may order only one obligor to furnish support without prejudice to reimbursement from other obligors of the share due from them (Art. 200). If there are multiple recipients and only one obligor, and the latter has no sufficient means to satisfy all claims: (1) Observe order in Article 199 (SDAB) as to whose claim shall be satisfied first; (2) But if the concurrent obligees are the spouse and a child subject to parental authority, the child shall be preferred. [Art. 200]
CONTRACTUAL SUPPORT OR THAT GIVEN BY WILL
The excess in amount beyond that required for legal support shall be subject to levy on attachment or execution. [Art. 208] Reason: The amount of support agreed upon in the contract or given in the will can be more than what the recipient needs (Sempio-Diy).
[Tolentino]: The above preference given to a child under parental authority over the spouse should prevail only if the person obliged to support pays it out of his own separate property. So if the support comes from ACP or CPG, the above rule of preference for the child does not apply.
Furthermore, contractual support shall be subject to adjustment whenever modification is necessary due to changes in circumstances manifestly beyond the contemplation of the parties. [Art. 208] SUPPORT DURING MARRIAGE LITIGATION Pending legal separation or annulment, and for declaration of nullity, support (pendente lite) for spouses and children will come from the ACP/CPG. After final judgment granting the petition, mutual support obligation between spouses ceases. (But in legal separation court may order guilty spouse to give support to innocent spouse.) [Art. 198]
Pelayo v. Lauron (1909): Even if the parents-in-law were the ones who called for the physician’s services for the childbirth of their daughter-in-law, it is the woman’s husband who is bound to pay the fees due to the physician.
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Note: De facto separation does not affect the ACP, except that the spouse who leaves the conjugal home without just cause shall not be entitled to support. [Art. 100]
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PARENTAL AUTHORITY AND RESPONSIBILITY MAY NOT BE RENOUNCED OR TRANSFERRED EXCEPT IN THE CASES AUTHORIZED BY LAW. [ART. 210] CASES WHEN PARENTAL AUTHORITY AND RESPONSIBILITY MAY BE TRANSFERRED OR RENOUNCED:
AMOUNT The amount of support is in proportion to the means of the provider and the needs of the receiver, and can be reduced or increased if such circumstances change. [Arts. 201, 202]
(a) Adoption; (b) Guardianship; or (c) Commitment of the child in an entity or institution engaged in child care or in a children’s home
WHEN DEMANDABLE (a) The obligation to give support shall be DEMANDABLE from the time the person who has a right to receive the same needs it for maintenance, but it shall not be PAYABLE except from the date of judicial or extra-judicial demand. [Art. 203] (b) Support pendente lite may be claimed in accordance with the Rules of Court. [Art. 203] (c) Payment shall be made within the first five days of each corresponding month. When the recipient dies, his heirs shall not be obliged to return what he has received in advance. [Art. 203]
RULES AS TO THE EXERCISE OF PARENTAL AUTHORITY:
(a) Jointly exercised by the father and mother over their common children, but in case of disagreement, the father's decision shall prevail, unless there is a judicial order to the contrary [Art. 211] (b) Exercised by the mother if the child is illegitimate [Art.176] (c) Children under parental authority shall always observe respect and reverence towards their parents and are obliged to obey them [Art. 211] CHARACTERISTICS OF PARENTAL AUTHORITY:
OPTIONS (a) Payment of the amount; or (b) Receiving and maintaining the recipient in the home of the provider, unless there is a legal or moral obstacle for doing so.
(1) Natural right and duty of parents [Art. 209, FC] (2) Cannot be renounced, transferred or waived, except in cases authorized by law [Art 210, FC] (3) Jointly exercised by the father and the mother [Art. 211, FC] (4) Purely personal and cannot be exercised through agents (5) Temporary
ATTACHMENT The right to receive support as well as any money or property obtained as such support shall not be levied upon on attachment or execution. (Art. 205)
PARENTAL PREFERENCE RULE:
The natural parents, who are of good character and who can reasonably provide for the child, are ordinarily entitled to custody as against all persons. [Santos v CA (1995)]
[Tolentino:] This is to protect that which the law gives to the recipient against want and misery.
WHO EXERCISES AUTHORITY IN CASES OF DEATH, ABSENCE, UNSUITABILITY, REMARRIAGE, OR SEPARATION OF PARENTS:
Parental Authority
(1) In case one parent is absent or already dead, the present or surviving parent [Art. 212] - Remarriage of the surviving parent shall not affect his/her parental authority over the children, unless the court appoints another person to be the guardian of the children or their property [Art. 212] (2) In case of a void/annulled marriage, and there is no agreement between spouses, the parent designated by the court [Art. 43 par. 1; Art. 49] (3) Innocent spouse gets custody of minor children in legal separation [Art. 63 par. 3]
GENERAL PROVISIONS Parental authority is the mass of rights and obligations which parents have in relation to the person and property of their children until their emancipation, and even after this under certain circumstances (Manresa). PARENTAL AUTHORITY INCLUDES [ART. 209]:
(1) The caring for and rearing of children for civic consciousness and efficiency; (2) The development of the moral, mental and physical character and well-being of said children
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(4) The court shall take into account all relevant considerations, especially the choice of the child over seven years of age, unless the parent chosen is unfit [Art. 213 par. 1] (5) Substitute parental authority [Art. 214] (a) In case of death, absence or unsuitability of the parents, substitute parental authority shall be exercised by the surviving grandparent (b) When several grandparents survive, the one designated by the court shall exercise parental authority, taking into account all relevant considerations, especially the choice of the child over seven years of age, unless the grandparent chosen is unfit
SUBSTITUTE PARENTAL AUTHORITY OVER DISADVANTAGED CHILDREN (ART. 217)
DESCENDANT’S PRIVILEGE OF REFUSAL TO TESTIFY [ART.
PERSONS EXERCISING SPECIAL PARENTAL AUTHORITY [ART. 218 FC]
Entrusted in summary judicial proceedings to: (1) Heads of children’s homes (2) Orphanages Similar institutions duly accredited by the proper government agency (such as the DSWD) Who are disadvantaged children: (1) Foundlings (2) Abandoned (3) Neglected (4) Abused (5) Others similarly situated
215]: No descendant shall be compelled, in a criminal case, to testify against his parents and grandparents.
(1) School, its administrators and teachers; or (2) The individual, entity or institution engaged in child care
Exception: When such testimony is indispensable in (1) a crime against the descendant, or (2) a crime by one parent against the other.
Note: Exercised over minor child while under their supervision, instruction or custody; authorized activities include those conducted both within or outside the school, entity or institution
TENDER YEARS PRESUMPTION:
NO child under 7 years of age shall be separated from the mother, unless the court finds compelling reasons to order otherwise. [Art. 213 par 2; Gamboa v. CA (2007)]
Substitute Parental Authority It is exercised in case of death, absence, or in case of unsuitability of parents.
Examples of compelling reasons are: (1) When the mother is insane; (2) with a communicable disease that might endanger the life or health of the child; (3) is maltreating the child; or (4) has another child by another man who lives with her. [Cervantes v. Fajardo (1989)] Note: Prostitution or infidelity to husband does not make a mother unfit as parent. SUBSTITUTE AUTHORITY
AND
SPECIAL
Special Parental Authority It is exercised concurrently with the parental authority of the parents and rests on the theory that while the child is in the custody of the person exercising special parental authority, the parents temporarily relinquish parental authority over the child to the latter.
St. Mary’s Academy v. Carpitanos (2002): The special parental authority and responsibility applies to all authorized activities, whether inside or outside the premises of the school, entity or institution.
PARENTAL
PERSONS EXERCISING SUBSTITUTE PARENTAL AUTHORITY IN DEFAULT OF PARENTS OR JUDICIALLY APPOINTED GUARDIAN (IN THIS ORDER):
LIABILITY OF THOSE EXERCISING SPECIAL PARENTAL AUTHORITY OVER THE CHILD (ART. 219 FC)
(1) Principal and solidary liability for damages caused by the acts or omissions of the minor child while under their special parental authority (2) Subsidiary liability for the parents and judicial guardians of the minor, or those exercising substitute parental authority over such minor for his acts and omissions
(a) The surviving grandparent [Art. 214, FC] (b) Oldest brother or sister, over 21 years old, unless unfit or unqualified. (c) Child’s actual custodian, over 21 years old, unless unfit or unqualified. Note: The same order applies to the appointment of judicial guardian over the property of the child
Note: Both groups can use the defense that they exercised proper diligence to avoid liability
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(3) If the court finds the petition meritorious, disciplinary measures may include the commitment of the child for not more than 30 days in entities or institutions engaged in child care or in children’s homes duly accredited by the proper government agency. [Art. 224] (a) The parent exercising parental authority shall not interfere with the case of the child whenever committed but shall provide for his support. [Art. 224] (b) Upon proper petition or at its own instance, the court may terminate the commitment of the child whenever just and proper. [Art. 224] If the court finds the petitioner at fault, irrespective of the merits of the petition, or when the circumstances so warrant, the court may also order the deprivation or suspension of parental authority or adopt such other measures as it may deem just and proper. [Art. 223]
RIGHTS OF PARENTS UPON THE PERSON OF THE CHILDREN:
(1) To have them in their custody [Art. 220] (2) To represent them in all matters affecting their interests [Art. 220] (3) To demand from them respect and obedience and impose necessary discipline on them [Art. 220] (4) To give or withhold consent to their marriage, their marriage settlements, their donations by reason of marriage, adoption, and employment (Art. 220) (5) To disinherit them for just cause (Tolentino)
People v Silvano (1999): Art. 220 which states that the parent has a right to impose necessary discipline on the child does not authorize the parent to invade or disregard the child’s honor and dignity under the mask of discipline. Such acts can never be justified as parental punishment.
EFFECTS OF PARENTAL AUTHORITY UPON THE PROPERTY OF THE CHILDREN (a) The father and mother shall jointly exercise legal guardianship over the property of the minor child without court appointment. [Art. 225] (b) In case of disagreement, the father’s decision shall prevail, unless there is judicial order to the contrary. [Art. 225] (c) The ordinary rules on guardianship shall be merely suppletory except when the child is under special parental authority, or the guardian is a stranger, or a parent has remarried, in which case the ordinary rules on guardian ship shall apply. [Art. 225] (d) If the market value of the property or the annual income of the child exceeds P50,000, the parent is required to furnish a bond of not less than 10% of the value of the child’s property or income. [Art. 225]
DUTIES OF PARENTS UPON THE PERSON OF THE CHILDREN:
(a) To support them, providing for their upbringing in accordance with their means [Art. 220] (b) To educate, instruct, and provide them with moral and spiritual guidance and love and understanding [Art. 220] (c) To defend them against unlawful aggression [Art. 220] (d) To give their lawful inheritance (Tolentino) (e) To perform such other duties as are imposed by law [Art. 220] (f) To answer for damages caused by their fault or negligence and for the civil liability for crimes committed by them. [Art. 221] SUBSTITUTE REPRESENTATION [ART. 222]
The courts may appoint a guardian of the child’s property, or a guardian ad litem when the best interests of the child so requires.
PROCEDURE IN THE APPROVAL OF THE PARENT’S BOND [ART. 225]
(a) A verified petition for approval of the bond shall be filed in the proper court of the place where the child resides. (b) If the child resides in a foreign country, the petition shall be filed in the proper court of the place where the property or any part thereof is situated. (c) The petition shall be docketed as a summary special proceeding. The court shall determine the amount of the bond, but shall not be less than 10% of the market value of the child’s property or of his annual income.
COURT ASSISTANCE IN THE DISCIPLINE OF THE CHILD [ARTS. 223-224]
(1) The parents or, in their absence or incapacity, the individual, entity or institution exercising parental authority, may petition the proper court of the place where the child resides, for an order providing for disciplinary measures over the child. [Art. 223] (2) The child shall be entitled to the assistance of counsel, either of his choice or appointed by the court, and a summary hearing shall be conducted wherein the petitioner and the child shall be heard. [Art. 223]
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OWNERSHIP OF CHILD’S ACQUISITIONS [ART. 226]
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(4) Upon final judgment of a competent court divesting the party concerned of parental authority.
The property of the unemancipated child earned or acquired with his work or industry or by onerous or gratuitous title shall belong to the child in ownership and shall be devoted exclusively to the latter’s support and education, unless the title or transfer provides otherwise.
GROUNDS FOR SUSPENSION OF PARENTAL AUTHORITY [CLEBC; ART. 230-231]
The right of the parents over the fruits and income (not the property itself) of the child’s property shall be limited primarily to the child’s support and secondarily to the collective daily needs of the family.
(1) Conviction of parent for crime which carries with it the penalty of civil interdiction (2) Treats child with excessive harassment and cruelty (3) Gives corrupting orders, counsel, or example (4) Compels child to beg (5) Subjects or allows acts of lasciviousness
WHEN PARENTS ENTRUST THE MANAGEMENT OF THEIR PROPERTIES TO A CHILD [ART. 227]
SCOPE OF SUBSTITUTE AND SPECIAL PARENTAL AUTHORITY [ART. 233]
PARENT’S USUFRUCT [ART. 226]
(a) If the parents entrust the management or administration of any of their properties to an unemancipated child, the net proceeds of such property shall belong to the owner. (b) The child shall be given a reasonable monthly allowance in an amount not less than that which the owner would have paid if the administrator were a stranger, unless the owner grants the entire proceeds to the child. (c) In any case, the proceeds thus given in whole or in part shall not be charged to the child’s legitime.
(a) The person exercising substitute parental authority shall have the same authority over the person of the child as the parents. (b) In no case shall the school administrators, teacher or individual engaged in child care exercising special parental authority inflict corporal punishment upon the child. RA 7610 – CHILD ABUSE LAW
An ascendant, stepparent or guardian of a minor who shall induce, deliver or offer the minor to: (1) Any one prohibited to keep the minor or (2) Any one prohibited to have in his company a minor, twelve (12) years or under or who is ten (10) years or more his junior in any public or private place, hotel, motel, beer joint, discotheque, cabaret, pension house, sauna or massage parlor, beach and/or other tourist resort or similar places shall suffer penalties and imprisonment.
SUSPENSION OR TERMINATION OF PARENTAL AUTHORITY; RA 7610 – CHILD ABUSE LAW PARENTAL AUTHORITY PERMANENTLY TERMINATES
(1) Upon death of parents [Art. 228] (2) Upon death of child [Art. 228] (3) Upon emancipation of child [Art. 228] (4) If the parents exercising parental authority has subjected the child or allowed him to be subjected to sexual abuse [Art. 232]
Note: Those not prohibited to have in his company such minor in any of the mentioned places: anyone who is related within the fourth degree of consanguinity or affinity or any bond recognized by law, local custom and tradition or acts in the performance of a social, moral or legal duty
Note: In the case of death of parents, there is no absolute termination of parental authority because while the child is still a minor, the grandparents, brothers and sisters, or a guardian may exercise substitute parental authority over the child [Art. 216]
Emancipation, as amended by RA 6809
TERMINATION OF PARENTAL AUTHORITY WHICH CAN BE REVIVED BY FINAL JUDGMENT [ART. 229]
(1) Upon adoption of the child; (2) Upon the appointment of a general guardian for the child; (3) Upon judicial declaration of (a) Abandonment of the child in a case filed for the purpose (b) Absence or incapacity of the person exercising parental authority
Art. 234. Emancipation takes place by the attainment of majority. Unless otherwise provided, majority commences at the age of eighteen years. Art. 236. Emancipation shall terminate parental authority over the person and property of the child who shall then be qualified and responsible for all acts of
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civil life, save the exceptions established by existing laws in special cases.
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exercised by the proper court authorized to hear family cases, if one exists, or in the regional trial court or its equivalent sitting in the place where either of the spouses resides. [Art. 241]
Contracting marriage shall require parental consent until the age of twenty-one.
NOTIFICATION TO OTHER SPOUSE:
Nothing in this Code shall be construed to derogate from the duty or responsibility of parents and guardians for children and wards below twenty-one years of age mentioned in the second and third paragraphs of Article 2180 of the Civil Code. RA 6809: By virtue of this law, emancipation can no longer take place by virtue of the minor’s marriage or by the concession of the parents to a minor in a recorded public instrument.
(1) Upon the filing of the petition, the court shall notify the other spouse, whose consent to the transaction is required, of said petition, ordering said spouse to show cause why the petition should not be granted, on or before the date set in said notice for the initial conference. (2) The notice shall be accompanied by a copy of the petition and shall be served at the last known address of the spouse concerned. [Art. 242] PROCEDURE:
(1) A preliminary conference shall be conducted by the judge personally without the parties being assisted by counsel. (2) After the initial conference, if the court deems it useful, the parties may be assisted by counsel at the succeeding conferences and hearings. [Art. 243] (3) If the petition is not resolved at the initial conference, said petition shall be decided in a summary hearing. Basis of summary hearing (at the sound discretion of the court): (a) Affidavits (b) Documentary evidence (c) Oral testimonies at the court’s sound discretion. If testimony is needed, the court shall specify the witnesses to be heard and the subject-matter of their testimonies, directing the parties to present said witnesses. [Art. 246(a)]
Summary Judicial Proceedings in the Family Law PROCEDURAL RULES PROVIDED FOR IN THIS TITLE SHALL APPLY TO [ART. 238]: (1) Separation in fact between husband and wife (2) Abandonment by one of the other (3) Incidents involving parental authority SEPARATION IN FACT A verified petition alleging the following facts is required when [Art. 239]: (a) A husband and wife are separated in fact; or, (b) One has abandoned the other
WHEN APPEARANCE OF SPOUSES REQUIRED:
Situation: Where one of them seeks judicial authorization for a transaction where the consent of the other spouse is required by law but such consent is withheld or cannot be obtained
(1) In case of non-appearance of the spouse whose consent is sought, the court shall inquire into the reasons for his failure to appear, and shall require such appearance, if possible. [Art. 244] (2) If, despite all efforts, the attendance of the nonconsenting spouse is not secured, the court may proceed ex parte and render judgment as the facts and circumstances may warrant. In any case, the judge shall endeavor to protect the interests of the non-appearing spouse. [Art. 245]
The petition shall: (1) Attach the proposed deed, if any, embodying the transaction, if none, shall describe in detail the said transaction and state the reason why the required consent thereto cannot be secured. (2) The final deed duly executed by the parties shall be submitted to and approved by the court.
NATURE OF JUDGMENT: The
judgment of the court shall be immediately final and executory. [Art 247]
SEPARATE CLAIM FOR DAMAGES: Claims for damages by
either spouse, except costs of the proceedings, may be litigated only in a separate action. [Art. 240]
RULES APPLICABLE FOR ADMINISTERING OR ENCUMBERING SEPARATE PROPERTY OF SPOUSE: The petition for
judicial authority to administer or encumber specific separate property of the abandoning spouse and to use the fruits or proceeds thereof for the support of
JURISDICTION:
Jurisdiction over the petition shall, upon proof of notice to the other spouse, be
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the family shall also be governed by these rules. [Art. 248]
Retroactive Effect
INCIDENTS INVOLVING PARENTAL AUTHORITY
RETROACTIVE EFFECT
PROCEDURE
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This Code shall have retroactive effect insofar as it does not prejudice or impair vested or acquired rights in accordance with the Civil Code or other laws. [Art 256]
(1) Such petitions shall be verified and filed in the proper court of the place where the child resides. [Art. 250] (2) Upon the filing of the petition, the court shall notify the parents or, in their absence or incapacity, the individuals, entities or institutions exercising parental authority over the child. [Art. 251]
INVALIDITY OF OTHER PROVISIONS If any provision is held invalid, other provisions not affected shall remain valid. [Art. 255]
Note: (a) Petitions filed under Articles 223, 225 and 235 of this Code involving parental authority shall be verified. [Art. 249] (b) The rules in Chapter 2 hereof shall also govern summary proceedings under this Chapter insofar as they are applicable [Art. 253] (c) The foregoing rules in Chapter 2 (Separation in Fact) and (Incidents Involving Parental Authority) hereof shall likewise govern summary proceedings filed (1) Declaration of presumptive death [Art. 41] (2) Delivery of presumptive legitime [Art. 51] (3) Fixing of family domicile [Art. 69] (4) Disagreements regarding one spouse’s profession, occupation, business, or activity [Art. 73] (5) Disposition or encumbrance of common property in ACP where one spouse is incapacitated or unable to participate in the administration; administration of absolute community in a disagreement and the wife takes recourse within five years [Art. 96] (6) Disposition or encumbrance of common property in CPG where one spouse is incapacitated or unable to participate in the administration; administration of absolute community in a disagreement and the wife takes recourse within five years, [Art. 124]
Funeral, NCC Arts. 305-310 The duty and the right to make arrangements for the funeral of a relative shall be in accordance with the order established for support, under Article 294 [Art. 305]: (1) Spouse (2) Descendants in the nearest degree. In case of descendants of the same degree, or of brothers and sisters, the oldest shall be preferred. (3) The ascendants in the nearest degree. In case of ascendants, the paternal shall have a better right (4) The brothers and sisters. (5) Municipal authorities – if there are no persons who are bound to support or if such persons are without means NATURE OF FUNERAL: Every funeral shall be in keeping
with the social position of the deceased. [Art. 306] The funeral shall be: (1) In accordance with the expressed wishes of the deceased. (2) In the absence of such expression, his religious beliefs or affiliation shall determine the funeral rites. (3) In case of doubt, the form of the funeral shall be decided upon by the person obliged to make arrangements for the same, after consulting the other members of the family [Art. 307]
When wife and husband are de facto separated and the CPG is insufficient, the spouse present shall, upon a petition, be given judicial authority to administer or encumber any specific property of the other spouse and use the fruits and proceeds thereof to satisfy the latter’s share. [Art. 127]
Note: No human remains shall be retained, interred, disposed of or exhumed without the consent of the persons mentioned in articles 294 and 305. Damages: Any person who shows disrespect to the dead, or wrongfully interferes with a funeral shall be liable to the family of the deceased for damages, material and moral [Art. 309]
Retroactive Effect RETROACTIVE EFFECT
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Funeral Expenses: The construction of a tombstone or mausoleum shall be deemed a part of the funeral expenses, and shall be chargeable to the conjugal partnership property, if the deceased is one of the spouses [Art. 310].
(5) Illegitimate children referred to in Article 287 shall bear the surname of the mother. [Art 368] (6) Children conceived before the decree annulling a voidable marriage shall principally use the surname of the father. [Art. 369]
GUIDELINES IN MAKING FUNERAL ARRANGEMENTS
WIFE AFTER AND DURING MARRIAGE (1) A married woman may use [Art. 370]: (a) Her maiden first name and surname and add her husband's surname, or (b) Her maiden first name and her husband's surname or (c) Her husband's full name, but prefixing a word indicating that she is his wife, such as "Mrs."
(1) The persons who are preferred in the right to make funeral arrangements may waive the right expressly or impliedly in which case the right and duty immediately descend to the person next in the order. (2) It must be in keeping with the social position of the deceased. (3) Law shall prevail over the will of the persons who have the right to control the burial of deceased – exhumation, evidential purpose, disposition of corpse by deceased, mutilation of corpses and autopsies. (4) Corpses which are to be buried at public expenses may also be used for scientific purposes under certain conditions. (5) Expressed wishes of the deceased is given priority provided that it is not contrary to law and must not violate the legal and reglementary provisions concerning funerals and disposition of the remains (time, manner, place or ceremony) (6) In the absence of expressed wishes, his religious beliefs or affiliation shall determine the funeral rights. (7) In case of doubt, the persons in Art. 199 shall decide. (8) Any person who disrespects the dead or interferes with the funeral shall be liable for material and moral damages.
[Tolentino:] The wife cannot claim an exclusive right to use the husband’s surname. She can’t be prevented from using it; but neither can she restrain others from using it. (2) In case of annulment of marriage, and the wife is the guilty party, she shall resume her maiden name and surname. If she is the innocent spouse, she may resume her maiden name and surname. However, she may choose to continue employing her former husband's surname, unless [Art. 371]: (a) The court decrees otherwise, or (b) She or the former husband is married again to another person. (3) When legal separation has been granted, the wife shall continue using her name and surname employed before the legal separation. [Art. 372] (4) A widow may use the deceased husband's surname as though he were still living, in accordance with Article 370. [Art 373] CONFUSION AND CHANGE OF NAMES In case of identity of names and surnames, the younger person shall be obliged to use such additional name or surname as will avoid confusion. [Art. 374]
Use of Surnames, Arts. 364369, 369-380
In case of identity of names and surnames between ascendants and descendants, the word "Junior" can be used only by a son. Grandsons and other direct male descendants shall either [Art. 375]: (a) Add a middle name or the mother's surname, or (b) Add the Roman Numerals II, III, and so on.
SURNAMES OF CHILDREN (1) Legitimate and legitimated children shall principally use the surname of the father. [Art. 364] (2) An adopted child shall bear the surname of the adopter. [Art. 365] (3) A natural child acknowledged by both parents shall principally use the surname of the father. If recognized by only one of the parents, a natural child shall employ the surname of the recognizing parent. [Art 366] (4) Natural children by legal fiction shall principally employ the surname of the father [Art. 367]
No person can change his name or surname without judicial authority. [Art. 376] Usurpation of a name and surname may be the subject of an action for damages and other relief. [Art. 377]
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The unauthorized or unlawful use of another person's surname gives a right of action to the latter [Art. 378]
Note: Applicable only to two or more persons who perish in the same calamity, and it is not shown who died first, and there are no particular circumstances from which it can be inferred.
The employment of pen names or stage names is permitted, provided it is done in good faith and there is no injury to third persons. Pen names and stage names cannot be usurped. [Art. 379]
Article 41. A marriage contracted by any person during subsistence of a previous marriage shall be null and void, unless before the celebration of the subsequent marriage, the prior spouse had been absent for four consecutive years and the spouse present has a wellfounded belief that the absent spouse was already dead. In case of disappearance where there is danger of death under the circumstances set forth in the provisions of Article 391 of the Civil Code, an absence of only two years shall be sufficient.
Except as provided in the preceding article, no person shall use different names and surnames. [Art 380]
Absence – Art. 43, CC; Art. 41, FC
General rule: Marriage contracted by any person during the subsistence of a previous marriage is void.
PROVISIONAL MEASURES IN CASE OF ABSENCE, ARTS. 381-383
Exceptions: The following subsequent marriage of the present spouse is valid: (1) Subsequent marriage due to ordinary absence where: (a) The prior spouse had been absent for 4 consecutive years; (b) The spouse present had a well-founded belief that absent spouse is dead; and (c) Judicial declaration of presumptive death was secured (no prejudice to the effect of the reappearance of the absent spouse). (2) Subsequent marriage due to extraordinary absence where: (a) The prior spouse had been missing for 2 consecutive years; (b) There is danger of death attendant to the disappearance [Art. 391, Civil Code]; (c) The spouse present had a well-founded belief that the missing person is dead; and (d) Judicial declaration of presumptive death was secured (no prejudice to the effect of the reappearance of the absent spouse).
Art. 43. If there is a doubt, as between two or more persons who are called to succeed each other, as to which of them died first, whoever alleges the death of one prior to the other, shall prove the same; in the absence of proof, it is presumed that they died at the same time and there shall be no transmission of rights from one to the other. Note: Article 43 provides a statutory presumption when there is doubt on the order of death between persons who are called to succeed each other (only). Joaquin v. Navarro (1948): The statutory presumption of Article 43 was not applied due to the presence of a credible eyewitness as to who died first. PRESUMPTION IN THE RULES OF COURT
(Rule 131, sec. 3,
(jj.) (presumption of survivorship) Age Both under 15 Both above 60 One under 15, the other above 60 Both over 15 and under 60; different sexes Both over 15 and under 60; same sex One under 15 or over 60, the other between those ages
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Presumed Survivor
Notes: (a) Institution of a summary proceeding is not sufficient. There must also be a summary judgment. (Balane) (b) Only the deserted spouse can file or institute an action a summary proceeding for the declaration of presumptive death of the absentee. (Bienvenido case) (c) There must have been diligent efforts on the part of the deserted spouse to locate the absent spouse. These diligent efforts correspond to the requirement of the law for a well-founded belief.
Older Younger One under 15 Male Older One between 15 and 60
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Exception to the Exception: Art. 381. When a person disappears from his domicile, his whereabouts being unknown, and without leaving an agent to administer his property, the judge, at the instance of an interested party, a relative, or a friend, may appoint a person to represent him in all that may be necessary.
(4) Those who may have over the property of the absentee some right subordinated to the condition of his death.
This same rule shall be observed when under similar circumstances the power conferred by the absentee has expired.
WHEN MAY A DECLARATION OF ABSENCE BE DECLARED?
Article 386. The judicial declaration of absence shall not take effect until six months after its publication in a newspaper of general circulation. (a) Two years without any news about the absentee (b) Five years if the absentee left a person in charge of administration of his property (c) Declaration takes effect only after six months after publication in a newspaper of general circulation
Art. 382. The appointment referred to in the preceding article having been made, the judge shall take the necessary measures to safeguard the rights and interests of the absentee and shall specify the powers, obligations and remuneration of his representative, regulating them, according to the circumstances, by the rules concerning guardians.
WHO MAY ASK FOR A DECLARATION OF ABSENCE?
(1) Spouse present (2) Heirs instituted in a will, who may present an authentic copy of the same; (3) Relatives who may succeed by the law of intestacy; (4) Those who may have some right over the property of the absentee, subordinated to the condition of his death.
Art. 383. In the appointment of a representative, the spouse present shall be preferred when there is no legal separation. If the absentee left no spouse, or if the spouse present is a minor, any competent person may be appointed by the court.
ADMINISTRATION OF THE PROPERTY OF THE ABSENTEE, ARTS. 387-389 Art. 387. An administrator of the absentee's property shall be appointed in accordance with Article 383.
REQUISITES:
The judge may appoint a person to represent absentee when: (1) Person disappears from his domicile (2) His whereabouts are unknown (3) No agent to administer his property (4) An interested party, a relative, or a friend files the action
Art. 388. The wife who is appointed as an administratrix of the husband's property cannot alienate or encumber the husband's property, or that of the conjugal partnership, without judicial authority. Art. 389. The administration shall cease in any of the following cases: (1) When the absentee appears personally or by means of an agent; (2) When the death of the absentee is proved and his testate or intestate heirs appear; (3) When a third person appears, showing by a proper document that he has acquired the absentee's property by purchase or other title.
WHO MAY BE APPOINTED AS REPRESENTATIVE?
(1) Spouse present shall be preferred when there is no legal separation (2) If no spouse or spouse is incapacitated, any competent person DECLARATION OF ABSENCE, ARTS. 384-389 Art. 384. Two years having elapsed without any news about the absentee or since the receipt of the last news, and five years in case the absentee has left a person in charge of the administration of his property, his absence may be declared.
In these cases the administrator shall cease in the performance of his office, and the property shall be at the disposal of those who may have a right thereto.
Art. 385. The following may ask for the declaration of absence: (1) The spouse present; (2) The heirs instituted in a will, who may present an authentic copy of the same; (3) The relatives who may succeed by the law of intestacy;
WHO MAY ADMINISTER THE PROPERTY?
(a) Spouse present shall be preferred when there is no legal separation (b) If no spouse or spouse is incapacitated, any competent person
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WHEN WILL THE ADMINISTRATION OF PROPERTY CEASE?
Administrator shall cease in performance of his office, and property shall be disposed in favor of those who have a right thereto when (1) Absentee appears personally or by means of an agent (2) Testate or intestate heirs appear, upon proof of death of absentee (3) Third person appears, with a proper document showing he has acquired absentee’s property by purchase or other title
Note: (1) Although 7 years is required for the presumption of death of an absentee in the Civil Code, Art. 41 of the Family Code makes an exception for the purpose of remarriage by limiting such requirement to 4 years. (2) Art. 41 also limits the required 4 years in Art. 391 for absence under exceptional circumstances to only 2 years. Art. 392. If the absentee appears, or without appearing his existence is proved, he shall recover his property in the condition in which it may be found, and the price of any property that may have been alienated or the property acquired therewith; but he cannot claim either fruits or rents.
PRESUMPTION OF DEATH, ARTS. 390-392 Art. 390. After an absence of 7 years, it being unknown whether or not the absentee still lives, he shall be presumed dead for all purposes, except for those of succession. The absentee shall not be presumed dead for the purpose of opening his succession till after an absence of 10 years. If he disappeared after the age of 75 years, an absence of 5 years shall be sufficient in order that his succession may be opened.
Republic of the Philippines v. Granada (2012): The petition for declaration of presumptive death of an absent spouse for the purpose of contracting a subsequent marriage under Article 41 of the Family Code is a summary proceeding “as provided for” under the Family Code, and as such, the judgment of the court therein shall be immediately final and executor, and not subject to ordinary appeal.
Art. 391. The following shall be presumed dead for all purposes, including the division of the estate among the heirs: (SAAD) (7) A person on board a vessel lost during a sea voyage, or an aeroplane which is missing, who has not been heard of for four years since the loss of the vessel or aeroplane; (8) A person in the armed forces who has taken part in war, and has been missing for four years; (9) A person who has been in danger of death under other circumstances and his existence has not been known for four years.
However, the losing party in a summary proceeding for the declaration of presumptive death for purposes of remarriage under Art. 41 of the FC may file a petition for certiorari with the CA on the ground that, in rendering judgment thereon, the trial court committed grave abuse of discretion amounting to lack of jurisdiction. From the decision of the CA, the aggrieved party may elevate the matter to the Supreme Court via a petition for review on certiorari under Rule 45 of the Rules of Court.
General rule: A person shall be presumed dead for all purposes after absence for a period of 7 years. Exception: Succession (a) In succession, 10 years is required for presumption of death. (b) If absentee disappeared after age 75, 5 years shall be sufficient.
Civil Registrar ARTS. 407-413 Art. 407. Acts, events and judicial decrees concerning the civil status of persons shall be recorded in the civil register.
EXTRAORDINARY ABSENCE
Only 4 years is required for presumption to arise if: (1) A person on board a vessel lost during a sea voyage, or an aeroplane which is missing, who has not been heard of for four years since the loss of the vessel or aeroplane; (2) A person in the armed forces who has taken part in war, and has been missing for four years; (3) A person who has been in danger of death under other circumstances and his existence has not been known for four years.
Art. 408. The following shall be entered in the civil register: (1) Births; (2) marriages; (3) deaths; (4) legal separations; (5) annulments of marriage;
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(6) judgments declaring marriages void from the beginning; (7) legitimations; (8) adoptions; (9) acknowledgments of natural children; (10) naturalization; (11) loss, or (12) recovery of citizenship; (13) civil interdiction; (14) judicial determination of filiation; (15) voluntary emancipation of a minor; and (16) changes of name.
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Exception: (a) Clerical or typographical errors; (b) Change of: first name or nickname, day and month in the date of birth, or sex of a person This exception applies where it is patently clear that there was a clerical or typographical error or mistake in the entry, which can be corrected or changed by the concerned city or municipal civil registrar or consul general in accordance with the provisions of this Act and its implementing rules and regulations Notes: (a) Clerical or typographical error refers to a mistake committed in the performance of clerical work in writing, copying, transcribing or typing an entry in the civil register that is harmless and innocuous (i.e. misspelled name, misspelled place of birth, mistake in the entry of day and month in the date of birth or the sex of the person or the like, which is visible to the eyes or obvious to the understanding, and can be corrected or changed only by reference to other existing record or records) (b) Before the amendment by RA 10172, no correction must involve the change of sex, nationality, age or status of the petitioner. After the amendment, change of sex can now be subjected to correction without judicial order under the rules of this Act. (c) Civil Register refers to the various registry books and related certificates and documents kept in the archives of the local civil registry offices, Philippine Consulates and of the Office of the Civil Registrar General.
Art. 409. In cases of legal separation, adoption, naturalization and other judicial orders mentioned in the preceding article, it shall be the duty of the clerk of the court which issued the decree to ascertain whether the same has been registered, and if this has not been done, to send a copy of said decree to the civil registry of the city or municipality where the court is functioning.
Art. 410. The books making up the civil register and all documents relating thereto shall be considered public documents and shall be prima facie evidence of the facts therein contained. Art. 411. Every civil registrar shall be civilly responsible for any unauthorized alteration made in any civil register, to any person suffering damage thereby. However, the civil registrar may exempt himself from such liability if he proves that he has taken every reasonable precaution to prevent the unlawful alteration.
Sec. 3. Who May File the Petition and Where. – Any person having direct and personal interest in the correction of a clerical or typographical error in an entry and/or change of first name or nickname in the civil register may file, in person, a verified petition with the local civil registry office of the city or municipality where the record being sought to be corrected or changed is kept.
Art. 412. No entry in a civil register shall be changed or corrected, without a judicial order. Art. 413. All other matters pertaining to the registration of civil status shall be governed by special laws. RA 9048 AS AMENDED BY RA 10172 AN ACT AUTHORIZING THE CITY OR MUNICIPAL CIVIL REGISTRAR OR THE CONSUL GENERAL TO CORRECT A CLERICAL OR TYPOGRAPHICAL ERROR IN AN ENTRY AND/OR CHANGE OF FIRST NAME OR NICKNAME IN THE CIVIL REGISTER WITHOUT NEED OF A JUDICIAL ORDER, AMENDING FOR THIS PURPOSE ARTICLES 376 AND 412 OF THE CIVIL CODE OF THE PHILIPPINES
In case the petitioner has already migrated to another place in the country and it would not be practical for such party, in terms of transportation expenses, time and effort to appear in person before the local civil registrar keeping the documents to be corrected or changed, the petition may be filed, in person, with the local civil registrar of the place where the interested party is presently residing or domiciled. The two (2) local civil registrars concerned will then communicate to facilitate the processing of the petition.
General rule: No entry in a civil register shall be changed or corrected without a judicial order
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petition and shall show affirmatively that the petitioner is competent to testify to the matters stated. The petitioner shall state the particular erroneous entry or entries, which are sought to be corrected and/or the change sought to be made.
Citizens of the Philippines who are presently residing or domiciled in foreign countries may file their petition, in person, with the nearest Philippine Consulates. The petitions filed with the city or municipal civil registrar or the consul general shall be processed in accordance with this Act and its implementing rules and regulations. All petitions for the clerical or typographical errors and/or change of first names or nicknames may be availed of only once.
The petition shall be supported with the following documents: (1) A certified true machine copy of the certificate or of the page of the registry book containing the entry or entries sought to be corrected or changed. (2) At least two (2) public or private documents showing the correct entry or entries upon which the correction or change shall be based; and (3) Other documents which the petitioner or the city or municipal civil registrar or the consul general may consider relevant and necessary for the approval of the petition.
GROUNDS
Who may file the petition and where? (1) Any person having direct personal interest in the correction of a clerical or typographical error in an entry and/or change of first name or nickname in the civil register (2) Verified petition with the local civil registry office of the city or municipality (a) where the record being sought to be corrected or changed is kept (b) where the interested party is presently residing or domiciled, if it will be impractical to submit in the place where record is kept (i.e. when party has migrated to another place in the country (c) nearest Philippine Consulates, if the petitioner is presently residing or domiciled in foreign countries
No petition for correction of erroneous entry concerning the date of birth or the sex of a person shall be entertained except if the petition is accompanied by earliest school record or earliest school documents such as, but not limited to, medical records, baptismal certificate and other documents issued by religious authorities; nor shall any entry involving change of gender corrected except if the petition is accompanied by a certification issued by an accredited government physician attesting to the fact that the petitioner has not undergone sex change or sex transplant. The petition for change of first name or nickname, or for correction of erroneous entry concerning the day and month in the date of birth or the sex of a person, as the case may be, shall be published at least once a week for two (2) consecutive weeks in a newspaper of general circulation.
Note: All petitions for the clerical or typographical errors and/or change of first names or nicknames may be availed of only once. Sec. 4. Grounds for Change of First Name or Nickname. – The petition for change of first name 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 by that first name or nickname in the community: or (3) The change will avoid confusion.
Furthermore, the petitioner shall submit a certification from the appropriate law enforcements, agencies that he has no pending case or no criminal record. The petition and its supporting papers shall be filed in three (3) copies to be distributed as follows: first copy to the concerned city or municipal civil registrar, or the consul general; second copy to the Office of the Civil Registrar General; and third copy to the petitioner. RULE 108, RULES OF COURT CANCELLATION OR CORRECTION OF ENTRIES IN THE CIVIL REGISTRY
Sec. 5. Form and Contents of the Petition. – The petition for correction of a clerical or typographical error, or for change of first name or nickname, as the case may be, shall be in the form of an affidavit, subscribed and sworn to before any person authorized by the law to administer oaths. The affidavit shall set forth facts necessary to establish the merits of the
Sec. 1. Who may file petition. - Any person interested in any act, event, order or decree concerning the civil status of persons which has been recorded in the civil register, may file a verified petition for the cancellation
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or correction of any entry relating thereto, with the Court of First Instance of the province where the corresponding civil registry is located.
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(2) Any act, event, order or decree concerning the civil status of persons which has been recorded in the civil register (3) Verified petition for the cancellation or correction of any entry relating thereto with the Court of First Instance of the province where the corresponding civil registry is located
Sec. 2. Entries subject to cancellation or correction. Upon good and valid grounds, the following entries in the civil register may be cancelled or corrected: (a) births; (b) marriages; (c) deaths; (d) legal separations; (e) judgments of annulments of marriage; (f) judgments declaring marriages void from the beginning; (g) legitimations; (h) adoptions; (i) acknowledgments of natural children; (j) naturalization (k) election, loss or recovery of citizenship (l) civil interdiction; (m) judicial determination of filiation; (n) voluntary emancipation of a minor; and (o) changes of name.
ENTRIES SUBJECT TO CANCELLATION
(a) Births (b) Marriages (c) Deaths (d) Legal separations (e) Judgments of annulments of marriage (f) Judgments declaring marriages void from the beginning (g) Legitimations (h) Adoptions (i) Acknowledgments of natural children (j) Naturalization (k) Election, loss or recovery of citizenship (l) Civil interdiction (m) Judicial determination of filiation (n) Voluntary emancipation of a minor (o) Changes of name
Sec. 3. Parties. - When cancellation or correction of an entry in the civil register is sought, the civil registrar and all persons who have or claim any interest which would be affected thereby shall be made parties to the proceeding. Sec. 4. Notice and publication. - Upon the filing of the petition, the court shall, by an order, fix the time and place for the hearing of the same, and cause reasonable notice thereof to be given to the persons named in the petition. The court shall also cause the order to be published once a week for three (3) consecutive weeks in a newspaper of general circulation in the province. Sec. 5. Opposition. - The civil registrar and any person having or claiming any interest under the entry whose cancellation or correction is sought may, within fifteen (15) days from notice of the petition, or from the last date of publication of such notice, file his opposition thereto. Sec. 6. Expediting proceedings. - The court in which the proceeding is brought may make orders expediting the proceedings, and may also grant preliminary injunction for the preservation of the rights of the parties pending such proceedings. Sec. 7. Order. - After hearing, the court may either dismiss the petition or issue an order granting the cancellation or correction prayed for. In either case, a certified copy of the judgment shall be served upon the civil registrar concerned who shall annotate the same in his record. WHO MAY FILE PETITION?
(1) Any person interested
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Property – All things which are, or may be, the object of appropriation. [NCC 414]
them with the intention to have them permanently attached to the land, and forming a permanent part of it; the animals in these places are included; (7) Fertilizer actually used on a piece of land; (8) Mines, quarries, and slag dumps, while the matter thereof forms part of the bed, and waters either running or stagnant; (9) Docks and structures which, though floating, are intended by their nature and object to remain at a fixed place on a river, lake, or coast; (10) Contracts for public works, and servitudes and other real rights over immovable property.
Characteristics (USA) (1) Utility – capacity to satisfy human wants (2) Substantivity and Individuality – separate and autonomous existence (3) Susceptibility of being appropriated – what cannot be appropriated because of their distance, depth, or immensity cannot be considered ‘things’ (i.e. stars, ocean)
Classification
Categories of Immovables (NIDA) (1) By nature (2) By incorporation (3) By destination (4) By analogy
HIDDEN TREASURE Hidden treasure –any hidden and unknown deposit of money jewels or other precious objects, the lawful ownership of which does not appear. [NCC 439]
Immovables by Nature: cannot be moved from place to place; their intrinsic qualities have no utility except in a fixed place (Par. 1 & 8) (1) Par. 1 (a) “Building” - their adherence to the land must be permanent and substantial. (b) Buildings have been considered as immovables, despite: (i) Treatment by the parties e.g. they constitute a separate mortgage on the building and the land [Punzalan v. Lacsamana] (ii) Separate Ownership i.e. a building on rented land is still considered an immovable. [Tolentino] (2) Par. 8 (a) Mineral Deposits (i) Minerals still deposited in the soil (ii) When minerals have been extracted, they become chattel. (b) Slag Dump: dirt and soil taken from a mine and piled upon the surface of the ground. Inside the dump can be found the minerals. (c) Waters: those still attached to or running thru the soil or the ground.
Owner of the land, building or other property on which the hidden treasure was found, also owns it, subject to: (1) Right of a finder by chance who is not a trespasser/intruder: ½ of treasure (2) Right of a usufructuary who finds treasure: ½ of treasure (3) Right of State to acquire things of interest to science or the arts [NCC 438] BASED ON MOVABLE
MOBILITY
–
IMMOVABLE
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OR
REAL OR IMMOVABLE PROPERTY [NCC 415]
(1) Land, buildings, roads and constructions of all kinds adhered to the soil; (2) Trees, plants, and growing fruits, while they are attached to the land or form an integral part of an immovable; (3) Everything attached to an immovable in a fixed manner, in such a way that it cannot be separated therefrom without breaking the material or deterioration of the object; (4) Statues, reliefs, paintings or other objects for use or ornamentation, placed in buildings or on lands by the owner of the immovable in such a manner that it reveals the intention to attach them permanently to the tenements; (5) Machinery, receptacles, instruments or implements intended by the owner of the tenement for an industry or works which may be carried on in a building or on a piece of land, and which tend directly to meet the needs of the said industry or works; (6) Animal houses, pigeon-houses, beehives, fish ponds or breeding places of similar nature, in case their owner has placed them or preserves
Immovables by Incorporation: are essentially movables but are attached to an immovable in such a way as to be an integral part [Par. 2, 3, 4, 6 & 7] (1) Par. 2 (a) Trees and plants: only immovables when they are attached to the land or form an integral part of an immovable (i) When they have been cut or uprooted, they become movables.
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(b) By special treatment of Act 1508 (Chattel Mortgage Law), growing crops may be subject of a Chattel Mortgage. (c) For the purpose of attachment: growing crops are to be attached in the same manner as realty. (Rule 59, Sec. 7)
work in which they are utilized) they recover their condition as movables. (ii) If it is still needed for the industry but separated from the tenement temporarily, the property continues to be immovable. (b) Requisites for Immovability in Par. 5: (i) Placed by the owner or the tenant (as agent); (ii) Adapted to the needs of the industry or work (c) Except: Estoppel (d) Parties may, by agreement, treat as personal property that which by nature would be real, as long as no third parties would be prejudiced. That characterization is effective between the parties. [Makati Leasing v. Wearever(1983)] (e) Effect of Attachment (i) Machinery becomes part of the immovable. (ii) The installation of machinery and equipment in a mortgaged sugar central for the purpose of carrying out the industrial functions and increasing production, constitutes a permanent improvement on said sugar central and subjects said machinery and equipment to the mortgage constituted thereon. [Berkenkotter v. Cu Unjieng(1935)]
(2) Par. 3 (a) Res vinta in Roman Law (b) “Attachment in a fixed manner”: breakage or injury in case of separation will be substantial e.g. wells, sewers, aqueducts and railways (i) Whether attached by the owner himself or some other person (3) Par. 7 Actually used (it has been spread over the land) Immovables by Destination: are essentially movables but by the purpose for which they have been placed in an immovable, partake of the nature of an immovable [Par. 4, 5, 6 & 9] (1) Par. 4 (a) Requisites: (i) Placed by the owner or by the tenant (as agent); (ii) With intention of attaching them permanently even if adherence will not involve breakage or injury. (b) Where the improvement or ornaments placed by the lessee are not to pass to the owner at the expiration of the lease, they remain movables for chattel mortgage purposes. [Davao Sawmill v. Castillo(1935)] (2) Par. 3 v. Par. 4 Par. 3 Cannot be separated from immovable without breaking or deterioration Need not be placed by the owner Real property by incorporation
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(4) Par. 6 Requisites: (a) Placed by the owner or the tenant (as agent); (b) With the intention of permanent attachment; (c) Forming a permanent part of the immovable.
Par. 4
(5) Par. 9: (a) A floating house tied to a shore and used as a residence is considered real property, considering that the waters on which it floats are considered immovables. (b) But if the floating house makes it a point to journey from place to place, it assumes the category of a vessel, and is considered immovable
Can be separated from immovable without breaking or deterioration Must be placed by the owner, or by his agent, expressed or implied Real property by incorporation and destination
Immovables by Analogy: Contracts for public works, servitudes, other real rights over immovable property e.g. usufruct and lease of real property for a period of 1 year and registered [Par. 10]
(3) Par. 5 (a) Immovability depends upon their being destined for use in the industry or work in the tenement; (i) The moment they are separated, (from the immovable or from the industry or
Note: Enumeration in Art. 415 not absolute (1) Parties may by agreement treat as, but effective only as to them.
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It is based, partly, upon the principle of estoppel. [Evangelista vs. Alto Surety(1958)]
(c) Intellectual property – considered personal property; it consists in the pecuniary benefit which the owner can get by the reproduction or manufacture of his work.
(2) For purposes of taxation, improvements on land are commonly taxed as realty, even though for some purposes, they might be considered as personalty.
(4) By forces of nature – e.g. electricity, gas, heat, oxygen
It is a familiar phenomenon to see things classified as real property for purposes of taxation, which on general principle, might be considered personal property. [Manila Electric v. Central Bank(1962)]
IMPORTANCE AND SIGNIFICANCE OF CLASSIFICATION UNDER THE CIVIL CODE
(1) In Criminal Law (a) Usurpation of property can take place only with respect to real property. [RPC 312] (b) Robbery and theft can be committed only against personal property. [RPC 293, 308]
PERSONAL OR MOVABLE [416 & 417, CC]
(1) Those movables susceptible of appropriation which are not included in the preceding article; (2) Real property which by any special provision of law is considered as personalty; (3) Forces of nature which are brought under control by science; and (4) In general, all things which can be transported from place to place without impairment of the real property to which they are fixed. (5) Obligations and actions which have for their object movables or demandable sums; and (6) Shares of stock of agricultural, commercial and industrial entities, although they may have real estate. Tests to Determine Movable Character (1) By exclusion (a) Everything NOT included in Article 415 (b) Parties cannot by agreement treat immovable that which is legally movable.
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(2) In the Form of Contracts Involving Movables and Immovables (a) Subject matter of specific contracts: (i) Only real property can be the subject of real mortgage [NCC 2124] and antichresis [NCC 2132] (ii) Only personal property can be the subject of voluntary deposit [NCC 1966], pledge [NCC 2094] and chattel mortgage [Act 1508[ (b) Donations of real property are required to be in a public instrument [NCC 749] but a donation of a movable may be made orally or in writing [NCC 748] (3) For Acquisitive Prescription (a) Real property can be acquired by prescription in 30 years (bad faith) and 10 years (good faith). (NCC 1137, 1134) (b) Movables can be acquired by prescription in 8 years (bad faith) and 4 years (good faith). (NCC 1132)
as
(2) By description (a) Ability to change location – whether it can be carried from place to place; (b) Without substantial injury to the immovable to which it is attached.
(4) Actions for Recovery of Possession (a) Possession of real property - recovered through accion reivindicatoria, accion publiciana, forcible entry and unlawful detainer. (b) Possession of movable property - recovered through replevin.
The steel towers built by MERALCO are not buildings or constructions since they are removable and merely attached to a square metal frame by means of bolts, which when unscrewed could easily be dismantled and moved from place to place, without breaking the material or causing deterioration to the object they are attached. [Board of Assessment Appeals v. Meralco]
(5) Venue of actions (a) Real actions - Actions concerning real property are commenced in the court which has jurisdiction over the area where the real property is situated. [Rules of Court Rule 4 Sec. 1] (b) Personal actions - Commenced where the plaintiff or any of the principal plaintiffs, or where the defendant or any of the principal defendants resides, or if a non-resident
(3) By special provision of law (a) Growing crops under the Chattel Mortgage Law (b) Machinery installed by a lessee not acting as agent of the owner [Davao Sawmill v. Castillo]
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defendant, where he may be found, at the election of the plaintiff. [Rule 4 Sec. 2]
May be used by everybody, even by strangers or aliens but nobody can exercise over it the rights of a private owner
(6) The Governing Law (Private International Law) (a) Immovables - governed by the law of the country where they are located (b) Movables - governed by the personal laws of the owner (which in some cases is the law of his nationality and in other cases, the law of his domicile)
(2) Those intended for some public service (a) may be used only by authorized persons but exists for the benefit of all (b) e.g. fortresses, unleased mines and civil buildings
(7) In affecting third persons (a) In transactions involving real property – must be recorded in the Registry of Property to affect third persons (b) In transactions involving personal property – registration is not required, except for chattel mortgages [Chattel Mortgage Register, NCC 2140]
(3) Those for the development of the national wealth Includes natural resources such as minerals, coal, oil and forest (4) Patrimonial property (a) Owned by the State over which it has the same rights as private individuals in relation to their own property (b) Subject to the administrative laws and regulations on the procedure of exercising such rights. (c) E.g. friar lands, escheated properties and commercial buildings (d) Purpose: (i) Enables the State to attain its economic ends (ii) Serves as a means for the State’s subsistence and preservation (iii) Enables the State to fulfill its primary mission (e) Conversion of Property of Public Dominion for Public Use to Patrimonial Property: (i) Property of public dominion, when no longer intended for public use or for public service, shall form part of the patrimonial property of the State [NCC 422, Civil Code] (ii) Requires a Declaration by the Government (executive or legislative departments) that it is no longer needed for public use or service.
BASED ON OWNERSHIP Either of public dominion or private ownership [NCC 419] Churches and other consecrated objects are considered outside the commerce of man; they are considered neither public nor private property PUBLIC DOMINION
Property of public dominion is outside the commerce of man. They cannot be the subject matter of private contracts, cannot be acquired by prescription and they are not subject to attachment and execution nor burdened with a voluntary easement. Public Dominion Public Domain
As defined by NCC 420
Public Lands
Public Land Act
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Used in Art XII, Section 2, 1987 Constitution
Characteristics: (1) Not owned by the State but pertains to it as territorial sovereign; to hold in trust for the interest of the community. (2) Purpose: For public use, and not for use by the State as a juridical person (3) Cannot be the subject of appropriation either by the State or by private persons
Administered by Municipal Corporations: [NCC 424] (1) Property for public use, in the provinces, cities, and municipalities, consist of the provincial roads, city streets, municipal streets, the squares, fountains, public waters, promenades, and public works for public service paid for by said provinces, cities, or municipalities. (2) Patrimonial property of Municipal Corporations: (a) The province or municipality, as a juridical entity, also possesses private property to answer for its economic necessities.
Classifications: Administered by the State: [NCC 420] (1) Those intended for public use (roads, canals, rivers, torrents, ports and bridges constructed by the State, banks, shores, roadsteads, and others of similar character)
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(b) Classification of Properties of provinces, cities, and municipalities [Salas v. Jarencio, (1972)] (i) Properties acquired with their own funds in their private or corporate capacity over which the political subdivision has ownership and control (ii) Properties of public dominion held in trust for the State’s inhabitants are subject to the control and supervision of the State
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acquired with its private or corporate funds, the presumption is that such land came from the State upon the creation of the municipality. Conversion Alienable Public Land converted to Private Property through Prescription – Alienable public land held by a possessor – personally/through predecessors-ininterest, openly, continuously and exclusively – for 30 years is CONVERTED to private property by the mere lapse or completion of the period. The application for confirmation is mere formality, because land had already been converted, giving rise to a registrable title. [Director of Lands v. IAC]
(c) A municipal corporation must prove that they acquired the land with their own corporate funds (d) Presumption: that land comes from the State upon the creation of the municipality. All lands in the possession of the municipality
Private Land converted to Property of Public Dominion through abandonment and reclamation – Through the gradual encroachment or erosion by the ebb and flow of the tide, private property may become public IF the owner appears to have ABANDONED the land, and permitted it to be totally destroyed so as to become part of the shore. The land having disappeared on account of the gradual erosion, and having remained submerged until they were reclaimed by the government, they are public land. [Government v. Cabangis]
Except for those acquired with its private funds, are deemed to be property of public dominion, held in trust for the State for the benefit of its inhabitants. (e) Congress has paramount power to dispose of lands of public dominion in a municipality, the latter being a subdivision only for purposes of local administration. [Salas v. Jarencio, (1972)] PRIVATE OWNERSHIP
BASED ON CONSUMABILITY [NCC 418] Only applies to movables, determined by nature
Can be exercised by the State in its private capacity or by private persons
CONSUMABLE
(1) Movables which cannot be used in a manner appropriate to their nature without their being consumed (e.g. food) (2) Consumable goods cannot be the subject matter of a commodatum unless the purpose of the contract is not the consumption of the object, as when it is merely for exhibition.
Kinds: (1) Patrimonial property - Property owned by the State and its political subdivisions in their private capacity; all property of the State not included in NCC 420 (on public dominion) [NCC 421-424] (2) Property belonging to private persons, either individually or collectively [NCC 425] (1) Property of private ownership, besides the patrimonial property of the State, provinces, cities, and municipalities, consists of all property belonging to private persons, either individually or collectively. (2) Refers to all property belonging to private persons, natural or juridical, either individually or collectively (co-owned property)
NON-CONSUMABLE
All others not falling under ‘consumable’ e.g. money in coin SUSCEPTIBILITY TO SUBSTITUTION Only applies to movables, determined by the intention of the parties. FUNGIBLES
Things which, because of their nature or the will of the parties, are capable of being substituted by others of the same kind, not having a distinct individuality
Determination (two different views): (1) Determined by how the property was used: In Province of Zamboanga v. City of Zamboanga (1968), property was considered patrimonial for they were not for public use.
NON-FUNGIBLES
(1) Things which cannot be substituted for another (2) If the parties agreed that the same thing be returned, it is not fungible
(2) Determined by how the property was acquired: According to Salas v. Jarencio (1972), the absence of a title deed to any land, showing that it was
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BASED ON THE CONSTITUTION [ARTICLE XII, SEC 3] (1) Public Agricultural Land (2) Mineral Land (3) Timber Land (4) National Parks
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Ownership DEFINITION (a) Independent right of exclusive enjoyment and control of a thing (b) For the purpose of deriving all advantages required by the reasonable needs of the owner/holder of right and promotion of general welfare (c) Completely subjected to his will (d) In everything not prohibited by public law or the rights of another
OTHER CLASSIFICATIONS BY THEIR PHYSICAL EXISTENCE
(1) Corporeal - All property the existence of which can be determined by the senses (res qui tangi possunt) (2) Incorporeal (a) Things having abstract existence, created by man and representing value. (b) Includes rights over incorporeal things, credits, and real rights other than ownership over corporeal things.
RIGHT IN GENERAL RIGHTS INCLUDED IN OWNERSHIP [NCC 428]
(1) Right to enjoy and dispose of a thing, without other limitations than those established by law (2) Right of action against the holder and possessor of the thing in order to recover it.
BY THEIR AUTONOMY OR DEPENDENCE
(1) Principal - Those to which other things are considered dependent or subordinated, such as the land on which a house is built. (2) Accessory - Those which are dependent upon or subordinated to the principal. They are destined to complete, enhance or ornament another property.
BUNDLE OF RIGHTS
(1) Jus Utendi: Right to enjoy and receive what the
property produces Jus Fruendi: Right to receive fruits Jus Accessiones: Right to the accessories Jus Abutendi: Right to consume a thing by use Jus Disponendi: Right to alienate, encumber, transform or even destroy the thing owned (6) Jus Vindicandi: Right to recover possession of property based on a claim of ownership (7) Jus Possidendi: Right to possess the property (Implied from all the other rights) (2) (3) (4) (5)
BY SUSCEPTIBILITY TO DETERIORATION
(1) Deteriorable that deteriorate through use or by time (2) Non-deteriorable BY REASON OF THEIR SUSCEPTIBILITY TO DIVISION
PROTECTING PROPERTY
(1) Divisible - Those which can be divided physically or juridically without injury to their nature. E.g.: piece of land or an inheritance. (2) Indivisible - Those which cannot be divided without destroying their nature or rendering impossible the fulfillment of the juridical relation of which they are object.
BASIC DISTINCTIONS
(1) Real right v. Personal right Real Rights - Rights that confer upon its holder an autonomous power to derive directly from a thing certain economic advantages independently of whoever the possessor of the thing Personal Rights - Rights of a person to demand from another as a definite passive subject, the fulfillment of a prestation to give, to do or not to do
BY REASON OF DESIGNATION
(1) Generic - That which indicates its homogenous nature, but not the individual such as a horse, house, dress, without indicating it (2) Specific - That which indicates the specie or its nature and the individual, such as “the white horse of X”
Real Rights Definite active subject who has a right against ALL persons generally as an indefinite passive subject Object is generally a corporeal thing
EXISTENCE IN POINT OF TIME
(1) Present - Those which exist in actuality, either physical or legal, such as, the erected building (2) Future - Those which do not exist in actuality, but whose existence can reasonably be expected with more or less probability, such as ungathered fruits.
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Personal Rights Definite active subject (creditor) and a definite passive subject (debtor) Subject matter is always an incorporeal thing
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Real Rights Generally extinguished by the loss or destruction of the thing over which it is exercised
Personal Rights Personal right survives the subject matter
It is directed against the whole world, giving rise to rd real actions against 3 persons
It is binding or enforceable only against a particular person giving rise to personal actions against such debtor
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Distinction between forcible entry and unlawful detainer (1) Forcible Entry: Lawful possessor deprived through FISTS: (a) FISTS (Force, Intimidation, Strategy, Threats, Stealth) (b) Prescription: 1 year from dispossession (force, intimidation, threats) or from knowledge of dispossession (strategy, stealth) (2) Unlawful Detainer: Possessor refused to vacate upon demand by owner (a) Legal possession (by permission/ tolerance) becomes unlawful upon failure to vacate (b) Prescription of action: 1 year from last notice to vacate
(2) Real action v. Personal action (Rule 4 Sec 1-2) Real action – actions affecting title to or possession of real property or any interest therein
Actions for recovery of possession of movable property Replevin (1) for manual delivery of property (2) Prescription of Right: 4 years (GF) or 8 years (BF)
Personal action – all other actions (3) Action in rem v. Action in personam v. Action quasi in rem Action in rem – action against a property, judgment binding against the whole world
Requisites for recovery of property [NCC 434] (1) Property must be identified Through a relocation survey and a title properly identifying boundaries and location
Action in personam – action against a specific person, judgment binding against that particular person
(2) Plaintiff must rely on the strength of his title and not on weakness of defendant’s title (a) Right must be founded on positive title and not on lack or insufficiency of defendant’s (b) Ei incumbit probatio qui dicit, non qui negat: He who asserts, not he who denied must prove
Action quasi in rem – action against a specific property with respect to a person REMEDIES
(1) Self-help [NCC 429-430] (a) The owner may use such force as may be reasonably necessary to repel or prevent an actual or threatened unlawful physical invasion or usurpation of his property. (b) Every owner may enclose or fence his land or tenements by any other means without detriment to servitudes constituted thereon. (2) Actions to recover ownership and possession of real property
LIMITATIONS ON OWNERSHIP LIMITATIONS ON THE RIGHTS OF OWNERSHIP PROVIDED BY LAW
General limitations – taxation, eminent domain, police power (1) Police Power: Property taken with no compensation for general welfare (a) When any property is condemned or seized by competent authority in the interest of health, safety or security, the owner thereof shall not be entitled to compensation, unless he can show that such condemnation or seizure is unjustified. [Art. 436, Civil Code] (b) Requisites: To justify the exercise of police power, the following must appear: (i) The interests of the public generally, require such interference (as distinguished from those of a particular class) (ii) The means are reasonably necessary for the accomplishment of a purpose, and not unduly oppressive
RIGHT TO RECOVER POSSESSION
Immovable Property (1) Accion Reivindicatoria: Recovery of ownership of real property (a) Including but not limited to possession (b) Prescription of Action: 30 years (2) Accion Publiciana: Recovery of a better right to possess (de jure) (a) Judgment as to who has the better right of possession (b) Also, actions for ejectment not filed within 1 year must be filed as accion publiciana (c) Prescription: 10 years
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(2) Taxation: Forced contribution to the operation of government (3) Eminent Domain: Property taken for public use/purpose, but subject to due process and payment of just compensation Requisites – To justify the exercise of the right of eminent domain, the following requisites must all be present: (a) Private property as the object of the expropriation; (b) The property is taken by the State or by competent authority; (c) The purpose of the taking is for public use; (d) The taking must be attended with due process of law; (e) There is payment of just compensation
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(3) Act in State of Necessity The owner of a thing has no right to prohibit the interference of another with the same, if the interference is necessary to avert an imminent danger and the threatened damage, compared to the damage arising to the owner from the interference, is much greater. The owner may demand from the person benefited, indemnity for the damage to him. (NCC 432) (4) Nuisance - A nuisance is any act, omission, establishment, business, condition of property, or anything else which: (a) Injures or endangers the health or safety of others; or (b) Annoys or offends the senses; or (c) Shocks, defies or disregards decency or morality; or (d) Obstructs or interferes with the free passage of any public highway or street, or any body of water; or (e) Hinders or impairs the use of property. (NCC 694)
Specific Limitations – imposed by law, sic utere tuo, nuisance, stat of necessity, easements voluntarily imposed by owner: servitudes, mortgages imposed by contract (1) Legal Servitudes: once requisites are satisfied, the servient owner may ask the Court to declare the existence of an easement (a) Art. 644 & 678: Aqueduct (b) Art. 679: Planting of trees (c) Art. 670: Light and View (d) Art. 649 & 652: Right of Way (e) Art. 637: Passage of water from upper to lower tenements (f) Art. 676: Drainage of buildings (g) Art. 684-687: Lateral and subjacent support (2) Must not injure the rights of a third person (a) Sic Utere Tuo Ut Alienum Non Laedas (b) The owner of a thing cannot make use thereof in such manner as to injure the rights of a third person. [NCC 431] Summary of Actions: Action Forcible Entry/Unlawful Detainer Accion Publiciana
Venue
Summon
Prayer
Basis Prior physical possession Real right of Possession Ownership
Real Action
In personam
Possession
Real Action
In personam
Possession
Real Action
In personam
Possession
Accion Reividicatoria
Reconveyance
Prescription 1 year 10 years [NCC 555(4)] GF: 10 years BF: 30 years [NCC 1137] Unless--Torrens Title -- Unless laches
Real Action
In personam
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Title
Ownership
10 years
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Quieting of Title Replevin
PROPERTY
Venue
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Summon
Real Action
Quasi-in rem
Personal Action
In personam
Accession
Prayer Quieting of Title Possession
Basis Ownership Ownership
Prescription (NCC 1456) Imprescriptible GF: 4 years BF: 8 years
(3) Lease (4) Antichresis (a) He who receives the fruits has the obligation to pay the expenses made by a third person in their production, gathering, and preservation. [NCC 443] (b) Necessary expenses of production, gathering and preservation must be borne by the receiver of the fruits
Accession – the right by virtue of which the owner of a thing becomes the owner of everything which is produced thereby, or which is incorporated or attached thereto, either naturally or artificially. [NCC 440] Accessories – things joined to or included with the principal thing for the latter’s embellishment, better use, or completion.
Fruits – all periodical additions to a principal thing produced by forces inherent to the thing itself
CLASSIFICATION OF ACCESSION (1) Accession Discreta (fruits) – the right pertaining to the owner of a thing over everything produced thereby (by internal forces)
Kinds of Fruits (1) Natural – spontaneous products of soil and the young and other products of animals [NCC 442 (1)]
(2) Accession Continua – the right pertaining to the owner of a thing over everything that is incorporated or attached thereto either naturally or artificially; by external forces (by external forces) (a) Over Immovables (i) Industrial (ii) Natural (1) Alluvion (2) Avulsion (3) Change of Course of River (4) Formation of Islands
Under the rule partus sequitur ventrem, to the owner of female animals would also belong the young of such animals although this right is lost when the owner mixes his cattle with those of another. (2) Industrial – produced by lands of any kind through cultivation or labor [NCC 442 (2)] Standing trees are not fruits since they are considered immovables although they produce fruits themselves. However, they may be considered as industrial fruits when they are cultivated or exploited to carry on an industry.
(b) Over Movables (i) Conjunction and Adjunction (ii) Commixtion and Confusion (iii) Specification
(3) Civil Fruits – easily prorated for under NCC 544 they are deemed to accrue daily and belong to the possessor in good faith in that proportion
WITH RESPECT TO IMMOVABLES:
Accession Discreta - Right of ownership to the fruits [NCC 441]
Note: (a) Natural and Industrial Fruits are real property while still ungathered (b) Only such as are manifest or born are considered as natural or industrial fruits
General Rule: To the owner of the principal belongs the natural, industrial and civil fruit. Exception: [PULA] (1) Possession in good faith (2) Usufruct
Principles Applicable to Accession Discreta (1) Time of Accrual depending on kind:
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(a) Annuals: from the time seedlings appear on the ground (b) Perennials: from the time fruits actually appear on the plants (c) Young of animals: from the time they are in the womb, although unborn – beginning of maximum ordinary period of gestation Fowls: from the time of incubation
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Note: (a) Bad faith leads to liability for damages and the loss of the works or the improvement without reimbursement (b) Bad faith of one party neutralizes the bad faith of the other (2) Accession Continua Natural: Land deposits, etc. (a) Alluvium: Soil is gradually deposited on banks adjoining the river
(2) A receiver of fruits has the obligation to pay the expenses incurred by a third person in the production, gathering and preservation. [NCC 443] (a) Exception: Receiver does not have to pay if fruits are recovered before gathering from a possessor in bad faith, receiver does NOT have to pay indemnity (b) But if recovered after fruits have been gathered, receiver must pay since the fruits have been separated from immovable, hence accession principles will not apply
Requisites (i) Deposit of soil or sediment is gradual and imperceptible (ii) As a result of the action of the currents of the waters of the river (iii) Land where the accretion takes place is adjacent to the banks of the rivers (iv) Deemed to Exist: When the deposit of the sediment has reached a level higher than the highest level of the water during the year
Principles Applicable to Accession Continua (1) Accession Continua Artificial or Industrial: Building, planting or sowing on land owned by another (over immovables)
Effect (i) Land automatically owned by the riparian owner (ii) BUT does not automatically become registered property
General Rule: Whatever is built, planted or sown on the land of another + improvements or repairs made thereon, belong to the owner of the land subject to the rules on BPS.
Rationale (i) To offset the owner’s loss from possible erosion due to the current of the river (ii) Compensate for the subjection of the land to encumbrances and legal easements
Presumptions: (a) All works, sowing and planting are presumed made by the owner (b) All works are presumed made at the owner’s expense, unless the contrary is proved (c) The owner of the principal thing owns the natural, industrial and civil fruits, except when the following persons exist: (i) Possessor in Good Faith (ii) Usufructuary (iii) Lessee (iv) Antichretic creditor
(b) Avulsion: A portion of land is segregated from one estate by the forceful current of a river, creek or torrent and transferred to another Requisites (i) Segregation and transfer of land is sudden and abrupt (ii) Caused by the current of the water (iii) Portion of land transported must be known and identifiable OR (iv) Can also apply to sudden transfer by other forces of nature such as land transferred from a mountain slope because of an earthquake
Meaning of bad faith (a) On the part of the landowner: Whenever the building, planting or sowing was done with the knowledge and without opposition on his part (b) On the part of owner of materials: Allows the use of his materials without protest (c) On the part of the builder, planter and sower: Knows that he does not have title to the land, nor the right to build thereon OR no permission of the owner of the materials to pay their value
Effect: The ownership of the detached property is retained by the owner subject to removal within 2 years from the detachment
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(d) Formation of Islands They belong to the State if: (i) Formed on the SEAS within the jurisdiction of the Philippines (ii) Formed on LAKES (iii) Formed on NAVIGABLE or FLOATABLE RIVERS (1) Capable of affording a channel or passage for ships and vessels (2) Must be sufficient not only to float bancas and light boats, but also bigger watercraft (3) Deep enough to allow unobstructed movements of ships and vessels (4) TEST: can be used as a highway of commerce, trade and travel
(c) Change Of Course Of River Requisites (i) Change in the natural course of the waters of the river (ii) Such change causes the abandonment of the river beds Natural Bed: ground covered by its waters during ordinary floods. Such change is sudden or abrupt Results: (i) Owners whose lands are occupied by the new course automatically become owners of the old bed, in proportion to the area they lost (ii) Owners of the lands adjoining the old bed are given the right to acquire the same by paying the value of the land
They belong to the Owners of the nearest margins or banks if (i) Formed through successive accumulation of alluvial deposits (ii) On NON-NAVIGABLE and NONFLOATABLE RIVERS (iii) If island is in the middle: divided longitudinally in half.
Not exceeding the value of the land invaded by the new bed (the old property of the owner) (iii) The new bed opened by the river on a private estate shall become of public dominion
Landowner Good Faith
Bad Faith
Builder, Planter, Sower [BPS]
Good Faith
Rights of Landowner [NCC 448]: (a) Buy (only after payment of indemnity under NCC 546 and 548 to BPS) 546 and 548 – Necessary, Useful and Ornamental (b) Sell to BP (unless the value of the land is considerably more than that of the building or trees) Remedy: Rent to BP if L does not want to buy (c) Rent to S
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Absolute Duties of Landowner [NCC 447]: (a) Pay damages (b) Buy or pay for value (c) Allow removal
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Landowner
Bad Faith
Good Faith
Bad Faith
Absolute Right of Landowner [NCC 449-452] (a) Get (b) Demolish the work of B at the expense of B (c) Removal of PS at the expense of PS (d) Sell to BP (e) Rent to the S (f) Damages
SAME AS GF: GF
Landowner
Material Man
Good Faith
Bad Faith
Good Faith
Rights of Landowner: [NCC 447] Buy unless M can remove without damage
Absolute Duties of Landowner: [NCC 447] (1) Pay damages (2) Buy or pay for value (3) Allow removal
Bad Faith
Absolute Right of Landowner [NCC 447] Get
SAME AS GF: GF
Case 1: Landowner is BPS using material of another Landowner and BPS
Owner of Material
Good faith Right to acquire the improvements after paying the value of materials.
Good faith (1) Limited right of removal if there would be no injury to work constructed, or without plantings or constructions being destroyed. [Article 447] (2) Right to receive payment for value of materials Good faith (a) Right to receive payment for value of materials (b) Absolute right of removal of the work constructed in any event (c) Right to be indemnified for damages Bad faith Lose materials without right to indemnity
Bad faith Acquire BPS after paying its value and paying indemnity for damages [Article 447] but subject to OM’s right to remove Good faith (1) Right to acquire the improvements without paying indemnity (2) Right to acquire indemnity for damages if there are hidden defects known to OM Bad faith Same as though acted in good faith under Article 453
Bad faith Same as though acted in good faith under Article 453
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Case 2: BPS builds, plants, or sows on another’s ;and using his own materials Landowner
BPS and Owner of Material
Good faith Good faith Landowner has option to: BPS has right to retain (right of retention) the land until (a) Acquire the improvement after paying indemnity the payment of indemnity which may be the original cost of improvement OR increase in value of the whole brought about by the NOTE: During this period BPS is not required to pay improvement rent. (b) Sell the land to the BP or collect rent from sower UNLESS value of land is more than the thing built, planted or sown or BP shall pay rent fixed by parties or by the court in case of disagreement. NOTE: Landowner can be forced to choose under pain of direct contempt or court can choose for him. Good faith Landowner has right to collect damages in any case and option to: (a) Acquire improvements without paying indemnity if the improvements are still standing on the land (b) Sell the land to BP or collect rent from the sower unless value of the improvements in which case there will be a forced lease (c) Order demolition of improvements or restoration of land to its former condition at the expense of the BPS Landowner must pay for necessary expenses for preservation Bad faith (1) Landowner must indemnify BPS for the improvements and pay damages as if he himself did the BPS (2) Landowner has no option to sell the land and cannot compel BPS to buy the land unless BPS agrees to Bad faith Same as though acted in bad faith under Article 453
Bad faith (1) Pay damages to landowner (2) BPS lose materials without right to indemnity (3) No right to refuse to buy the land (4) Recover necessary expenses for preservation of land
Good faith BPS has right to : (1) Be indemnified for damages (2) Remove all improvements in any event Bad faith Same as though acted in bad faith under Article 453
Case 3: BPS builds, plants or sows on another’s land with materials owned by third persons Landowner
BPS
Owner of Material
Good faith (a) Right to acquire improvements and pay indemnity to BPS; subsidiarily liable to OM (b) Has option to: (1) Sell land to BP except if the value of the land is considerably more (2) Rent to sower Good faith (1) Right to acquire improvements and pay indemnity to BPS (2) Has option to: (1) Sell land to BP except if the value of the land is
Good faith (1) Right of retention until necessary and useful expenses are paid (2)Pay value of materials to OM
Good faith (1) Collect value of material primarily from BPS and subsidiarily liable for landowner if BPS is insolvent (2) Limited right of removal
Good faith (1) Right of retention until necessary and useful expenses are paid. (2)Keep BPS without indemnity to OM and collect damages from him
Bad faith (1) Lose the material without right to indemnity (2) Must pay for damages to BPS
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Landowner considerably more (2) Rent to sower (3) Without subsidiary liability for cost of materials Good faith (1) Landowner has right to collect damages in any case and option to: (1) Acquire improvements w/o paying for indemnity; or (2) Demolition or restoration; or (3) Sell to BP, or to rent to sower (2) Pay necessary expenses to BPS Bad faith Same as when all acted in good faith under Article 453 Bad faith (1) Acquire improvement after paying indemnity and damages to BPS unless latter decides to remove (2) Subsidiarily liable to OM for value of materials Bad faith (1) Acquire improvements after indemnity; subsidiarily liable to OM for value of materials (2) Has option to: (a) Sell the land to BP except if the value of the land is considerably more (b) Rent to sower Good faith (a) Acquire improvement after paying indemnity; subsidiarily liable to OM (b) Landowner has option to: (a) Sell land to BP except if value of land is considerably more (b) Rent to sower Bad faith Acquire improvements and pay indemnity and damages to BPS unless latter decides to remove materials
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BPS
Owner of Material
Bad faith Recover necessary expenses for preservation of land from landowner unless landowner sells land
Bad faith (1) Recover value from BPS (as if both are in good faith) (2) If BPS acquires improvement, remove materials if feasible w/o injury (3) No action against landowner but liable to landowner for damages
Bad faith Same as when all acted in good faith under Article 453 Good faith (1) May remove improvements (2)Be indemnified for damages in any event
Bad faith Same as when all acted in good faith under Article 453 Good faith (1) Remove materials if possible w/o injury (2) Collect value of materials from BPS; subsidiarily from landowner
Bad faith (a) Right of retention until necessary expenses are paid (b)Pay value of materials to OM and pay him damages
Good faith (a) Collect value of materials primarily from BPS and subsidiarily from landowner (b) Collect damages from BPS (c) If BPS acquires improvements, remove materials in any event
Bad faith (1) Right of retention until necessary expenses are paid (2)Pay value of materials to OM (3) Pay damages to OM
Good faith - Collect value of materials primarily from BPS and subsidiarily from landowner - Collect damages from BPS - If BPS acquires improvements, absolute right of removal in any event Bad faith (1) No right to indemnity (2) Loses right to material
Good faith (1) Receive indemnity for damages (2)Absolute right of removal of improvements in any event
(2) Mixture – the union of material where the components lose their identity
WITH RESPECT TO MOVABLE PROPERTY
Three Types: (1) Conjunction or Adjunction - process where 2 movables belonging to different owners are attached to each other to form a single object
Kinds: (a) Commixtion – mixture of solids (b) Confusion – mixture of liquids and gases
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(3) Specification – transforming/giving of a new form to another’s material through labor
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When separation allowed (1) Separation without injury (2) Accessory much more precious (a) Owner of accessory may demand separation even though the principal thing may suffer (b) Owner who caused the union shall bear the expenses for separation even if he acted in good faith (3) Owner of principal in bad faith
Adjunction Requisites (1) There are 2 movables belonging to 2 different owners (2) They are united in such a way that they form a single object (3) They are so inseparable that their separation would impair their nature or result in substantial injury to either component
Mixture Kinds of Mixtures: (1) Commixtion: mixture of solid things (2) Confusion: mixture of liquid things
Kinds of Adjunction (1) Inclusion or engraftment – e.g. a diamond is set on a gold ring (2) Soldadura or soldering – e.g. when lead is united or fused to an object made of lead (a) It is ferruminacion if both the accessory and principal objects are of the same metal; and (b) Plumbatura, if they are of different metals (3) Escritura or writing – e.g. when a person writes on paper belonging to another; (4) Pintura or painting – e.g. when a person paints on canvas belonging to another; (5) Tejido or weaving – e.g. when threads belonging to different owners are used in making textile
Rules: (1) Mixture by will of the owners (a) First governed by their stipulations (b) In the absence of stipulation, each owner acquires a right or interest in the mixture in proportion to the value of his material (2) Mixture caused by an owner in good faith or by chance (a) Share of each owner shall be proportional to the value of the part which belonged to him (b) If things mixed are exactly the same kind and quality, divide mixture equally/proportionally (c) If things mixed are of different kind or quality, a co-ownership arises (d) If they can be separated without injury, owners may demand separation (e) Expenses borne by owners pro rata (f) NOTE: Good faith does not necessarily exclude negligence, which gives rise to damages
Ownership of new object formed by adjunction (1) If union was made in good faith, owner of principal thing acquires the accessory, with obligation to indemnify the owner of the accessory for its value in its uncontroverted state (2) If union was in bad faith, NCC 470 applies: (a) Owner of accessory in bad faith loses the thing incorporated and has the obligation to indemnify the owner of the principal thing for damages (b) If owner of principal is in bad faith, owner of the accessory has a right to choose between the owner of principal paying him its value or that the thing belonging to him be separated, even though for this purpose it be necessary to destroy the principal thing; and in both cases, there shall be indemnity for damages
(3) Mixture caused by an owner in bad faith (a) Actor forfeits the thing belonging to him (b) Actor also becomes liable for damages (4) Mixture made with knowledge and without objection of the other owner Rights to be determined as though both acted in good faith
Test to determine the principal thing In the order of application, the principal is that: (1) To which the other has been united as an ornament or for its use or perfection (“Rule of importance and purpose”) (2) Of greater value (3) Of greater volume (4) That of greater merits, taking into consideration all the pertinent legal provisions, as well as the comparative merits, utility and volume of their respective things
Specification Definition: Takes place when the work of a person is done on the material of another, such material, in consequence of the work itself, undergoes a transformation Rules: (1) Person in good faith General rule:
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Worker becomes the owner but must indemnify owner (who was also in good faith) for the value of the material
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NATURE: QUASI IN REM (a) A suit against a particular person or persons in respect to the res and the judgment will apply only to the property in dispute. (b) The action to quiet title is characterized as proceeding quasi in rem. Technically, it are neither in rem nor in personam. In an action quasi in rem, an individual is named as defendant. However, unlike suits in rem, a quasi in rem judgment is conclusive only between the parties. [Spouses Portic v. Cristobal]
Exception: If material is more valuable than the new thing, owner of material may choose: (a) To take the new thing but must pay for the work or labor (b) To demand indemnity for the material If the owner was in bad faith, maker may appropriate the new thing without paying the owner OR require the owner to pay him the value of the thing or his work, with right to indemnity
JUSTIFICATIONS FOR QUIETING OF TITLE (1) To prevent future or further litigation on the ownership of the property (2) To protect the true title and possession (3) To protect the real interest of both parties (4) To determine and make known the precise state of the title for the guidance of all
(2) Person in bad faith General rule: (a) Owner may either appropriate the new thing to himself without paying the maker OR (b) Owner may demand value of material plus damages
THE ACTION TO QUIET TITLE DOES NOT APPLY: (1) To questions involving interpretation of documents (2) To mere written or oral assertions of claims (a) Unless made in a legal proceeding (b) Or asserting that an instrument or entry in plaintiff’s favor is not what it purports to be (3) To boundary disputes (4) To deeds by strangers to the title unless purporting to convey the property of the plaintiff (5) To instruments invalid on their face (6) Where the validity of the instrument involves a pure question of law
Exception: The first option is not available in case the value of the work, for artistic or scrientific reasons, is considerably more than that of the material (3) Person made use of material with consent and without objection of owner Rights shall be determined as though both acted in good faith
REQUIREMENT
Quieting of Title or Interest in and Removal or Prevention of Cloud over Title to or Interest in Real Property
REQUISITES OF AN ACTION TO QUIET TITLE
(1) There is a CLOUD on title to real property or any interest to real property. (2) The plaintiff must have legal or equitable title to, or interest in the real property. (3) Plaintiff must return the benefits received from the defendant. THERE IS A CLOUD ON TITLE TO REAL PROPERTY OR ANY INTEREST TO REAL PROPERTY
IN GENERAL (1) Applicable to real property (2) Basis: Equity comes to the aid of the plaintiff who would suffer if the instrument (which appear to be valid but is in reality void, ineffective, voidable or unenforceable) was to be enforced.
“Cloud on title” means a semblance of title, either legal or equitable, or a claim or a right in real property, appearing in some legal form but which is, in fact, invalid or which would be inequitable to enforce.
PURPOSE (1) To declare: (a) The invalidity of a claim on a title (b) The invalidity of an interest in property (2) To free the plaintiff and all those claiming under him from any hostile claim on the property.
A cloud exists if: (1) There is a claim emerging by reason of: (a) Any instrument e.g. a contract, or any deed of conveyance, mortgage, assignment, waiver, etc. covering the property concerned
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(b) Any record, claim, encumbrance e.g. an attachment, lien, inscription, adverse claim, lis pendens, on a title (c) Any proceeding e.g. an extrajudicial partition of property (2) The claim should appear valid or effective and extraneous evidence is needed to prove their validity or invalidity. (a) Test: Would the owner of the property in an action for ejectment brought by the adverse party be required to offer evidence to defeat a recovery? (b) As a general rule, a cloud is not created by mere verbal or parole assertion of ownership or an interest in property. (3) Such instrument, etc. is, in truth and in fact, invalid, ineffective, voidable, or unenforceable, or has been extinguished or terminated, or has been barred by extinctive prescription. (4) Such instrument, etc. may be prejudicial to the true owner or possessor.
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affirmatively and within the time provided by the statute. Possession is a continuing right as is the right to defend such possession. So it has been determined that an owner of real property in possession has a continuing right to invoke a court of equity to remove a cloud that is a continuing menace to his title. Such a menace is compared to a continuing nuisance or trespass which is treated as successive nuisances or trespasses, not barred by statute until continued without interruption for a length of time sufficient to affect a change of title as a matter of law." [Pingol v. CA] (2) When the plaintiff is not in possession of the property, the action to quiet title may prescribe. (a) 10 yrs. – ordinary prescription (b) 30 yrs. – extraordinary prescription
Co-ownership
THE PLAINTIFF MUST HAVE LEGAL OR EQUITABLE TITLE TO, OR INTEREST IN THE REAL PROPERTY [NCC 477]
(1) Legal title: the party is the registered owner of the property. (2) Equitable title: the person has the beneficial ownership of the property.
DEFINITION: The form of ownership when the ownership of an undivided thing or right belongs to different persons. [NCC 484]
PLAINTIFF MUST RETURN THE BENEFITS RECEIVED FROM THE DEFENDANT [NCC 479]
REQUISITES: (1) Plurality of owners (2) Object must be an undivided thing or right (3) Each co-owner’s right must be limited only to his ideal or abstract share of the physical whole
QUIETING OF TITLE V. REMOVAL OF CLOUD REQUISITES OF AN ACTION TO PREVENT A CLOUD
(1) Plaintiff has a title to a real property or interest therein (2) Defendant is bent on creating a cloud on the title or interest therein. The danger must not be merely speculative or imaginary but imminent. (3) Unless the defendant is restrained or stopped, the title or interest of the plaintiff will be prejudiced or adversely affected.
WHAT GOVERNS CO-OWNERSHIP: (1) Contracts (2) Special provisions (3) Civil Code CHARACTERISTICS OF CO-OWNERSHIP (1) There are 2 or more co-owners (2) There is a single object which is not materially or physically divided and over which and his ideal share of the whole (3) There is no mutual representation by the coowners (4) It exists for the common enjoyment of the coowners (5) It has no distinct legal personality (6) It is governed first of all by the contract of the parties; otherwise, by special legal provisions, and in default of such provisions, by the provisions of Title III on Co-ownership
PRESCRIPTION/NON-PRESCRIPTION OF ACTION PRESCRIPTION OF ACTION
(1) When plaintiff is in possession of the property – the action to quiet title does not prescribe. The rationale for this rule has been aptly stated thus: “The owner of real property who is in possession thereof may wait until his possession is invaded or his title is attacked before taking steps to vindicate his right. A person claiming title to real property, but not in possession thereof, must act
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(b) Article 148: between a man and a woman not capacitated to marry each other (c) Article 90: if matter is not provided in the FC Chapter on ACP, then rules on co-ownership will apply
THERE ARE IDEAL SHARES DEFINED BUT NOT PHYSICALLY IDENTIFIED [NCC 485]
(1) The share of the co-owners, in the benefits as well as in the charges, shall be proportional to their respective interests. (2) Any stipulation in a contract to the contrary shall be void. (3) The portions belonging to the co-owners in the co-ownership shall be presumed equal, unless the contrary is proved
(2) Purchase creating implied trust: co-ownership between persons who agree to purchase property If two or more persons agree to purchase property and by common consent the legal title is taken in the name of one of them for the benefit of all, a trust is created by force of law in favor of the others in proportion to the interest of each [NCC 1452]
Each co-owner has absolute control over his ideal share Every co-owner has absolute ownership of his undivided interest in the co-owned property and is free to alienate, assign or mortgage his interest except as to purely personal rights. While a coowner has the right to freely sell and dispose of his undivided interest, nevertheless, as a co-owner, he cannot alienate the shares of his other co-owners – nemo dat qui non habet. [Acabal v. Acabal]
(3) Easement of Party Wall: co-ownership of partowners of a party wall (NCC 658) (4) Condominium Law: co-ownership of the common areas by holders of units Sec. 6, RA 4726. The Condominium Act. Unless otherwise expressly provided in the enabling or master deed or the declaration of restrictions, the incidents of a condominium grant are as follows: (a) Unless otherwise, provided, the common areas are held in common by the holders of units, in equal shares, one for each unit.
Mutual respect among co-owners with regard to use, enjoyment, and preservation of the things as a whole (1) The property or thing held pro-indiviso is impressed with a fiduciary character: each coowner becomes a trustee for the benefit of his coowners and he may not do any act prejudicial to the interest of his co-owners. (2) Until a judicial division is made, the respective part of each holder cannot be determined. The effects of this would be: (a) Each co-owner exercises, together with the others, joint ownership over the pro indiviso property, in addition to his use and enjoyment of the same (b) Each co-owner may enjoy the whole property and use it.
CONTRACTS
By Agreement of Two or More Persons Article 494, Civil Code. No co-owner shall be obliged to remain in the co-ownership. Each co-owner may demand at any time the partition of the thing owned in common, insofar as his share is concerned. Nevertheless, an agreement to keep the thing undivided for a certain period of time, not exceeding ten years, shall be valid. This term may be extended by a new agreement.
Only limitation: a co-owner cannot use or enjoy the property in a manner that shall injure the interest of his other co-owners. [Pardell v. Bartolome]
A donor or testator may prohibit partition for a period which shall not exceed twenty years. Neither shall there be any partition when it is prohibited by law.
SOURCES OF CO-OWNERSHIP Law, contract, succession, testamentary disposition or donation inter vivos, fortuitous event or chance, and by occupancy
No prescription shall run in favor of a co-owner or coheir against his co-owners or co-heirs so long as he expressly or impliedly recognizes the co-ownership.
LAW
(1) Cohabitation: co-ownership between common law spouses
(1) Two or more persons may agree to create a coownership (2) Note: there is a 10-year term limit for ownership by agreement; BUT: Term may be extended by a new agreement
The Family Code, in the following provisions, made the rules on co-ownership apply (a) Article 147: between a man and a woman capacitated to marry each other
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By the creation of a Universal Partnership Of all present property NCC 1778. A partnership of all present property is that in which the partners contribute all the property which actually belongs to them to a common fund, with the intention of dividing the same among themselves, as well as all the profits which they may acquire therewith.
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when the discovery is made on the property of another, or of the State or any of its subdivisions, and by chance, one-half shall be allowed to the finder. BY OCCUPANCY
Harvesting and Fishing: co-ownership by two or more persons who have seized a res nullius thing BY ASSOCIATIONS AND SOCIETIES WITH SECRET ARTICLES
NCC 1779. In a universal partnership of all present property, the property which belonged to each of the partners at the time of the constitution of the partnership, becomes the common property of all the partners, as well as all the profits which they may acquire therewith.
[NCC 1775] Articles are kept secret among the members and any one of the members may contract in his own name with third persons: (1) governed by the provisions relating to coownership
A stipulation for the common enjoyment of any other profits may also be made; but the property which the partners may acquire subsequently by inheritance, legacy, or donation cannot be included in such stipulation, except the fruits thereof.
RIGHT OF CO-OWNERS RIGHT TO THE SHARE IN THE BENEFITS AS WELL AS CHARGES [NCC 485]
(1) Proportional to their interests (2) Stipulation to the contrary is void (3) Portions belonging to the co-owners is presumed equal
SUCCESSION
Intestate succession: co-ownership between the heirs before partition of the estate
RIGHT TO USE THE THING OWNED IN COMMON [NCC 486]
Limitation: That he use the thing in accordance with the purpose for which it is intended
NCC 1078. Where there are two or more heirs, the whole estate of the decedent is, before its partition, owned in common by such heirs, subject to the payment of debts of the deceased. For as long as the estate is left undivided the heirs will be considered co-owners of the inheritance. If one of the heirs dies, his heirs will in turn be coowners of the surviving original heirs.
That he uses it in such a way as to not injure the interest of the co-ownership or prevent the other coowners from using it RIGHT TO BRING AN ACTION IN EJECTMENT [NCC 487] RIGHT TO COMPEL OTHER CO-OWNERS TO CONTRIBUTE TO THE EXPENSES OF PRESERVATION AND TO THE TAXES
TESTAMENTARY DISPOSITION OR DONATION INTER VIVOS
(1) When a donation is made to several persons jointly, it is understood to be in equal shares, and there shall be no right of accretion among them, unless the donor has otherwise provided [NCC 753] (2) A donor or testator may prohibit partition for a period which shall not exceed 20 years.
[NCC 488] (1) Any one of the other co-owners may exempt himself by renouncing so much of his undivided interest as may be equivalent to his share of the expenses and taxes. (2) No waiver if it is prejudicial to the co-ownership
BY FORTUITOUS EVENT OR BY CHANCE
(1) Repairs for preservation may be made at the will of one of the co-owners but he must first notify his co-owners (2) Expenses to improve or embellish, decided upon by a majority
RIGHT TO REPAIR [NCC 489]
(1) Co-ownership between owners of 2 things that are mixed by chance or by will of the owners: Each owner shall acquire a right proportional to the part belonging to him, bearing in mind the value of the things mixed or confused [NCC 472]
RIGHT TO OPPOSE ALTERATIONS [NCC 491]
(1) Consent of all the others is needed to make alterations, even if the alteration benefits all.
(2) Hidden Treasure - co-ownership between finder and owner of the land [NCC 438]
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(2) If the withholding of the consent is clearly prejudicial to the common interest, the courts may afford relief (3) Reason for the rule: alteration is an act of ownership, not of mere administration.
Repairs for preservation (1) First, notify other co-owners, as far as practicable (2) Co-owner may advance expenses for preservation even without prior consent; he is entitled to reimbursement.
RIGHT TO FULL OWNERSHIP OF HIS PART AND OF THE FRUITS AND BENEFITS PERTAINING THERETO [NCC 493] (1) Therefore he may alienate, assign or mortgage it,
Embellishment or improvements (1) Notify co-owners of improvements and embellishments to be made If no notification, co-owner who advanced the expenses has the right to reimbursement if he proves the necessity of such repairs and the reasonableness of the expense
and even substitute another person in its enjoyment (2) Except: when personal rights are involved. (3) The effect of the alienation or the mortgage, with respect to the co-owners, shall be limited to the portion which may be allotted to him in the division upon the termination of the coownership
Exception: If proven that had there been a notification, they could have hired another who would charge less or that they know of a store that sells the needed material at a cheaper price
RIGHT TO PARTITION [NCC 494]
(1) Each may demand at any time the partition of the thing, insofar as his share is concerned (2) An agreement to keep the thing undivided for a certain period NOT exceeding 10 years is valid. (3) Term may be extended by a new agreement (4) Donor or testator may prohibit partition, period NOT to exceed 20 years (5) No partition if prohibited by law (6) Right does not prescribe
Only entitled to reimbursement for the amount that should have been spent had he notified the others, and difference shall be borne by him alone (2) Decision by majority must be followed TERMINATION/EXTINGUISHMENT TOTAL DESTRUCTION OF THING OR LOSS OF THE PROPERTY CO-OWNED
RIGHT TO REDEMPTION [NCC 1619]
Is there still co-ownership if a building is destroyed?— Yes, over the land and the debris.
(1) May exercise this in case the shares of other coowners are sold to a third person (2) If 2 or more co-owners wish to exercise this right = in proportion to their share in the thing
MERGER OF ALL INTERESTS IN ONE PERSON ACQUISITIVE PRESCRIPTION
Note: Rules on Co-Ownership Not Applicable to CPG or ACP (1) These are governed by the Family Code (2) Even void marriages and cohabitation of incapacitated persons are governed by FC 50, 147, and 148
By whom (1) A third person [NCC 1106] (2) A co-owner against the other co-owners Requisites (1) Unequivocal acts of repudiation of the rights of the other co-owners (oust the other co-owners) (a) Must be shown by clear and convincing evidence (b) Must be within the knowledge of the other coowners (c) Must not be a mere refusal to recognize the others as co-owners (2) Open and adverse possession - Not mere silent possession
RULES:
On Renunciation (1) Other co-owners may choose not to contribute to the expenses by renouncing so much of his undivided interest as may be equivalent to his share of the necessary expenses and taxes (2) Must be express; thus, failure to pay is not a renunciation (3) Requires the consent of other co-owners because it is a case of dacion en pago (cessation of rights) involving expenses and taxes already paid (J.B.L. Reyes) (4) Cannot renounce his share if it will be prejudicial to another co-owner
Note: there is a presumption that possession of a co-owner is NOT adverse Prescription only arises and produces all effects when the acts are clearly meant to oust the rights of the other co-owners
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to take part in the division presupposes the duty to notify. (2) If notice is not given, the partition will not be binding on them. (3) Once notice has been given, it is the duty of creditors and assignees to intervene and make known their stand. (a) If they fail, they cannot question the division made, except in cases of fraud. (b) If they formulate a formal question, they can contest such partition
PARTITION OR DIVISION
Effect: (1) Confers exclusive ownership of the property adjudicated to him (2) Co-heirs shall be reciprocally bound to warrant the title to and the quality of each property adjudicated (3) Reciprocal obligation of warranty shall be proportionate to the respective hereditary shares of co-heirs (4) An action to enforce warranty must be brought within 10 years from the date the right accrues (5) The co-heirs shall not be liable for the subsequent insolvency of the debtor of the estate
Possession DEFINITION [NCC 523] The holding of a thing or the enjoyment of a right
Unless partition is effected, each heir cannot claim sole ownership over a definite portion of the land. Heirs become the undivided owner of the whole estate Until said partition, he cannot alienate a specific part of the estate. Until then, they can only sell their successional rights. [Carvaria v. CA]
CONCEPT OF POSSESSION (1) To possess, in a grammatical sense, means to have, to physically and actually occupy a thing, with or without right. (Sanchez Roman) (2) It is the holding of a thing or a right, whether by material occupation or by the fact that the thing or the right is subjected to the action of our will. (Manresa) (3) It is an independent right apart from ownership.
Rights against individual co-owners in case of partition [NCC 497] (1) The creditors are allowed to take part in the partition. (2) Reason for the rule: They own part of the interest of the co-owners who made the assignment or alienation.
Right of Possession (jus possessionis) Independent right
Partition in case co-owners cannot agree (NCC 498)
Right to possess (jus possidendi) Incident to ownership
(4) Possession includes the idea of occupation. It cannot exist without it. (Exceptions: NCC 537)
Procedure for Partition (1) Governing rule: Rule 69 (2) How: By agreement of parties or by judicial decree (3) Form: Oral or Written (Statute of Frauds does not operate here because it is not a conveyance of property but a mere segregation or designation of which parts belong to whom) (4) Rules of Court do not preclude agreements or settlements.
CHARACTERISTICS ESSENTIAL REQUISITES OF POSSESSION
(1) Corpus possessionis: Holding (actual or constructive) of a thing or exercise of a right, if right is involved. (a) General Rule: Possession and cultivation of a portion of a tract under claim of ownership of all is a constructive possession of all, if the remainder is not in adverse possession of another. [Ramos v. Director of Lands] (b) Doctrine of constructive possession applies when the possession is under title calling for the whole. It does not apply where possession is without title.
Action for Partition: (1) W/N the plaintiff is indeed a co-owner of the property (2) HOW will the property be divided between the plaintiff and defendant. Intervention of creditors and assignees: (1) The law does not expressly require previous notice to the creditors and assignees before a partition, but the right of creditors and assignees
(2) Animus possidendi: Intention to possess (a) There is no possession if the holder does not want to exercise the rights of a possessor. (b) Implied from the acts of the possessor.
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(c) May be contradicted and rebutted by evidence – to prove that the person who is in possession does not in fact exercise power or control and does not intend to do so.
does not become effective unless ratified by the person in whose name it is exercised. Possession in the Concept of an Owner, and Possession in the Concept of a Holder with the Ownership Belonging to Another [NCC 525] (1) Possession in Concept of Holder: (a) One who possesses as a mere holder, not in the concept of owner, acknowledges in another a superior right which he believes to be ownership, whether his belief be right or wrong. (b) e.g. tenant, usufructuary, borrower in commodatum.
DEGREES OF POSSESSION
(1) Mere holding or possession without title and in violation of the right of the owner (a) e.g. possession of a thief or usurper of land (b) Here, both the possessor and the public know that the possession is wrongful. (2) Possession with juridical title but not that of ownership (a) e.g. possession of a tenant, depository agent, bailee trustee, lessee, antichretic creditor. (b) This possession is peaceably acquired. (c) This degree of possession will never ripen into full ownership as long as there is no repudiation of concept under which property is held.
(2) Possession in Concept of Owner: (a) May be exercised by the owner himself or one who claims to be so. (b) When a person claims to be the owner of a thing, whether he believes so or not, acting as an owner, and performing acts of ownership, and he is or may be considered as the owner by those who witness his exercise of proprietary rights, then he is in the possession of an owner. This is the kind of possession that ripens into ownership under Article 540, when such possession is public, peaceful and uninterrupted [see Art. 1118].
(3) Possession with just title or title sufficient to transfer ownership, but not from the true owner (a) e.g. possession of a vendee from a vendor who pretends to be the owner. (b) This degree of possession ripens into full ownership by lapse of time. (4) Possession with a just title from the true owner This is possession that springs from ownership.
Effects of Possession in Concept of an Owner (1) Converted into ownership by the lapse of time necessary for prescription (2) Possessor can bring all actions necessary to protect his possession, availing himself of any action which an owner can bring, except accion reivindicatoria which is substituted by accion publiciana. (3) He can ask for the inscription of possession in the registry of property (4) Upon recovering possession from one who has unlawfully deprived him of it, he can demand fruits and damages (5) He can do on the thing possessed everything that the law authorizes an owner to do; he can exercise the right of pre-emption and is entitled to the indemnity in case of appropriation.
CASES OF POSSESSION
Possession for Oneself, or Possession Exercised in One’s Own Name and Possession in the Name of Another [NCC 524] (1) In one’s own name – the fact of possession and the right to such possession is found in the same person. (2) In the name of another – the one in actual possession is without any right of his own, but is merely an instrument of another in the exercise of the latter’s possession. Kinds of possession in the name of another (a) Necessary – arises by operation of law e.g. representatives who exercise possession in behalf of a conceived child, juridical persons, persons not sui juris and the conjugal partnership (b)
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Possession in Good Faith and Possession in Bad Faith [NCC 526] (1) Possessor in good faith – one who is unaware that there exists a flaw which invalidates his acquisition (a) Good faith – consists in the possessor’s belief that the person from whom he received a
Voluntary – effected through the mutual consent of the parties (i) e.g. agents or administrators appointed by the owner or possessor. (ii) Third person may also voluntary exercise possession in the name of another, but it
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thing was the owner of the same and could convey his title. It implies freedom from knowledge and circumstances which ought to put a person on inquiry. The belief of a possessor that he is the owner of the thing must be based upon the title or mode of acquisition, such as a sale, a donation, inheritance or other means of transmitting ownership; for without this, there can be no real, well-grounded belief of one’s ownership. Error in the application of the law, in the legal solutions that arise from such application, in the appreciation of legal consequence of certain acts, and in the interpretation of doubtful provisions or doctrines, may properly serve as basis for good faith. A misconception of the law, no matter how honest cannot have the effect of making one a possessor in good faith when he does not hold a title valid in form or a deed sufficient in terms to transfer property.
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ACQUISITION OF POSSESSION WAYS OF ACQUIRING POSSESSION [NCC 531] (1) By material occupation (a) “Material occupation” – used in its ordinary meaning and not in its technical meaning under NCC 712, which defines occupation as a mode of acquiring ownership. (b) Possession acquired by material occupation is only possession as a fact, not the legal right of possession. (c) Constructive delivery is considered as an equivalent of material occupation in two situations where such occupation is essential to the acquisition of possession: (i) Tradicion brevi manu – takes place when one who possess a thing by title other than ownership, continues to possess the same under a new title, that of ownership. (ii) Tradicion constitutum possessorium – takes place when the owner alienates the thing, but continues to possess the same under a different title.
(2) Possessor in bad faith – one who knows his title is defective (a) Only personal knowledge of the flaw in the title or mode of acquisition can make him a possessor in bad faith for bad faith is not transmissible from one person to another. (b) Mistake upon a doubtful or difficult question of law as a basis of good faith (c) Mistake or ignorance of the law, by itself, cannot become the basis of good faith. What makes the error or ignorance a basis of good faith is the presence of an apparent “doubt” or “difficulty” in the law. In other words, the law is complex, ambiguous, or vague such that it is open to two or more interpretations. (d) When the ignorance of the law is gross and inexcusable, as when a person of average intelligence would know the law, such ignorance cannot be the basis of good faith. Otherwise, the intendment of Article 3 which states that, “Ignorance of the law excuses no one from compliance therewith,” will be defeated.
(2) By subjection to the action of one’s will (a) This mode refers more to the right of possession than to possession as a fact. The “action of our will” must be juridical, in the sense that it must be according to law. (b) Includes: (i) Tradicion symbolica – by delivering some object or symbol placing the thing under the control of the transferee (ii) Tradicion longa manu – by the transferor pointing out to the transferee the things which are being transferred (3) By execution of proper acts under legal formalities (a) This mode refers to juridical acts or the acquisition of possession by sufficient title evidenced by the performance of required formalities. (b) Examples: (i) Donations (ii) Succession (iii) Contracts (like a sale with right to repurchase) (iv) Judicial possession (v) Execution of judgments (vi) Execution and registration of public instruments (vii) Inscription of possessory information titles (c) The execution of the required formalities is equivalent to delivery of the property
What Things May be Possessed [NCC 530] Only things and rights which are susceptible of being appropriated may be the object of possession. What May Not Be Possessed by Private Persons (1) Res Communes (2) Property of Public Dominion (3) Right under discontinuous and/or non-apparent easement
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BY WHOM MAY POSSESSION BE ACQUIRED [NCC 532]
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cannot read and write, spendthrifts and those under civil interdiction) (2) Object of possession – things only, not rights. (3) Method of acquisition – material occupation; acquisition by means for which the incapacitated person has the capacity, such as acquisition by succession, testate or intestate, or by donations propter nuptias, pure and simple donations
(1) By the same person (2) By his legal representative (3) By his agent (4) By any person without any power whatsoever but subject to ratification, without prejudice to proper case of negotiorum gestio [Arts. 2144, 2149, 2150] (5) Qualifiedly, minors and incapacitated persons
WHAT DO NOT AFFECT POSSESSION (NCC 537)
By the same person Elements of personal acquisition: (1) Must have the capacity to acquire possession (2) Must have the intent to possess (3) The possibility to acquire possession must be present.
(1) Acts merely tolerated (a) Those which because of neighborliness or familiarity, the owner of property allows another person to do on the property; (b) Those services or benefits which one’s property can give to another without material injury or prejudice to the owner, who permits them out of friendship or courtesy (c) Acts of little disturbances which a person, in the interest of neighborliness or friendly relations permits others to do on his property, although continued for a long time, no right will be acquired by prescription
By his legal representative Requisites of acquisition through another: (1) That the representative or agent has the intention to acquire the thing or exercise the right for another, and not for himself (2) That the person for whom the thing has been acquired or the right exercised, has the intention of possessing such thing or exercising such right
Note: Permissive use merely tolerated by the possessor cannot affect possession and cannot be the basis of acquisitive prescription. Possession to constitute the foundation of prescriptive right must be possession under claim of title; it must be adverse. [Cuaycong v. Benedicto]
Note: (a) Bad faith is personal and intransmissible. Its effects must be suffered only by the person who acted in bad faith; his heir should not be saddled with the consequences (b) Good faith can only benefit the person who has it; and the good faith of the heir cannot erase the effects of bad faith of his predecessor.
(2) Acts executed clandestinely and without the knowledge of the possessor [NCC 1108] Possession has to be in the concept of an owner, public, peaceful and uninterrupted. (UPPO)
By any person without any power whatsoever but subject to ratification, without prejudice to proper case of negotiorum gestio [NCC 2144, 2149, 2150] (1) Whoever voluntarily takes charge of the agency or management of the business or property of another, without any power from the latter, is obliged to continue until the termination of the affair and its incidents, or to require the person concerned to substitute him, if the owner is in a position to do so. (2) This juridical relation does not arise in either of these instances: (a) When the property or business is not neglected or abandoned; (b) If in fact the manager has been tacitly authorized by the owner.
(3) Acts of violence as long as the possessor objects thereto (i.e. he files a case) [NCC 536] (a) Possession cannot be acquired through force or intimidation. Includes forcibly taking away the property from another and also when one occupied the property in the property in the absence of another, and repels the latter upon his return (b) Effect on Possession: Acts mentioned do not constitute true possession. They do not interrupt the period of prescription nor affect the rights to the fruits.
Qualifiedly, minors and incapacitated persons [NCC 535] (1) Incapacitated – all those who do not have the capacity to act (insane, lunatic, deaf-mutes who
RULES TO SOLVE CONFLICTS OF POSSESSION (NCC 538)
General Rule: Possession cannot be recognized in two different personalities, except in cases of copossession by co-possessors without conflict of claims of interest.
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(3) Accion Reivindicatoria (1) Recovery of possession based on a claim of ownership) (2) An action setting up title and right to possession (3) Not barred by a judgment in an action for forcible entry and unlawful detainer
In case of conflicting possession – preference is given to: (1) Present possessor or actual possessor (2) If there are two or more possessors, the one longer in possession (3) If the dates of possession are the same, the one who presents a title (4) If all conditions are equal, the thing shall be placed in judicial deposit pending determination of possession or ownership through proper proceedings
(4) Action for Replevin (a) Possession or ownership for movable property Rules: (1) Lawful possessor can employ self-help (NCC 429) (2) To consolidate title by prescription, the possession must be under claim of ownership, and it must be peaceful, public and uninterrupted (UPPO) (3) It is only the conviction of ownership externally manifested, which generates ownership. (4) Acts of possessory character done by virtue of a license or mere tolerance by the real owner are not sufficient and will not confer title by prescription or adverse possession. (5) The following cannot acquire title by prescription: (a) Lessees, trustees, pledges, tenants on shares or planters and all those who hold in the name or representation of another; (b) Mere holders placed in possession of the property by the owner, such as agents, employees; (c) Those holding in a fiduciary character, like receivers, attorneys, depositaries and antichretic creditors (d) Co-owner, with regard to common property; Except: When he holds the same adversely against all of them with notice to them of the exclusive claim of ownership (i) Possession of real property presumes possession of the movables therein (NCC 542) (ii) Each co-owner is deemed to have exclusive possession of the part which may be allotted to him upon the division, for the entire period during which the copossession lasted.
EFFECTS OF POSSESSION (1) Right to be Protected in His Possession (NCC 539) (2) Entitlement to fruits – possessor in good faith/bad faith (Art. 544, 549) (3) Reimbursement for Expenses—Possessor in Good Faith/Bad Faith RIGHT TO BE PROTECTED IN HIS POSSESSION (NCC 539)
(1) Every possessor has a right to be respected in his possession; if disturbed, possessor has a right to be protected in or restored to said possession. (2) Every possessor – includes all kinds of possession, from that of an owner to that of a mere holder, except that which constitutes a crime. (3) Reason for the rule: To prevent anyone from taking the administration of justice into his own hands. Even the owner cannot forcibly eject the possessor, but must resort to the courts. Actions to Recover Possession: (1) Forcible entry and Unlawful detainer (Summary proceedings) (a) Action by a person deprived of the possession of any land or building by force, intimidation, strategy, threat, or stealth (FISTS) at any time within 1 year after such unlawful deprivation (Rule 70) (b) May ask for writ of preliminary mandatory injunction within 10 days from filing of complaint in forcible entry (NCC 539). (c) The same writ is available in unlawful detainer actions upon appeal. (Art. 1674) (2) Accion Publiciana (1) Based on superior right of possession, no ownership (2) Action for the recovery of possession of real property upon mere allegation and proof of a better title
Interruption in the possession of the whole or a part of a thing possessed in common shall be to the prejudice of all the possessors. (NCC 543) ENTITLEMENT TO FRUITS – POSSESSOR FAITH/BAD FAITH (ART. 544, 549)
IN GOOD
(1) Possessor in good faith is entitled to the fruits received before the possession is legally interrupted
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(2) Natural and industrial fruits are considered received from the time they are gathered or severed (3) Civil fruits are deemed to accrue daily and belong to the possessor in good faith in that proportion
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When fruits are insufficient There should only be reimbursement of expenses; but each possessor should suffer a proportionate reduction due to the insufficiency of the harvest. REIMBURSEMENT FOR EXPENSES—POSSESSOR IN GOOD FAITH/BAD FAITH (NCC 546-552)
Provision is based on the following reasons of equity (1) The fruits received are generally used for the consumption and livelihood of the possessor, and his life and expenses may have been regulated in view of such fruits (2) The owner has been negligent in not discovering or contesting the possession of the possessor; it would be unjust after the possessor has been thus allowed to rely on the efficacy of the title, to require him to return the fruits he has received on the basis of that title. (3) Between the owner, who has abandoned his property and left it unproductive, and the possessor, who has contributed to the social wealth, by the fruits he has produced, the law leans toward the latter
Necessary Expenses (1) Imposed by the thing itself and have no relation to the desire or purpose of the possessor (2) They are the “cost of living” for the thing and must be reimbursed to the one who paid them, irrespective of GF or BF. (a) Only the possessor in GF may retain the thing until he has been reimbursed therefor (3) Those imposed for the preservation of the thing. They are not considered improvements; they do not increase the value of the thing, but merely prevent them from becoming useless. Useful Expenses (1) Incurred to give greater utility or productivity to the thing (2) e.g. Wall surrounding an estate, an irrigation system, planting in an uncultivated land, a fishpond, an elevator in the building, electric lighting system (3) They are reimbursed only to the possessor in GF as a compensation or reward for him. Possessor in BF cannot recover such expenses (4) If the useful improvements can be removed without damage to the principal thing, the possessor in good faith may remove them, unless the person who recovers the possession refunds the expenses or pays the increase in value which the thing may have acquired by reason thereof
Right of the possessor in good faith Only limited to the fruits of the thing. He must restore the fruits received from the time such good faith ceased. He has no rights to the objects which do not constitute fruits. Legal interruption of possession in good faith Takes place when an action is filed against him— from the time he learns of the complaint, from the time he is summoned to the trial. When good faith ceases (NCC 545) (1) If at the time the good faith ceases, there should be any natural or industrial fruits, the possessor shall have a right to a part of the expenses of cultivation, and to a part of the net harvest, both in proportion to the time of the possession. (2) The charges divided on the same basis by the two possessors. (a) “Charges” – Those which are incurred, not on the thing itself but because of it (e.g. taxes, contributions in favor of the government) (3) The owner of the thing may give the possessor in good faith the right to finish the cultivation and gathering of the growing fruits, as an indemnity for his part of the expenses of cultivation and the net proceeds. (a) The possessor in good faith who refuses to accept this concession shall lose the right to be indemnified in any other manner.
Expenses for Luxury (1) They do not affect the existence or the substance of the thing itself, but only the comfort, convenience or enjoyment of the possessor. (2) They are not the subject of reimbursement, because the law does not compensate personal whims or caprices. (3) e.g. Opening of a garden, placing fountains and statues in it, adorning the ceilings with paintings, and the walls with reliefs Useful Expenses
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Those which increased the income derived from the thing
Those which merely embellished the thing
Result: Increase in the products, either absolutely, or because of
Result: Benefit or advantage is only for the convenience of definite
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Useful Expenses greater facilities for producing them
Expenses for Luxury
Possessor in GF
possessors
Possessor in BF
and to a part of the net (549) harvest, in proportion to the time of the possession.
Includes expenses resulting in real benefit or advantage to the thing Result: Benefit or advantage is only for the convenience of definite possessors
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Indemnity may be, at the owner’s option, 1. In money, OR 2. By allowing full cultivation and gathering of the fruits (545)
The utility is for the possessor or particular persons alone and is therefore accidental.
Charges Possessor In Bad Faith (1) Reimburse the fruits received and those which the legitimate possessor could have received (2) Has a right only to the reimbursement of necessary expenses and the production, gathering, and preservation of fruits (3) Does not have right to reimbursement of expenses for luxury but may remove them as long as the principal thing suffers no injury, or may sell them to the owner. (4) Liable for deterioration or loss in every case, even if caused by a fortuitous event a. As opposed to a possessor in good faith, not liable for the deterioration or loss, except when proved that he has acted with fraudulent intent or negligence, after the judicial summons
Must share with the legitimate possessor, in Same as with GF (545) proportion to the time of the possession (545) Necessary Expenses Right to reimbursement and retention in the Reimbursement only meantime (546) (546) Useful Expenses Right of retention until reimbursed; Owner’s option to reimburse him either for expenses or for increase in value which the thing may have No right to acquired (546) reimbursement and no right of removal (547) Limited right of removal – should not damage principal and owner does not exercise option of paying the expenses or increase in value (547)
Note: (1) Costs of litigation over the property shall be borne by every possessor. (NCC 550) (2) Improvements caused by nature or time shall always inure to the benefit of the person who has succeeded in recovering possession (NCC 551) (1) Includes all the natural accessions referred to by articles 457-465, and all those which do not depend upon the will of the possessor. (e.g. widening of the streets, rising of fountains of fresh or mineral water, increase of foliage of trees) Possessor in GF
Ornamental Expenses Limited right of removal Limited right of removal (548) (549) Deterioration or Loss
Possessor in BF
No liability unless due to fraud or negligence after Liable in every case (552) becoming in BF (552)
Fruits Received Entitled to the fruits Must reimburse the while possession is in GF legitimate possessor and before legal (549) interruption (544)
Costs of Litigation Bears cost (550)
Pending Fruits Entitled to part of the Must reimburse the expenses of cultivation, legitimate possessor PAGE 92
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LOSS OR UNLAWFUL DEPRIVATION OF A MOVABLE POSSESSION OF MOVABLE ACQUIRED IN GOOD FAITH (IN CONCEPT OF OWNER) IS EQUIVALENT TO TITLE (NCC 559) (1) Possessor has actual title which is defeasible only by true owner.
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The finder and the owner shall be obliged, as the case may be, to reimburse the expenses. (6) If the owner should appear in time, he shall be obliged to pay, as a reward to the finder, onetenth of the sum or of the price of the thing found DISTINGUISHED FROM VOIDABLE TITLE (NCC 1506) (1) Seller of goods with voidable title not avoided at the time of the sale: buyer acquires a good title to the goods, provided he buys them in good faith, for value, and without notice of the seller's defect of title (2) A movable lost or which the owner has been unlawfully deprived acquired by a possessor in good faith at a public sale - the owner can always recover the movable provided he reimburses the price paid.
Requisites of Title (a) Possession in GF (b) The owner has voluntarily parted with the possession of the thing (c) The possession is in the concept of an owner (2) Nevertheless, one who has lost any movable or has been unlawfully deprived thereof may recover it from the person in possession When the owner can recover (a) Has lost the thing (b) Has been unlawfully deprived thereof
EFFECTS OF POSSESSION EFFECTS OF POSSESSION IN THE CONCEPT OF OWNER
Possession may lapse and ripen into full ownership
(3) If the current possessor has acquired it in good faith at a public sale, owner must reimburse the price paid
General Rule: Presumption of just title and cannot be obliged to show or prove it (NCC 541) (1) Basis: Possession is presumed ownership, unless the contrary is proved. This presumption is prima facie and it prevails until contrary is proved. (2) Just title – that which is legally sufficient to transfer the ownership or the real right to which it relates (3) For the purposes of prescription, there is just title when the adverse claimant came into possession of the property through one of the modes recognized by law for the acquisition of ownership or other real rights, but the grantor was not the owner or could not transmit any right. (NCC 1129)
PERIOD TO RECOVER (NCC 1140, 1132, 1133)
(1) Actions to recover movables prescribe 8 years from the time the possession thereof is lost, unless the possessor has acquired the ownership by prescription for a lesser period (2) Ownership of movables prescribes through uninterrupted possession for 4 years in good faith. (3) Ownership of personal property also prescribes through uninterrupted possession for 8 years, without need of any other condition. (4) Movables possessed through a crime can never be acquired through prescription
Exception: For the purposes of prescription, just title must be proved; it is never presumed (NCC 1131) (1) Possessor may bring all actions necessary to protect his possession except reivindicatoria (2) May employ self-help under Art. 429 (3) Possessor may ask for inscription of such real right of possession in the registry of property (4) Has right to the fruits and reimbursement of expenses (assuming he is possessor in good faith) (5) Upon recovery of possession which he was unlawfully deprived of, may demand fruits and damages (6) Generally, he can do on the things possessed everything that the law authorizes the owner to do until he is ousted by one who has a better right. (7) Possession in good faith and possession in bad faith (Art. 528)
FINDER OF LOST MOVABLE (NCC 719-720)
(1) Whoever finds a movable, which is not a treasure, must return it to its previous possessor. (2) If the previous possessor is unknown, the finder shall immediately deposit it with the mayor of the city or municipality where the finding has taken place. (3) The finding shall be publicly announced by the mayor for two consecutive weeks in the way he deems best. (4) If the movable cannot be kept without deterioration, or without expenses which considerably diminish its value, it shall be sold at public auction eight days after the publication. (5) Six months from the publication having elapsed without the owner having appeared, the thing found, or its value, shall be awarded to the finder.
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(g) In all these cases, the period of the interruption shall be counted for the prescription
PRESUMPTION IN FAVOR OF THE POSSESSOR—FOR ACQUISITIVE PRESCRIPTION
(1) Of good faith until contrary is proved (NCC 527) (a) Presumption is only juris tantum because possession is the outward sign of ownership. Unless such proof of bad faith is presented, the possessor will be held to be in good faith. (b) So long as the possessor is not actually aware of any defect invalidating his title, he is deemed a possessor in good faith.
(5) Other presumptions with respect to specific properties of property rights (a) Of extension of possession of real property to all movables contained therein so long as in is not shown that they should be excluded (b) Non-interruption of possession of hereditary property (NCC 553) (i) Possession of hereditary property is deemed transmitted to the heir without interruption and from the moment of the death of the decedent (c) Of just title in favor of possessor in concept of owner (NCC 541)
(2) Of continuity of initial good faith in which possession was commenced; possession in good faith does not lose this character except in case and from the moment possessor became aware or is not unaware of improper or wrongful possession (NCC 528) (a) Good faith ceases from the date of the summons to appear at the trial (b) Good faith ceases when there is: (i) Extraneous evidence (ii) Suit for recovery of the property by the true owner
LOSS/TERMINATION OF POSSESSION (NCC 555) (1) By the abandonment of the thing; (2) By an assignment made to another either by onerous or gratuitous title; (3) By the destruction or total loss of the thing, or because it goes out of commerce; (4) By the possession of another, subject to the provisions of Article 537, if the new possession has lasted longer than one year. But the real right of possession is not lost till after the lapse of ten years.
(3) Of enjoyment of possession in the same character in which possession was required until contrary is proved (NCC 529) (4) Of non-interruption of possession in favor of present possessor who proves possession at a previous time until the contrary is proved (NCC 554) (a) Possession is interrupted for the purposes of prescription, naturally or civilly. (NCC 1120) (b) Possession is naturally interrupted when through any cause it should cease for more than one year (NCC 1121) (c) Old possession is not revived if a new possession should be exercised by the same adverse claimant (NCC 1121) (d) If the natural interruption is for only one year or less, the time elapsed shall be counted in favor of the prescription (NCC 1122) (e) Civil interruption is produced by judicial summons to the possessor. (NCC 1123) (f) Judicial summons shall be deemed not to have been issued and shall not give rise to interruption (NCC 1124): (i) If it should be void for lack of legal solemnities; (ii) If the plaintiff should desist from the complaint or should allow the proceedings to lapse; (iii) If the possessor should be absolved from the complaint
ABANDONMENT
(1) Includes the giving up of possession, and not necessarily of ownership by every possessor. (2) It is the opposite of occupation. It consists of the voluntary renunciation of all the rights which the person may have in a thing, with intent to lose such a thing. To be effective, it is necessary that it be made by a possessor in the concept of an owner. (3) It must be clearly appear that the spes recuperandi is gone and the animus revertendi is finally given up. ASSIGNMENT, EITHER ONEROUS OR GRATUITOUS
Complete transmission of ownership rights to another person, gratuitously or onerously POSSESSION BY ANOTHER; IF POSSESSION HAS LASTED LONGER THAN ONE YEAR; REAL RIGHT OF POSSESSION NOT LOST AFTER 10 YEARS - (SUBJECT TO NCC 537)
(1) Acts merely tolerated, and those executed clandestinely and without the knowledge of the possessor of a thing, or by violence, do not affect possession. (2) Possession that is lost here refers only to possession as a fact (de facto), not the legal right
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of possession (de jure). It is the possession that the new possessor acquires. (3) Real right of possession is lost only after 10 years. (4) After one year, the actions for forcible entry and unlawful detainer can no longer be brought. But accion publiciana may still be instituted to recover possession de jure
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(3) Unproductive things e.g. sterile or absolutely unproductive land, or things for mere pleasure, such as promenades, statues or paintings, even if they do not produce any utility. CHARACTERISTICS (1) It is a real right (2) Of temporary duration (3) To derive all advantages from the thing due to normal exploitation
RULES FOR LOSS OF MOVABLES
(1) The possession of movables is not deemed lost so long as they remain under the control of the possessor, even though for the time being he may not know their whereabouts. (NCC 556) (2) Control – judicial control or right, or that the thing remains in one’s patrimony (3) Wild animals are possessed only while they are under one's control (NCC 560) (a) Domesticated or tamed animals - if they retain the habit of returning to the premises of the possessor
NATURAL CHARACTERISTICS
(1) Includes only the right to use (jus utendi) and the right to the fruits (jus fruendi) (2) Usufructuary must preserve the form or substance of the thing (a) Preservation is a natural requisite, not essential because the title constituting it or the law may provide otherwise (b) Reason for preserving form and substance – (i) To prevent extraordinary exploitation; (ii) To prevent abuse, which is frequent; (iii) To prevent impairment. (c) Exception: In an abnormal usufruct, alteration is allowed (3) Usufruct is extinguished by the death of the usufructuary (a) Natural because a contrary intention may prevail
Kinds of Animals (1) Wild—those which live naturally independent of man (2) Domesticated—those which, being wild by nature, have become accustomed to recognize the authority of man. When they observe this custom, they are placed in the same category as domestic and when they lose it, they are considered as wild. (3) Domestic or Tame—those which are born and reared ordinarily under the control and care of man; they are under the ownership of man, and do not become res nullius unless they are abandoned.
CLASSIFICATION BY ORIGIN
(1) Voluntary: created by the will of private persons (a) By act inter vivos – such as contracts and donations (i) By alienation of the usufruct (ii) By retention of the usufruct (iii) Where a usufruct is constituted inter vivos and for valuable consideration, the contract is unenforceable unless in writing (b) By act mortis causa – such as testament
Usufruct CONCEPT (NCC 562): Usufruct gives a right to enjoy the property of another with the obligation of preserving its form and substance, unless the title constituting it or the law otherwise provides
(2) Legal: as provided by law Usufruct of parents over the property of unemancipated children (now limited to the collective daily needs of the family, FC 26)
OBJECTS OF USUFRUCT (1) Independent Rights (a) A servitude which is dependent on the tenement to which it attaches cannot be the object of usufruct
(3) Mixed: created both by law and the acts of persons (a) The rights and duties of the usufructuary provided by law may be modified or eliminated by the parties. (b) The title constituting the usufruct may validly authorize the usufructuary to alienate the thing itself held in usufruct.
(2) Things (a) Non-consumable things (b) Consumable things, but only as to their value if appraised, or on an equal quantity and quality if they were not appraised
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(i) If the usufructuary is authorized to alienate the thing in case of necessity, it is the usufructuary who determines the question of necessity.
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the return of the value or of the things of the same quantity and quality (as if converted into a simple loan)
BY PERSON ENJOYING RIGHT OF USUFRUCT
BY THE EXTENT OF THE USUFRUCT
(1) Simple: only one usufructuary enjoys the property (2) Multiple: several usufructuaries enjoy the property (a) Simultaneous: at the same time (b) Successive: one after the other
As to the fruits (1) Total: all consumed by the usufruct (2) Partial: only on certain aspects of the usufruct’s fruits As to object (1) Singular: only on particular property of the owner (2) Universal: pertains to the whole property; A universal usufructuary must pay the debts of the naked owner, if stipulated. Article 758 and 759 on donations apply.
Limitations on Successive Usufruct (1) If usufruct is by donation, ALL donees must be alive. (NCC 756) (2) Fiduciary or first heir and the second heir must be alive at the time of the death of the testator. (NCC 863) (3) If by testamentary succession, there must be only 2 successive usufructuaries, and both must be alive or at least already conceived at the time of the testator’s death. (NCC 869)
NCC 758: When the donation imposes upon the donee the obligation to pay the debts of the donor, if the clause does not contain any declaration to the contrary, the former is understood to be liable to pay only the debts which appear to have been previously contracted. In no case shall the donee be responsible for the debts exceeding the value of the property donated, unless a contrary intention clearly appears.
BY OBJECT OF USUFRUCT
Usufruct may be constituted on the whole or a part of the fruits of the thing or on a right, provided it is not strictly personal or intransmissible (NCC 564) Rights (1) Must not be strictly personal or intransmissible. (2) Usufruct over a real right is by itself a real right. (a) Right to receive present or future support cannot be the object of the usufruct.
NCC 759: There being no stipulation regarding the payment of debts, the donee shall be responsible therefor only when the donation has been made in fraud of creditors. The donation is always presumed to be in fraud of creditors, when at the time thereof the donor did not reserve sufficient property to pay his debts prior to the donation.
Things (1) Normal: involves non-consummable things where the form and substance are preserved (2) Abnormal or irregular: when the usufruct includes things which cannot be used without being consumed (a) The usufructuary has right to make use of them under the obligation of paying their appraised value at the termination of the usufruct, if they were appraised when delivered. (b) In case they were not appraised, he has the right to return the same quantity and quality, or pay their current price at the time the usufruct ceases (NCC 574) (c) In reality, the usufruct is not upon the consumable things themselves, but upon the sum representing their value or upon a quantity of things of the same kind and quality. (d) The usufructuary, in effect, becomes the owner of the things in usufruct, while the grantor becomes a mere creditor entitled to
BY THE TERMS OF THE USUFRUCT
(1) Pure: no terms or conditions (2) Conditional: either suspensive or resolutory (3) With a term or period (a) Ex die: from a certain day (b) In diem: up to a certain day (c) Ex die in diem: from a certain day up to a certain day
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RIGHTS AND OBLIGATIONS OF USUFRUCTUARY
ungathered for no fault imputable to him, but because of malice or an act imputable to the naked rd owner or a 3 person, or even due to force majeure or fortuitous event.
RIGHTS
As to Thing and Its Fruits Right to enjoy the property to the same extent as the owner, but only with respect to its use and the receipt of its fruits. (1) Usufructuary cannot extract products which do not constitute fruits because he is bound to preserve the form and substance of the thing. (2) Usufructuary rights may be transferred, assigned or otherwise disposed of by the usufructuary. (3) Not exempt from execution and can be sold at public auction.
Right to civil fruits (1) Civil fruits – deemed to accrue daily, and belong to the usufructuary in proportion to the time the usufruct may last. (2) Whenever a usufruct is constituted on the right to receive a rent or periodical pension, whether in money or in fruits, or in the interest on bonds or securities payable to bearer, each payment due shall be considered as the proceeds or fruits of such right (3) Whenever it consists in the enjoyment of benefits accruing from a participation in any industrial or commercial enterprise, the date of the distribution of which is not fixed, such benefits shall have the same character (a) In either case they shall be distributed as civil fruits
As to hidden treasure, usufructuary is considered a stranger without a right to a share, unless he is also the finder of the treasure (1) With respect to hidden treasure which may be found on the land or tenement, he shall be considered a stranger (2) Hidden treasure belongs to the owner of the land, building, or other property on which it is found. (3) Nevertheless, when the discovery is made on the property of another, or of the State or any of its subdivisions, and by chance, one-half thereof shall be allowed to the finder.
Right to enjoy any increase through accessions and servitudes, including products of hunting and fishing Right to lease the thing General rule: The usufructuary may lease the thing to another but this shall terminate upon the expiration of the usufruct, saving leases of rural lands, which shall be considered as subsisting during the agricultural year
Right to fruits pending at the beginning of usufruct Fruits pending at the Fruits pending at the beginning of the usufruct beginning of the usufruct Belong to the usufructuary
Belong owner
to
the
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naked
Exceptions: (1) Legal usufructs cannot be leased. (2) Caucion juratoria (lease would show that the usufructuary does not need the property badly)
Without need to The owner shall reimburse the expenses to reimburse to the the owners usufructuary ordinary cultivation expenses from the proceeds of the fruits (not to exceed the value of the fruits)
Effect of the transfer of right: (1) The transfer or lease of the usufruct does NOT terminate the relation of the usufructuary with the owner (2) Death of the transferee does not terminate the usufruct but it terminates upon the death of the usufructuary who made the transfer.
rd
Without prejudice to the Rights of innocent 3 rd right of 3 persons e.g. if parties should not be the fruits had been prejudiced. planted by a possessor in good faith, the pending crop expenses and charges shall be prorated between said possessor and the usufructuary
Rules as to Lease (1) The property in usufruct may be leased even without the consent of the owner. (2) The lease should be for the same period as the usufruct. (a) EXCEPT: leases of rural lands continues for the remainder of the agricultural year (b) A lease executed by the usufructuary before the termination of the usufruct and subsisting after the termination of the usufruct must be
Fruits already matured at the time of the termination of the usufruct, which ordinarily would have already been gathered by the usufructuary, may remain
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respected, but the rents for the remaining period will belong to the owner. (c) If the usufructuary has leased the lands or tenements given in usufruct, and the usufruct should expire before the termination of the lease, he or his heirs and successors shall receive only the proportionate share of the rent that must be paid by the lessee. (Art. 568, Civil Code) (3) It is the usufructuary and not the naked owner who has the right to choose the tenant. (a) As corollary to the right of the usufructuary to all the rent, to choose the tenant, and to fix the amount of the rent, she necessarily has the right to choose herself as the tenant thereof; and, as long as the obligations she had assumed towards the owner are fulfilled. (Fabie v. Gutierrez David) (4) A lease executed by the owner before the creation of the usufruct is not extinguished by such usufruct.
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usufruct, he has the right to do so, and the owner cannot prevent him from doing so even upon payment of their value. (3) This right does not involve an obligation – if the usufructuary does not wish to exercise it, he cannot be compelled by the owner to remove the improvements. (4) This right to remove improvements can be enforced only against the owner, not against a purchaser in good faith to whom a clean title has been issued. (5) Usufructuary may set off the improvements against any damage to the property (a) The improvements should have increased the value of the property, and that the damages are imputable to the usufructuary. (b) Increase in value and the amount of damages are set off against each other. (c) If the damages exceed the increase in value, the difference should be paid by the usufructuary as indemnity. (d) If the increase in value exceeds the damages, and the improvements are of such nature that they can be removed without injury to the thing in usufruct, the settlement of the difference must be agreed upon by the parties. (e) If the improvements cannot be removed without injury, the excess in value accrues to the owner. (6) Registration of improvements – to protect rd usufructuary against 3 persons
Limitations on the Right to Lease the Property (1) Usufructuary cannot alienate a thing in usufruct (a) Cannot alienate or dispose of the objects included in the usufruct (b) Cannot renounce a servitude (c) Cannot mortgage or pledge a thing (d) EXCEPT: (i) When the right of usufruct is converted into the right of ownership (ii) When the things are consumable (574); (iii) When the things by their nature are intended for sale, such as the merchandise in a commercial establishment; and (iv) When the things, whatever their nature, are delivered under appraisal as equivalent to their sale (2) Future crops may be sold but such sale would be void if not ratified by the owner. (a) The buyer’s remedy is to recover from the usufructuary. (3) Only voluntary usufruct can be alienated. (4) The usufructuary-lessor is liable for the act of the substitute. (a) A usufructuary who alienates or leases his right of usufruct shall answer for any damage which the things in usufruct may suffer through the fault or negligence of the person who substitutes him. (Art. 590, Civil Code)
As to the Legal Right of Usufruct Itself Right to mortgage right of usufruct (1) The usufructuary may alienate his right of usufruct, even by a gratuitous title; but all the contracts he may enter into as such usufructuary shall terminate upon the expiration of the usufruct [Art. 572] (2) Does not include parental usufruct because of personal and family considerations. Right to alienate the usufruct except in purely personal usufructs or when title constituting it prohibits the same Parental usufruct is inalienable OBLIGATIONS
At the Beginning of Usufruct or Before Exercising the Usufruct (1) To make, after notice to the owner or his legitimate representative, an inventory of all the property, which shall contain an appraisal of the movables and a description of the condition of the immovables;
Right to improve the thing, but improvement inures to the benefit of the naked owner (1) Usufructuary is not entitled to reimbursement. (2) Whenever the usufructuary can remove the improvements without injury to the property in
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(2) To give security, binding himself to fulfill the obligations imposed upon him in accordance with this Chapter.
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(iv) Sworn promise (c) A usufructuary under this can neither alienate his right nor lease the property, for that would mean that he does not need the dwelling or the implements and furniture.
Note: These requirements are NOT conditions precedent to the commencement of the right of the usufructuary but merely to the entry upon the possession and enjoyment of the property.
(4) Effect of filing a bond (a) Retroactivity: upon giving the security, the usufructuary will be entitled to all the benefits accruing since the time when he should have begun to receive them. (5) Effect of failure to give bond (NCC 586) (a) The owner may demand that the immovables be placed under administration; (i) That the movables be sold; (ii) That the public bonds, instruments of credit payable to order or to bearer be converted into registered certificates or deposited in a bank or public institution; (iii) That the capital or sums in cash and the proceeds of the sale of the movable property be invested in safe securities. (b) Owner may, until the usufructuary gives security, retain in his possession the property in usufruct as administrator, subject to the obligation to deliver to the usufructuary the net proceeds, after deducting the sums which may be agreed upon or judicially allowed him for such administration.
To Make An Inventory: (1) Requisites (a) Immovables must be described (b) Movables must be appraised because they are easily lost or deteriorated. (2) Concurrence of the owner in the making of the inventory (3) Expenses for the making of the inventory are borne by the usufructuary (4) Inventory may be in a private document, except when immovables are involved (a public rd instrument is prescribed to affect 3 persons) (5) Failure to make an inventory does not affect the rights of the usufructuary to enjoy the property and its fruits. (a) A prima facie presumption arises that the property was received by the usufructuary in good condition (b) Even if he is already in possession, he may still be required to make an inventory. (6) Exception to the requirement of inventory (a) When no one will be injured , the usufructuary may be excused from this obligation
During the Usufruct (1) To take care of the thing like a good father of a family (2) To undertake ordinary repairs (3) To notify owner of need to undertake extraordinary repairs (4) To pay for annual charges and taxes on the fruits (5) To notify owner of any act detrimental to ownership (6) To shoulder the costs of litigation re usufruct (7) To answer for fault or negligence of alienee, lessee or agent of usufructuary
To give a bond for the faithful performance of duties as usufructuary: (1) Any kind of sufficient security is allowed, e.g. cash, personal bond, mortgage (2) No bond is required in the following (a) No prejudice would result (Art. 585) (b) Usufruct is reserved by a donor (Art. 584) (i) Gratitude on the donee’s part demands that the donor be excused from filing the bond (c) Title constituting usufruct excused usufructuary (3) If usufructuary takes possession under a caucion juratoria (Art. 587) (a) The security given may be by a personal bond, a pledge, or a mortgage. (b) It is only by way of exception that a caucion juratoria is allowed, and only under the special circumstances: (i) Proper court petition (ii) Necessity for delivery of furniture, implements or house included in the usufruct (iii) Approval of the court
To take care of the thing like a good father of a family (1) When damages are caused to the property by the fault or negligence of the usufructuary, the naked owner need not wait for the termination of the usufruct before bringing the action to recover proper indemnity. (2) The bad use of a thing, which causes considerable injury, entitles the owner to demand the delivery and administration of the thing. (3) The exercise of this remedy does NOT extinguish the usufruct.
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To undertake ordinary repairs The usufructuary is obliged to make the ordinary repairs needed by the thing given in usufruct (NCC 592) (1) Ordinary repairs: (a) Such as are required by the wear and tear due to the natural use of the thing and are indispensable for its preservation. (b) Deteriorations or defects arise from the natural use of the thing; (c) Repairs are necessary for the preservation of the thing.
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(b) The usufructuary who has made the extraordinary repairs necessary for preservation is entitled to recover from the owner the increase in value which the tenement acquired by reason of such works. (c) Usufructuary may retain until he is paid. To pay for annual charges and taxes on the fruits It is well settled that a real tax, being a burden upon the capital, should be paid by the owner of the land and not by a usufructuary. There is no merit in the contention of distinguishing public lands into alienable and indisposable. All properties owned by the government, without any distinction, are exempt from taxation. (Board of Assessment Appeals of Zamboanga del Sur v. Samar Mining Company, Inc.)
(2) The usufructuary is bound to pay only for the repairs made during the existence of the usufruct. (a) If the defects existed already at the time the usufruct began, the obligation to defray the ordinary repairs falls upon the owner.
To notify owner of any act detrimental to ownership (NCC 601)
(3) If the defects are caused by the ordinary use of the thing, the usufructuary may exempt himself from making the repairs by returning to the owner the fruits received during the time that the defects took place.
To shoulder the costs of litigation re usufruct (NCC 602) To answer for fault or negligence of alienee, lessee or agent of usufructuary (NCC 590) The usufructuary is made liable for the acts of the substitute. While the substitute answers to the usufructuary, the usufructuary answers to the naked owner.
Except: When the ordinary repairs are due to defects caused by the fault of the usufructuary (4) If the usufructuary fails to make the repairs even after demand, the owner may make them at the expense of the usufructuary
At the Time of the Termination of the Usufruct To deliver the thing in usufruct to the owner in the condition in which he has received it, after undertaking ordinary repairs
To notify owner of need to undertake extraordinary repairs (1) Extraordinary repairs (a) Those caused by exceptional circumstances, whether or not they are necessary for the preservation of the thing; (b) Those caused by the natural use of the thing, but are not necessary for its preservation.
Exception: abnormal usufruct – return the thing of same kind, quantity and quality; if with appraised value, must return value appraised SPECIAL CASES OF USUFRUCT
USUFRUCT OVER A PENSION OR PERIODICAL INCOME (NCC
570) (1) Each payment due shall be considered as the proceeds or fruits of such right (2) Shall be distributed as civil fruits
(2) General Rule: Naked owner must make the extraordinary repairs (a) Usufructuary obliged to pay legal interest on the amount while usufruct lasts
USUFRUCT OF PROPERTY OWNED IN COMMON (NCC 582)
(3) If the extraordinary repairs are indispensable, and the naked owner fails to undertake them, the usufructuary may make such repairs (a) Requisites: (i) There must be due notification to the naked owner of the urgency – if it is not urgent, there is no obligation to give notice. (ii) The naked owner failed to make them (iii) The repair is needed for preservation
(1) The usufructuary takes the place of the owner as to: (a) Management; (b) Fruits; and (c) Interest (2) Effect of partition: (a) The right of the usufructuary is not affected by the division of the property in usufruct among the co-owners. (b) After partition, the usufruct is transferred to the part allotted to the co-owner
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Exceptions: (1) When it is so stipulated; in which case the usufructuary shall be liable for the debt specified. (2) If there is no specification, he is liable only for debts incurred by the owner before the usufruct was constituted. (3) When the usufruct is constituted in fraud of creditors
USUFRUCT CONSTITUTED ON A FLOCK OR HERD OF LIVESTOCK (NCC 591)
(1) On sterile stock: same rules on consumable property govern (i.e. replacement upon termination) (2) On fruitful stock (a) Must replace ordinary losses of the stock with the young if: (i) Some animals die from natural causes (ii) Some animals are lost due to rapacity of beasts of prey (b) NO obligation to replace if: (i) There is a total loss of animals because of some unexpected or unnatural loss (like contagious disease or any other uncommon event, provided the usufructuary has no fault); (1) If all perish, the usufructuary should deliver the remains to the owner. (ii) There is a partial loss (1) If a part of the stock perishes, the usufruct subsists on the remainder.
In no case shall the usufructuary be responsible for debts exceeding the benefits under the usufruct. (except when the contrary intention appears) USUFRUCT OVER DETERIORABLE PROPERTY (NCC 753)
(1) The usufructuary shall have the right to make use thereof in accordance with the purpose for which they are intended (2) It is sufficient if the usufructuary returns the things in the condition in which they may have been found at the time of the expiration of the usufruct despite ordinary defects caused by use and deterioration produced by age and time.
USUFRUCT OVER FRUIT BEARING TREES AND SPROUT AND WOODLANDS (NCC 575-576)
Except: when caused by the usufructuary’s fraud and negligence.
The usufructuary can: (1) Use dead trunks and those cut off or uprooted by accident. (2) Make usual cuttings that owner used to do. (3) Cut the trees that are not useful
(3) If usufructuary does not return the things upon the expiration of the usufruct, he should pay an indemnity equivalent to the value of the things at the time of such expiration.
USUFRUCT ON A RIGHT OF ACTION (NCC 578)
(1) The action may be instituted in the usufructuary’s name. As the owner of the usufruct, he is properly deemed a proper party in interest. (2) If the purpose is the recovery of the property or right, he is still required under 578 to obtain the naked owner’s authority. (3) If the purpose is to object to or prevent disturbances over the property, no special authority from the naked owner is needed.
USUFRUCT OVER CONSUMABLE PROPERTY (NCC 574)
(1) The usufructuary shall have the right to make use of them under the obligation of paying their appraised value at the termination of the usufruct, if they were appraised when delivered. (2) If not appraised, he shall have the right to return at the same quantity and quality, or pay their current price at the time the usufruct ceases. RIGHTS OF THE OWNER (1) At the beginning of the usufruct (see obligations of usufructuary at the beginning of the usufruct) (2) During the usufruct (a) Retains title to the thing or property (b) He may alienate the property: he may not alter the form or substance of the thing; nor do anything prejudicial to the usufructuary (c) He may construct buildings, make improvements and plantings, provided: (1) Value of the usufruct is not impaired (2) Rights of the usufructuary are not prejudiced
USUFRUCT ON MORTGAGED PROPERTY (NCC 600)
(1) When the usufruct is universal and some objects are mortgaged, apply Art. 598. (2) If the usufructuary mortgaged the usufruct himself, he is liable to pay his own debt. USUFRUCT OVER AN ENTIRE PATRIMONY (NCC 598)
Applies when: (1) The usufruct is a universal one (2) And the naked owner – Has debts or is obliged to make periodical payments (whether or not there be known capital) General rule: The usufructuary is not liable for the owner’s debts.
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EXTINGUISHMENT/TERMINATION (NCC 603) (1) By the death of the usufructuary, unless a contrary intention clearly appears; (2) By the expiration of the period for which it was constituted, or by the fulfillment of any resolutory condition provided in the title creating the usufruct; (3) By merger of the usufruct and ownership in the same person; (4) By renunciation of the usufructuary; (5) By the total loss of the thing in usufruct; (6) By the termination of the right of the person constituting the usufruct; (7) By prescription.
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association is dissolved, the usufruct shall be extinguished. rd (2) Time that may elapse before a 3 person attains a certain age [Art. 606, CC] (a) Usufruct subsists for the number of years rd specified, even if the 3 person should die before the period expired (b) Unless the usufruct has been expressly granted only in consideration of the existence of the person MERGER OF RIGHTS OF OWNERSHIP IN ONE PERSON
USUFRUCT
AND
NAKED
Illustration: H was the usufructuary of land owned by X. x dies, leaving in his will, the naked ownership of the land to H. the usufruct is extinguished because now H is both the naked owner and the usufructuary.
DEATH OF USUFRUCTUARY
Exceptions: (1) In multiple usufructs: it ends at the death of the last survivor (NCC 611) (a) If simultaneously constituted: all the usufructuaries must be alive (or at least conceived) at the time of constitution. (b) If successively constituted: (i) If by virtue of donation – all the doneesusufructuaries must be living at the time of the donation; (ii) If by will – there should only be 2 successive usufructuaries and both must have been alive at the time of testator’s death.
RENUNCIATION OF USUFRUCT
(1) Waiver: voluntary surrender of the rights of the usufructuary, made by him with intent to surrender them (2) Limitations (a) Must be express: tacit renunciation is not sufficient (b) Does not need the consent of naked owner (c) If made in fraud of creditors, waiver may be rescinded by them through action under Article 1381 (accion pauliana) EXTINCTION OR LOSS OF PROPERTY (NCC 608 & 608)
(2) If the period is fixed by reference to the life of another or there is a resolutory condition
Situation
Effect
Art. 607 If destroyed property is not insured
Death does not affect the usufruct and the right is transmitted to the heirs of the usufructuary until the expiration of the term or the fulfillment of the condition.
If the building forms part If the building forms part of an immovable under of an immovable under usufruct usufruct
(3) When a contrary intention clearly appears (a) If the usufructuary dies before the happening of a resolutory condition, the usufruct is extinguished. st (b) 1 view: usufruct is personal and it CANNOT be extended beyond the lifetime of the usufructuary. (Sanchez Roman and SC)
If usufruct is on the Usufruct continues over building only the land and materials (plus interests), if owner does not rebuild. If owner rebuilds, usufructuary must allow owner to occupy the land and to make use of materials; but the owner must pay interest on the value of both the land and the materials.
EXPIRATION OF PERIOD OR FULFILLMENT OF RESOLUTORY CONDITION IMPOSED ON USUFRUCT BY PERSON CONSTITUTING THE USUFRUCT
(1) In favor of juridical persons [Art. 605, CC] (a) Usufruct cannot be constituted in favor of a town, corporation, or association for more than fifty year (b) If before the expiration of such period the town is abandoned, or the corporation or
Art. 608 If destroyed property is insured before termination of the usufruct When insurance premium paid by owner and
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building. If owner does not rebuild interest upon insurance proceeds paid to usufructuary
When the insurance taken by the naked owner only because usufructuary refuses to contribute to the premium (par. 2)
Owner entitled to insurance money (no interest paid to usufructuary). If he does not rebuild, usufruct continues over remaining land and/or owner may pay interest on value of both materials and land (607). If owner rebuilds, usufruct does not continue on new building, but owner must pay interest on value of land and old materials.
When insurance taken by usufructuary only depends on value of usufructuary’s insurable interest
(2) If both the naked owner and the usufructuary were separately given indemnity, each owns the indemnity given to him, the usufruct being totally extinguished. (3) If usufructuary alone was given the indemnity, he must give it to the naked owner and compel the latter to return either the interest or to replace the property. He may even deduct the interest himself, if the naked owner fails to object.
Effect
usufructuary (par. 1)
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BAD USE OF THING IN USUFRUCT (NCC 610)
Does not extinguish the usufruct but (1) Entitles the owner to demand delivery and administration of the thing. (2) The bad use must cause considerable injury not to the thing, but to the owner. (a) Destruction of a building over which the usufruct is constituted (Arts. 607 and 608)
Easement
Insurance proceeds goes to the usufructuary. No obligation to rebuild. Usufruct continues on the land. Owner has no share in insurance proceeds.
(1) An encumbrance imposed upon an immovable for the benefit of another immovable belonging to a different owner (NCC 613) (2) A real right which burdens a thing with a prestation of determinate servitudes for the exclusive enjoyment of one who is NOT an owner of a tenement (3) A real right by virtue of which the owner has to ABSTAIN from doing or ALLOW somebody else to do something to his property for the benefit of another
TERMINATION OF RIGHT OF PERSON CONSTITUTING THE USUFRUCT
Example: usufructs constituted by a vendee a retro terminate upon redemption
Dominant Estate – the immovable in favor of which the easement is established
PRESCRIPTION
(1) Adverse possession against the owner or the usufructuary. (2) It is not the non-use which extinguishes the rd usufruct by prescription, but the use by a 3 person. (3) There can be no prescription as long as the usufructuary receives the rents from the lease of the property, or he enjoys the price of the sale of his right.
Servient Estate – the immovable which is subject to the easement CHARACTERISTICS ESSENTIAL FEATURES: (1) It is a real right – it gives an action in rem or real action against any possessor of the servient estate (a) Owner of the dominant estate can file a real action for enforcement of right to an easement (b) Action in rem: an action against the thing itself, instead of against the person.
CONDITIONS NOT AFFECTING USUFRUCT EXPROPRIATION OF THING IN USUFRUCT (NCC 609) 3 Situations (1) If naked owner alone was given the indemnity, he has the option: (a) To replace with equivalent thing (b) Or to pay to the usufructuary legal interest on the indemnity – requires security given by the naked owner for the payment of the interest
(2) It is a right enjoyed over another property (jus in re aliena) – it cannot exist in one’s property (nulli res sua servit) When a dominant and servient estate have the same owner, an easement is extinguished. PAGE 103
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Separate ownership is a prerequisite to an easement.
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Any alienation of the property covered carries with it the servitudes affecting said property. But this affects only the portion of the tenement with the easement, meaning the portions unaffected can be alienated without the servitude.
(3) It is a right constituted over an immovable by nature (land and buildings), not over movables. (Article 613) Immovable: used in its common and not in the legal sense, meaning only property immovable BY NATURE can have easements.
(9) It is indivisible (NCC 618) (a) If the servient estate is divided between two or more persons, the easement is not modified, and each of them must bear it on the part which corresponds to him (b) If the dominant estate is divided between two or more persons, each of them may use the easement in its entirety, without changing the place of its use, or making it more burdensome in any other way
(4) It limits the servient owner’s right of ownership for the benefit of the dominant estate. (a) Right of limited use but no right to possess servient estate. (b) There exists a limitation on ownership: the dominant owner is allowed to enjoy or use part of the servient estate, or imposes on the owner a restriction as to his enjoyment of his own property. (i) Being an abnormal limitation of ownership, it cannot be presumed.
(10) It has permanence – once it attaches, whether used or not, it continues and may be used anytime Perpetual: exists as long as property exists, unless it is extinguished.
(5) It creates a relation between tenements No transfer of ownership, but a relationship is created, depending on the easement.
CLASSIFICATION AS TO RECIPIENT OF BENEFITS
(1) Real or Praedial: exists for the benefit of a particular tenement. (2) Personal: exists for the benefit of persons without a dominant tenement e.g. usus habitatio (right to reside in a house) and operae servorum (right to the labor of slaves) in Roman Law
(6) Generally, it may consist in the owner of the dominant estate demanding that the owner of the servient estate refrain from doing something (servitus in non faciendo) or that the latter permit that something be done over the servient property (servitus in patendo), but not in the right to demand that the owner of the servient do something (servitus in faciendo) except if such act is an accessory obligation to a praedial servitude (obligation propter rem) Servient owner merely allows something to be done to his estate.
AS TO CAUSE OR ORIGIN
(1) Legal: created by law, whether for public use or for the interest of private persons (a) Once requisites are satisfied, the owner of the dominant estate may ask the Court to declare that an easement is created. (b) Example: Natural drainage of waters, Abutment of land, Aqueduct, etc. (2) Voluntary: Created by the will of the owners of the estate through contract
Exceptions: Praedial servitudes (a) Right to place beams in an adjoining wall to support a structure (b) Right to use another’s wall to support a building
Note: There is no such thing as a JUDICIAL EASEMENT. The Courts cannot create easements, they can only declare the existence of one, if it exists by virtue of the law or will of the parties.
(7) It is inherent or inseparable from estate to which they actively or passively belong (NCC 617) (a) Easements are merely accessory to the tenements, and a “quality thereof.” They cannot exist without tenements. (b) Easements exist even if they are not expressly stated or annotated as an encumbrance on the titles.
AS TO ITS EXERCISE (NCC 615)
(1) Continuous: Use is or may be incessant, without the intervention of any man (2) Discontinuous: Used at intervals, and dependent upon the acts of man. Note: This classification is important in determining prescription: only continuous and apparent easements can be created by prescription
(8) It is intransmissible – it cannot be alienated separately from the tenement affected or benefited
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may be acquired only by virtue of a title (NCC 622) (2) The existence of an apparent sign of easement between two estates, established or maintained by the owner of both, shall be considered, as a title in order that the easement may continue actively and passively.
AS INDICATION OF ITS EXISTENCE
(1) Apparent: Made known and continually kept in view by external signs that reveal the use and enjoyment of the same (2) Non-apparent: No external indication of their existence Note: Also important for purposes of prescription
Unless: At the time the ownership of the two estates is divided, the contrary should be provided in the title of conveyance of either of them, or the sign aforesaid should be removed before the execution of the deed. This provision shall also apply in case of the division of a thing owned in common by two or more persons. (NCC 624)
BY THE OBJECT OR OBLIGATION IMPOSED (NCC 616)
(1) Positive: Imposes upon the owner of the servient estate the obligation of allowing something to be done, or doing it himself (2) Negative: Prohibits the owner of the servient estate from doing something which he could lawfully do if the easement did not exist. e.g. Negative Easement of Light and View: An opening is made on the wall of the dominant estate, and the easement consists of imposing upon the servient estate the obligation to not build anything that would obstruct the light
DETERMINES HOW TO COMPUTE THE PRESCRIPTIVE PERIOD (NCC 621)
(1) In positive easements, from the day on which the owner of the dominant estate, or the person who may have made use of the easement, commenced to exercise it upon the servient estate (2) In negative easements, from the day on which the owner of the dominant estate forbade, by an instrument acknowledged before a notary public, the owner of the servient estate from executing an act which would be lawful without the easement.
Note: Prescription starts to run from service of notarial prohibition GENERAL RULES
(1) Nulli res sua servi: No one can have a servitude over one’s own property (2) Servitus in faciendo consistere nequit: A servitude cannot consist in doing (a) Although some easements seem to impose a positive prestation upon the owner of the servient estate, in reality, the primary obligation is still negative. (b) Illustration: Under Article 680: the owner of a tree whose branches extend over to a neighboring property is required to cut off the extended branches, but the real essence of the easement is the obligation NOT TO ALLOW the branches of the tree to extend beyond the land (3) Servitus servitutes esse non potes: There can be no servitude over another servitude (4) A servitude must be exercised civiliter – in a way least burdensome to the owner of the land (5) A servitude must have a perpetual cause
DETERMINES HOW EASEMENT IS LOST BY PRESCRIPTION [NCC 631 (2)]
By nonuser for 10 years (1) With respect to discontinuous easements, this period shall be computed from the day on which they ceased to be used (2) With respect to continuous easements, from the day on which an act contrary to the same took place CREATION BY TITLE
(1) Continuous and apparent easements may be acquired by virtue of a title (NCC 620) (2) Continuous nonapparent easements, and discontinuous ones, whether apparent or not, are acquired only by virtue of a title (NCC 622) (3) The absence of a document or proof showing the origin of an easement which cannot be acquired by prescription may be cured by a deed of recognition by the owner of the servient estate or by a final judgment (NCC 623) (4) The existence of an apparent sign of easement between two estates, established or maintained by the owner of both, shall be considered as a
RELEVANCE OF CLASSIFICATIONS DETERMINES WHAT EASEMENTS CAN BE ACQUIRED BY PRESCRIPTION
Continuous and apparent easements may be acquired by prescription of 10 years (NCC 620) DETERMINES WHAT EASEMENTS CAN BE ACQUIRED BY TITLE
(1) Continuous nonapparent easements, and discontinuous ones, whether apparent or not,
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title in order that the easement may continue actively and passively.
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established thereon without the consent of both owners. (NCC 690) (4) Consent of all co-owners is required to impose an easement on an undivided tenement (NCC 691)
Unless: at the time the ownership of the two estates is divided, the contrary should be provided in the title of conveyance of either of them, or the sign aforesaid should be removed before the execution of the deed. This provision shall also apply in case of the division of a thing owned in common by two or more persons. (NCC 624)
RIGHTS AND OBLIGATIONS OF OWNERS OF DOMINANT AND SERVIENT ESTATES RIGHT OF DOMINANT ESTATE OWNER
(1) To use the easement and exercise all rights necessary for it (NCC 625, 626) (a) Owner of the dominant estate is granted the right to use the principal easement, and all accessory servitudes (b) Example: Easement of drawing water carries with it the easement of right of way to the place where water is drawn. (c) Limitation: Only for the original immovable and the original purpose (2) To do at his expense, all necessary works for the use and preservation of the easement (NCC 627) Necessity of the works determine extent of such works. (3) In a right of way, to ask for change in width of easement sufficient for needs (NCC 651)
BY LAW (LEGAL EASEMENTS)
(1) Easements imposed by law have for their object either public use or the interest of private persons (NCC 634) (2) These easements may be modified by agreement of the interested parties, whenever the law does not prohibit it or no injury is suffered by a third person (NCC 636) BY WILL OF THE OWNERS (VOLUNTARY EASEMENTS)
Every owner of a tenement or piece of land may establish the easements which he may deem suitable and best (NCC 688)
Encarnacion v. Court of Appeals: The Court granted the modification of the easement stating that under the law, the needs of the dominant property ultimately determine the width of the passage. And these needs may vary from time to time.
BY PRESCRIPTION
Continuous and apparent easements may be acquired by prescription of 10 years (NCC 620) LEGAL EASEMENTS LAW GOVERNING LEGAL EASEMENTS
For public easements (1) Special laws and regulations relating thereto (ex: PD 1067 and PD 705) (2) By the provisions of Chapter 2, Title VII, Book II, NCC
OBLIGATIONS OF DOMINANT ESTATE OWNER
(1) To use the easement for the benefit of immovable and in the manner originally established (NCC 626) If established for a particular purpose, the easement cannot be used for a different one. However, if established in a general way, without specific purpose, the easement can be used for all the needs of the dominant estate. (2) To notify owner of servient before making repairs and to make repairs in a manner least inconvenient to servient estate [NCC 627(2)]
For private legal easements (1) By agreement of the interested parties whenever the law does not prohibit it and no injury is rd suffered by a 3 person (2) By the provisions of Chapter 2, title VII, Book II VOLUNTARY EASEMENTS (1) Every owner of a tenement or piece of land may establish thereon the easements which he may deem suitable, and in the manner and form which he may deem best (NCC 688) (2) The owner of a thing, the usufruct of which belongs to another, may impose, without the consent of the usufructuary, any servitudes which will not injure the right of usufruct (NCC 689) (3) Whenever the naked ownership belongs to one person and the beneficial ownership to another, no perpetual voluntary easement may be
(3) Not to alter easement or render it more burdensome (a) Owner of dominant estate may make repairs at his expense, but cannot alter the easement or make it more burdensome. (NCC 627) (b) Court allowed Central to use the right of way to transport the additional sugar. This did not make the easement more burdensome nor did it alter it. What is prohibited is extending the road or repairing it or depositing excavations outside the area. But the
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additional use produced no such effects. (Valderama v. North Negros) (4) To contribute to expenses of works necessary for use and preservation of servitude, if there are several dominant estates, unless he renounces his interest (NCC 628) (a) The contribution is in proportion to the benefits which each may derive from the work (b) Anyone who does not wish to contribute may exempt himself by renouncing the easement for the benefit of the others (c) If the owner of the servient estate should make use of the easement in any manner whatsoever, he shall also be obliged to contribute to the expenses in the proportion stated, saving an agreement to the contrary
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KINDS OF LEGAL EASEMENTS (1) Natural drainage (NCC 637) (2) Riparian banks (NCC 638) (3) Drainage of buildings (NCC 674) (4) Dam (NCC 639) (5) Drawing water (NCC 640-41) (6) Aqueduct (NCC 642-646) (7) Sluice gate (647) (8) Right of way (NCC 649-657) (9) Party wall (NCC 658-666) (10) Light and view (NCC 667-681) (11) Intermediate distances (NCC 677-681) (12) Nuisance (NCC 682-683) (13)Lateral and subjacent support (684-687) NATURAL DRAINAGE
(1) Lower estates are obliged to receive the waters which naturally and without the intervention of man descend from the higher estates (as well as the stones or earth which they carry with them) (2) The owner of the lower estate cannot construct those which will impede this easement (3) The owner of the higher estate cannot construct those which will increase the burden.
RIGHT OF SERVIENT ESTATE OWNER
(1) To retain ownership and use of his property (a) The owner of the servient estate retains the ownership of the portion on which the easement is established, and may use the same in such a manner as not to affect the exercise of the easement. (NCC 630) (b) Servient owner must respect the use of the servitude, but retains ownership and use of the same, in a manner not affecting the easement. (2) To change the place and manner of the use of the easement (NCC 629) General rule: The owner of the servient estate cannot impair the use of the servitude Exception: (a) By reason of the place/manner originally assigned, the use of such easement has become VERY INCONVENIENT to the owner (b) The easement should prevent him from making any important works, repairs or improvements thereon (c) Change must be done at his expense (d) He offers another place or manner equally convenient (e) In such a way that no injury is caused by the change to the owner of the dominant estate or to those who may have a right to use the easement (3) To use the easement May use the easement but must also contribute proportionately to the expenses
RIPARIAN BANKS
(1) The banks of rivers and streams are subject throughout their entire length and within a zone of 3 meters along their margins, to the easement of public use in the general interest of navigation, floatage, fishing, and salvage. (2) Estates adjoining the banks of navigable or floatable rivers are subject to the easement of towpath for the exclusive service of river navigation and floatage. (3) If it be necessary to occupy lands of private ownership, the proper indemnity shall first be paid. DRAINAGE OF BUILDINGS
(1) The owner of a building is obliged to construct its roof or covering in such manner that the rain water shall fall on his own land or on a street or public place, and NOT on the land of his neighbor, even though the adjacent land may belong to two or more persons, one of whom is the owner of the roof. (2) Even if it should fall on his own land, the owner shall be obliged to collect the water in such a way as not to cause damage to the adjacent land or tenement.
OBLIGATIONS OF SERVIENT ESTATE OWNER
(1) Not to impair the use of the easement [NCC 629(1)] (2) To contribute proportionately to expenses if he uses the easement [NCC 628(2)] Unless there is an agreement to the contrary
DAM
Whenever it should be necessary to build a dam, and the person who is to construct it is not the owner of the banks, or lands which must support it, he may
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establish the easement of abutment of a dam, after payment of the proper indemnity.
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easement to such owners and to the other irrigators.
DRAWING WATER
RIGHT OF WAY
(1) Compulsory easements for drawing water or for watering animals can be imposed only for reasons of public use in favor of a town or village, after payment of the proper indemnity. (2) Easements for drawing water and for watering animals carry with them the obligation of the owners of the servient estates to allow passage to persons and animals to the place where such easements are to be used, and the indemnity shall include this service.
Who may demand: (1) The owner of the dominant estate (2) Any person with the real right to cultivate or use the immovable e.g. a usufructuary Note: a lessee cannot demand such easement, because the lessor is the one bound to maintain him in the enjoyment of the property Requisites: (1) Dominant estate is surrounded by other immovables owned by other persons (2) There must absolutely be no access to a public highway (3) Even if there is access, it is difficult or dangerous to use, or grossly insufficient (a) Mere inconvenience in the use of an outlet does not render the easement a necessity. (b) An adequate outlet is one that is sufficient for the purpose and needs of the dominant owner, and can be established at a reasonable expense. (c) Does not necessarily have to be by land – an outlet through a navigable river if suitable to the needs of the tenement is sufficient. (4) Isolation of the immovable is NOT due to the dominant owner’s own acts e.g. if he constructs building to others obstructing the old way (5) Payment of indemnity (a) If right of way is permanent and continuous for the needs of the dominant estate = value of the land + amount of damage caused to the servient estate (b) If right of way is limited to necessary passage for cultivation of the estate and for gathering crops, without permanent way = damage caused by encumbrance.
AQUEDUCT
(1) Any person who may wish to use upon his own estate any water of which he can dispose shall have the right to make it flow through the intervening estates, with the obligation to indemnify their owners, as well as the owners of the lower estates upon which the waters may filter or descend. (2) Person desiring to make use of this right is obliged to: (a) To prove that he can dispose of the water and that it is sufficient for the use for which it is intended; (b) To show that the proposed right of way is the most convenient and the least onerous to third persons; (c) To indemnify the owner of the servient estate in the manner determined by the laws and regulations (3) Easement of aqueduct for private interest cannot be imposed on buildings, courtyards, annexes, or outhouses, or on orchards or gardens already existing (4) This easement does not prevent the owner of the servient estate from closing or fencing it, or from building over the aqueduct in such manner as not to cause the latter any damage, or render necessary repairs and cleanings impossible (5) This easement is considered as continuous and apparent, even though the flow of the water may not be continuous, or its use depends upon the needs of the dominant estate, or upon a schedule of alternate days or hours.
Rules For Establishing The Right Of Way (1) Must be established at the point LEAST prejudicial to the servient estate (NCC 650) (2) Insofar as consistent with the first rule, where the distance from the dominant estate to a public highway is shortest (3) The criterion of least prejudice to the servient estate must prevail over the criterion of shortest distance although this is a matter of judicial appreciation. While shortest distance may ordinarily imply least prejudice, it is not always so as when there are permanent structures obstructing the shortest distance; while on the other hand, the longest distance may be free of
SLUICE GATE
(1) Constructing a stop lock or sluice gate in the bed of the stream from which the water is to be taken, for the purpose of improving an estate (2) Such person may demand that the owners of the banks permit its construction, after payment of damages, including those caused by the new
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obstructions and the easiest or most convenient to pass through. (Quimen v. CA) (4) The fact that LGV had other means of egress to the public highway cannot extinguish the said easement, being voluntary and not compulsory. The free ingress and egress along Mangyan Road created by the voluntary agreement between the parties is thus legally demandable with the corresponding duty on the servient estate not to obstruct the same. (La Vista Association v. CA) (5) Width of the easement shall be that which is sufficient for the needs of the dominant estate (6) Easement may be changed from time to time depending upon the needs of the dominant tenement (7) The width of the easement of right of way shall be that which is sufficient for the needs of the dominant estate, and may accordingly be changed from time to time. (NCC 651) (8) Necessary repairs for a permanent right of way shall be made by the DOMINANT OWNER. (9) A proportionate share of taxes shall be reimbursed by the dominant owner to the proprietor of the servient estate (a) If the right of way is permanent, the necessary repairs shall be made by the owner of the dominant estate. A proportionate share of the taxes shall be reimbursed by said owner to the proprietor of the servient estate (NCC 654) (10) In cases where the dominant estate needing the right of way is acquired by sale, exchange or partition and the Estate is surrounded by other estates owned by the vendor, exchanger or coowner (11) Vendor, exchanger or co-owner shall grant the right of way WITHOUT INDEMNITY (a) Granting the servitude without indemnity is a tacit condition of the sale, exchange or partition: each party receives something (12) Donor (simple donation) must still be indemnified for right of way (a) Grantor receives nothing from the grantee, therefore no implied condition as to a right of way is constituted (13)If the land of the grantor is the one which becomes isolated, he may demand right of way after paying an indemnity (a) Whenever a piece of land acquired by sale, exchange or partition, is surrounded by other estates of the vendor, exchanger, or co-owner, he shall be obliged to grant a right of way without indemnity. In case of a simple donation, the donor shall be indemnified by the donee for the establishment of the right of way. (NCC 652)
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Extinguishment (1) Owner has joined the dominant estate to another abutting the public road (2) A new road is opened giving access to the isolated estate (3) Extinguishment is NOT automatic. The owner of the servient estate must ask for such extinguishment (4) Indemnity paid to the servient owner must be returned: (a) If easement is permanent: value of the land must be returned (b) If easement is temporary: nothing to be returned Special Rights Of Way (1) Right of way to carry materials for the construction, repair, improvement, alteration or beautification of a building through the estate of another (2) Right of way to raise on another’s land scaffolding or other objects necessary for the work (a) If it be indispensable for the construction, repair, improvement, alteration or beautification of a building, to carry materials through the estate of another, or to raise therein scaffolding or other objects necessary for the work, the owner of such estate shall be obliged to permit the act, after receiving payment of the proper indemnity for the damage caused him. (NCC 656) (3) Right of way for the passage of livestock known as animal path, animal trail, watering places, resting places, animal folds (NCC 657) (a) Easements of the right of way for the passage of livestock known as animal path, animal trail or any other, and those for watering places, resting places and animal folds, shall be governed by the ordinances and regulations relating thereto, and, in the absence thereof, by the usages and customs of the place. (b) Without prejudice to rights legally acquired, the animal path shall not exceed in any case the width of 75 meters, and the animal trail that of 37 meters and 50 centimeters. (c) Whenever it is necessary to establish a compulsory easement of the right of way or for a watering place for animals, the provisions of this Section and those of Articles 640 and 641 shall be observed. In this case the width shall not exceed 10 meters PARTY WALL
Refers to all those mass of rights and obligations emanating from the existence and common
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enjoyment of wall, fence, enclosures or hedges, by the owners of adjacent buildings and estates separated by such objects
When existence of exterior sign is presumed (NCC 660) (1) Whenever in the dividing wall of buildings there is a window or opening (2) Whenever the dividing wall is, on one side, straight and plumb on all its facement, and on the other, it has similar conditions on the upper part, but the lower part slants or projects outward (3) Whenever the entire wall is built within the boundaries of one of the estates (4) Whenever the dividing wall bears the burden of the binding beams, floors and roof frame of one of the buildings, but not those of the others (5) Whenever the dividing wall between courtyards, gardens, and tenements is constructed in such a way that the coping sheds the water upon only one of the estates (6) Whenever the dividing wall, being built of masonry, has stepping stones, which at certain intervals project from the surface on one side only, but not on the other (7) Whenever lands enclosed by fences or live hedges adjoin others which are not enclosed
Nature (1) A common wall which separates two estates, built by common agreement at the dividing line such that it occupies a portion of both estates on equal parts (2) A party wall is a co-ownership (a kind of compulsory co-ownership) (a) Each owner owns part of the wall but it cannot be separated from the other portions belonging to the others. A party wall has a special characteristic that makes it more of an easement as it is called by law (b) An owner may use a party wall to the extent of the ½ portion on his property. Co-Ownership
Party Wall
Before division of shares, a co-owner cannot point to any definite portion of the property as belonging to him
Shares of the co-owners cannot be physically segregated but they can be physically identified
None of the co-owners may use the community property for his exclusive benefit because he would be invading the rights of the others
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Note: The deposit of earth or debris on one side alone is an exterior sign that the owner of that side is the owner of the ditch or drain. The presumption is an addition to those enumerated in NCC 660.
No such limitation
Demolition of building supported by party wall (1) An owner may also renounce his part ownership of a party wall if he desires to demolish his building supported by the wall. (2) He shall bear all the expenses of repairs and work necessary to prevent any damage which the demolition may cause to the party wall.
In a co-ownership, partial Any owner may free renunciation himself from contributing is allowed to the cost of repairs and construction of a party wall by renouncing all his rights thereto
Increasing height of party wall An owner is given the right to increase the height of a party wall subject to the following conditions: (1) He must do so at his own expense; (2) He must pay for any damage which may be caused thereby even if the damage is temporary; (3) He must bear the cost of maintaining the portion added; (4) He must pay the increased cost of preservation of the wall
When existence of easement of party wall presumed (1) In dividing walls of adjoining buildings up to the point of common elevation (2) In dividing walls of gardens or yards situated in cities, or towns, or in rural communities (3) In fences, walls and live hedges dividing rural lands Note: may be rebutted by a title or exterior sign, or any other proof showing that the entire wall in controversy belongs exclusively to one of the adjoining property-owners
Proportional use of party wall The part owners share in the expenses of maintaining a party wall in proportion to the interest of each
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(ii) The outer line of the openings if they project (iii) The dividing line between the two properties in cases of oblique view (d) If distances are not complied with: (i) Windows are considered unlawful openings (ii) Owner may be ordered by the Court to close them (iii) Even if the adjoining owner does not object to the construction of such structures at first, he cannot be held to be in estoppel, except if 10-year period of acquisitive prescription has passed. (iv) Does not give rise to prescription (v) Mere opening of the window in violation of the distances does not give rise to the easement of light and view by prescription (3) In buildings separated by a public way or alley, not less than 3 meters wide, the distances required (2 m, 60 cm) do not apply (4) If an easement is acquired to have direct views, balconies or belvederes, the owner of the servient estate must not build at less than 3 meters from the boundary line of the two tenements. (a) The distances may be stipulated by the parties, but should not be less than what is prescribed by the law (2 meters and 60 cm)
LIGHT AND VIEW
Definition (1) Easement of light (jus luminum) is the right to admit light from the neighboring estate by virtue of the opening of a window or the making of certain openings (2) Easement of view (jus prospectus) is the right to make openings or windows, to enjoy the view through the estate of another and the power to prevent all constructions or works which would obstruct such view or make the same difficult. (a) Necessarily includes the easement of light (b) It is possible to have light only without view Nature (1) Positive: Opening a window through a party wall When a part owner of a party wall opens a window therein, such act implies the exercise of the right of ownership by the use of the entire thickness of the wall = invasion of the right of the other part owners / violation of the right to proportional use of the party wall. (2) Negative: Formal prohibition upon the owner of the adjoining land or tenement (a) When a person opens a window on his own building, he does nothing more than exercise an act of ownership on his property. (i) Does not establish an easement (b) Coexistent is the right of the owner of the adjacent property to build on his own land, even if such structures cover the window (c) If the adjacent owner does not build structures to obstruct the window, such is considered mere tolerance and NOT a waiver of the right to build. (d) An easement is created only when the owner opens up a window, prohibits or restrains the adjacent owner from doing anything, which may tend to cut off or interrupt the light + prescriptive period
Exception to Easement Vs. Direct View (1) Owners of a wall (not a party wall) adjoining a tenement of another can make openings to admit light without complying with the distance requirements SO LONG AS: (a) Openings are made at the height of the ceiling joists (horizontal beams) or immediately under the ceiling (i) Size: 30 cm square (ii) With iron grating imbedded in the wall (iii) With a wire screen (2) But owner of the adjoining estate can close the opening if: (a) He acquires part ownership of the party wall (b) He constructs a building or raises a wall on his land, unless an easement of light has been acquired (3) If requirements are not complied with, the owner of the adjoining estate may compel the closure of the opening. (4) The action to compel the closing of the opening may prescribe if the opening is permitted without protest. (a) BUT prescription of the action to compel the closure of the opening DOES NOT MEAN that the servitude of light and view has been acquired.
Easement against Direct view (1) Acquired by the person who opens the window (2) The following structures cannot be built without following the prescribed distances (a) Window, apertures, balconies and other projections with a direct view upon or towards an adjoining land must have a distance of 2 METERS between the wall and the contiguous property. (b) For structures with a side or oblique view (at an angle from the boundary line), there should be a distance of 60 centimeters. (c) Measured from: (i) The outer line of the wall if the openings do not project
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(b) Period of acquisitive prescription will only start to run from the time the owner asserting the servitude has forbidden the owner of the adjoining tenement from doing something he could lawfully do. (c) THUS, although the action to compel the closure might have prescribed, the owner of the adjoining estate may still build on his own land a structure which might obstruct the view.
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(4) Obstructs or interferes with the free passage of any public highway or street, or any body of water; or (5) Hinders or impairs the use of property. LATERAL AND SUBJACENT SUPPORT
(1) The proprietor is prohibited from making dangerous excavations. (a) No proprietor shall make such excavations upon his land as to deprive any adjacent land or building of sufficient lateral or subjacent support. (2) Easement of lateral and subjacent support is deemed essential to the stability of buildings (3) Support is lateral when the supported and supporting lands are divided by a vertical plane. (4) Support is subjacent when the supported land is above and the supporting land is beneath it.
INTERMEDIATE DISTANCES (NCC 677)
NCC 677, in effect, establishes an easement in favor of the State. The general prohibition is dictated by the demands of national security. The following must comply with the regulations or customs of the place: (1) Construction of aqueduct, well, sewer, etc. (678) Constructions which by reason of their nature or products are dangerous or noxious
MODES OF ACQUIRING EASEMENT BY TITLE
Juridical act which gives rise to the servitude (e.g. law, donations, contracts or wills) (1) If easement has been acquired but no proof of existence of easement available, and easement is one that cannot be acquired by prescription
(2) Planting of trees (NCC 679) (a) No trees shall be planted near a tenement or piece of land belonging to another except at the distance authorized by the ordinances or customs of the place (b) In the absence of regulations: (i) At least 2 meters from the dividing line of the estates if tall trees are planted (ii) At least 50 centimeters if shrubs or small trees are planted (c) In case of violation, a landowner shall have the right to demand the uprooting of the plant even if it has grown spontaneously.
The defect may be cured by: (a) Deed of recognition by owner of servient estate: By affidavit or a formal deed acknowledging the servitude (b) By final judgment: Owner of the dominant estate must file a case in Court to have the easement declared by proving its existence through other evidence
Branches, roots, and fruits: (1) If the branches of any tree should extend over a neighboring estate, tenement, garden or yard, the owner of the latter shall have the right to demand that they be cut-off (2) If it be the roots of a neighboring tree which should penetrate into the land of another, the latter may cut them off himself within his property (3) Fruits naturally falling upon adjacent land belong to the owner of said land.
(2) Existence of an apparent sign considered as title Illustration: The presence of 4 windows was considered an apparent sign which created a negative easement of light and view (altius non tollendi) i.e. not to build a structure that will cover the windows. (Amor v. Florentino) BY PRESCRIPTION
Requisites (1) Easement must be continuous and apparent. (2) Easement must have existed for 10 years. (3) NO NEED for good faith or just title.
NUISANCE
A nuisance is any act, omission, establishment, business, condition of property, or anything else which: (1) Injures or endangers the health or safety of others; or (2) Annoys or offends the senses; or (3) Shocks, defies or disregards decency or morality; or
EXTINGUISHMENT OF EASEMENTS (1) By merger in the same person of the ownership of the dominant and servient estates (2) By nonuser for ten years (3) When either or both of the estates fall into such condition that the easement cannot be used
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(4) By the expiration of the term or the fulfillment of the condition, if the easement is temporary or conditional (5) By the renunciation of the owner of the dominant estate; (6) By the redemption agreed upon between the owners of the dominant and servient estates
RENUNCIATION OF THE OWNER OF THE DOMINANT ESTATE
Must be specific, clear, express (distinguished from non-user) REDEMPTION AGREED UPON BETWEEN THE OWNERS OTHER CAUSES NOT MENTIONED IN NCC 631
(1) Annulment and rescission of the title constituting the voluntary easement (2) Termination of the right of grantor of the voluntary easement (3) Abandonment of the servient estate (a) Owner of the servient estate gives up ownership of the easement (e.g. the strip of land where the right of way is constituted) in favor of the dominant estate. (b) The easement is extinguished because ownership is transferred to the dominant owner, who now owns both properties. (4) Eminent domain (a) The government’s power to expropriate property for public use, subject to the payment of just compensation. (5) Special cause for extinction of legal rights of way; if right of way no longer necessary (a) NCC 655 (i) If the right of way granted to a surrounded estate ceases to be necessary because its owner has joined it to another abutting on a public road, the owner of the servient estate may demand that the easement be extinguished, returning what he may have received by way of indemnity. The interest on the indemnity shall be deemed to be in payment of rent for the use of the easement. (ii) The same rule shall be applied in case a new road is opened giving access to the isolated estate. (iii) In both cases, the public highway must substantially meet the needs of the dominant estate in order that the easement may be extinguished. (b) Right of way ceases to be necessary: (i) Owner of the of the dominant estate has joined to another abutting on a public road (ii) A new road is opened giving access to the isolated estate (c) Requisite: the public highway must substantially meet the needs of the dominant estate in order that the easement may be extinguished (d) Owner of the servient estate may demand that the easement be extinguished.
MERGER
Must be absolute, perfect and definite, not merely temporary (1) Absolute: Ownership of the property must be absolute, thus not applicable to lease, usufruct, etc. (2) Perfect: Merger must not be subject to a condition (3) If the merger is temporary, there is at most a suspension of the easement, but no extinguishment. BY NON-USER FOR 10 YEARS
(1) Owner of dominant estate does not exercise right over easement. (2) Inaction, not outright renunciation. (3) Due to voluntary abstention by the dominant owner, and not due to a fortuitous event (4) Computation of the period (a) Discontinuous easements: counted from the day they ceased to be used (b) Continuous easements: counted from the day an act adverse to the exercise of the easement took place (i) E.g. in an easement of light and view, the erection of works obstructing the servitude would commence the period of prescription (5) Use by a co-owner of the dominant estate bars prescription with respect to the others (6) Servitudes not yet exercised cannot be extinguished by non-user (a) An easement must have first been used, before it can be extinguished by inaction. EXTINGUISHMENT BY IMPOSSIBILITY OF USE
(1) Impossibility referred to must render the entire easement unusable for all time. (2) Impossibility of using the easement due to the condition of the tenements (e.g. flooding) only suspends the servitude until it can be used again. (3) Except: If the suspension exceeds 10 years, the easement is deemed extinguished by non-user EXPIRATION OF THE TERM RESOLUTORY CONDITION
OR
FULFILLMENT
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OF
Applicable only to voluntary easements
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(e) Owner of the servient estate must return
indemnity he received (value of the land)
Nuisance A nuisance is any act, omission, establishment, business, condition of property, or anything else which: (1) Injures or endangers the health or safety of others; or (2) Annoys or offends the senses; or (3) Shocks, defies or disregards decency or morality; or (4) Obstructs or interferes with the free passage of any public highway or street, or any body of water; or (5) Hinders or impairs the use of property.
Per se
ACCORDING TO SCOPE OF INJURIOUS EFFECTS
Test: not the number of persons annoyed but the possibility of annoyance to the public by the invasion of its rights – the fact that it is in a public place and annoying to all who come within its sphere. (1) Public (a) The doing of or the failure to do something that injuriously affects the safety, health or morals of the public. (b) It causes hurt, inconvenience or injury to the public, generally, or to such part of the public as necessarily comes in contact with it. (2) Private One which violates only private rights and produces damages to but one or a few persons
NUISANCE V. NEGLIGENCE Whether the defendant’s use of his property was unreasonable as to plaintiff, without regard to foreseeability of injury.
Liability for the resulting Liability is based on a injury to others regardless want of proper care of the degree of care or skill exercised to avoid such injury. Principles ordinarily apply Principles
Per accidence
The wrong is established Proof of the act and its by proof of the mere act. consequences. It becomes a nuisance as a matter of law.
Injury is immediate
Whether it was unreasonable for the defendant to act as he did in view of the threatened danger or harm to one in plaintiff’s position.
apply where the cause of action is for harm resulting from one act which created an unreasonable risk of injury.
(2) Nuisance per accidens or in fact (a) One that becomes a nuisance by reason of circumstances and surroundings. (b) It is not a nuisance by its nature but it may become so by reason of the locality, surrounding, or the manner in which it is conducted, managed, etc.
Use of one’s own property Direct infringement of in such a manner as to another’s right of cause injury to the property. property or right or interest of another, and generally results from the commission of an act beyond the limits of the property affected.
Negligence
where the cause of action is for continuing harm caused by continuing or recurrent acts which cause discomfort or annoyance to plaintiff in the use of his property.
(1) Nuisance per se or at law An act, occupation or structure which is a nuisance at all times and under any circumstances, regardless of location or surroundings.
Trespass
Nuisance
Negligence
ACCORDING TO NATURE
NUISANCE V. TRESPASS
Injury is consequential
Nuisance
CLASSES
Note: To constitute a nuisance there must be an arbitrary or abusive use of property or disregard of commonly accepted standards set by society.
Nuisance
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Public Affects the public at large Need not affect the whole community or
ordinarily
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Private
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LIABILITY OF TRANSFEREES
The grantee of land upon which there exists a nuisance created by his predecessors in title is NOT responsible therefore merely because he becomes the owner of the premises, or merely because he permits it to remain.
hurt and injure all the public. It is sufficient if it affects the surrounding community generally or if the injury is occasioned to such part of the public as come in contact with it.
He shall be liable if he knowingly continues the nuisance. Generally, he is not liable for continuing it in its original form, unless he has been notified of its existence and requested to remove it, or has actual knowledge that it is a nuisance and injurious to the rights of others.
(3) Mixed
NATURE OF LIABILITY
DOCTRINE OF ATTRACTIVE NUISANCE One who maintains on his premises dangerous instrumentalities or appliances of a character likely to attract children in play, and who fails to exercise ordinary care to prevent children from playing therewith or resorting thereto, is liable to a child of tender years who is injured thereby, even if the child is technically a trespasser in the premises.
All persons who participate in the creation or maintenance of a nuisance are jointly and severally liable for the injury done. If 2 or more persons who create or maintain the nuisance act entirely independent of one another, and without any community of interest, concert of action, or common design, each is liable only so far as his acts contribute to the injury.
Basis of liability – The attractiveness is an invitation to children. Safeguards to prevent danger must therefore be set up.
For joint liability, there must be some joint or concurrent act or community of action or duty, or the several wrongful acts done at several times must have concurred in their effects as one single act to produce the injury complained of.
Note: A swimming pool or water tank is not an attractive nuisance, for while it is attractive, it cannot be a nuisance, being merely an imitation of the work of nature. (Hidalgo Enterprises v. Balandan)
RIGHT TO RECOVER DAMAGES
The abatement of a nuisance does not preclude the right of any person injured to recover damages for its past existence. (NCC 697)
LIABILITY IN CASE OF NUISANCE WHO ARE LIABLE
Every successive owner or possessor of property who fails or refuses to abate a nuisance in that property started by a former owner or possessor is liable therefor in the same manner as the one who created it. (NCC 696)
Abatement and damages are cumulative remedies. NO PRESCRIPTION
The action to abate a public or private nuisance is NOT extinguished by prescription. [NCC. 1143(2)]
LIABILITY OF CREATOR OF NUISANCE
He who creates a nuisance is liable for the resulting damages and his liability continues as long as the nuisance continues. (1) There must be a breach of some duty on the part of the person sought to be held liable for damages resulting from a nuisance before an action will lie against him. (2) No one is to be held liable for a nuisance which he cannot himself physically abate without legal action against another for that purpose. (3) Where several persons, acting independently, cause damage by acts which constitute a nuisance, each is liable for the damage which he has caused or for his proportionate share of the entire damage.
REGULATION OF NUISANCES PUBLIC NUISANCE
Remedies The remedies against a public nuisance are: (1) A prosecution under the Penal Code or any local ordinance: or (2) A civil action; or (3) Abatement, without judicial proceedings. (a) It must be reasonably and efficiently exercised (b) Means employed must not be unduly oppressive on individuals, and (c) No more injury must be done to the property or rights of individuals than is necessary to accomplish the abatement.
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(d) No right to compensation if property taken or destroyed is a nuisance.
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allow thereafter a reasonable time to enable the other to abate the nuisance himself. (4) Means employed must be reasonable and for any unnecessary damage or force, the actor will be liable. Right to abate is not greater than the necessity of the case and is limited to the removal of only so much of the objectionable thing as actually causes the nuisance. (5) Abatement must be approved by the district health officer. (6) Property must not be destroyed unless it is absolutely necessary to do so. (7) Right must always be exercised with the assistance of local police so as not to disturb the public peace.
Action for abatement (1) The district health officer shall take care that one or all of the remedies against a public nuisance are availed of. (2) If a civil action is brought by reason of the maintenance of a public nuisance, such action shall be commenced by the city or municipal mayor. (3) The district health officer shall determine whether or not abatement, without judicial proceedings, is the best remedy against a public nuisance. (4) A private person may file an action on account of a public nuisance if it is especially injurious to himself.
PRIVATE NUISANCE
Remedies The remedies against a private nuisance are: (1) A civil action; or (2) Abatement, without judicial proceedings. (a) The procedure for extrajudicial abatement of a public nuisance by a private person be followed (b) Person extrajudicially abating a nuisance liable for damages if: (i) If he causes unnecessary injury (ii) If an alleged nuisance is later declared by the courts to be not a real nuisance
General rule: Individual has no right of action against a public nuisance. The abatement proceedings must be instituted in the name of the State or its representatives. Exception: An individual who has suffered some special damage different from that sustained by the general public may maintain a suit in equity for an injunction to abate it, or an action for damages which he has sustained. Action becomes a tort if an individual has suffered particular harm, in which case the nuisance is treated as a private nuisance with respect to such person.
Remedies of property owner A person whose property is seized or destroyed as a nuisance may resort to the courts to determine whether or not it was in fact a nuisance. (1) Action for replevin (2) Enjoin the sale or destruction of the property (3) Action for the proceeds of its sale and damages if it has been sold (4) Enjoin private parties from proceeding to abate a supposed nuisance
Requisites of the right of a private individual to abate a public nuisance (1) That demand be first made upon the owner or possessor of the property to abate the nuisance; (2) That such demand has been rejected; (3) That the abatement be approved by the district health officer and executed with the assistance of the local police; and (4) That the value of the destruction does not exceed P3000.
Modes of Acqiring Ownership
Rules: (1) The right must be exercised only in cases of urgent or extreme necessity. The thing alleged to be a nuisance must be existing at the time that it was alleged to be a nuisance.
MODES OF ACQUIRING OWNERSHIP: (OLDTIPS) (1) Occupation (2) Law (3) Donation (4) Tradition (5) Intellectual Property (6) Prescription (7) Succession
(2) Summary abatement must be resorted to within a reasonable time after knowledge of the nuisance is acquired or should have been acquired by the person entitled to abate. (3) Person who has the right to abate must give reasonable notice of his intention to do so, and
Mode is a specific cause which produces dominion and other real rights as a result of the co-existence of
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special status of things, capacity and intention of persons and fulfillment of the requisites of law.
The owner of a swarm of bees shall have a right to pursue them to another’s land, indemnifying the possessor of the latter for the damage.
Title is every juridical right which gives a means to the acquisition of real rights but in itself is insufficient to produce them.
If the owner has not pursued the swarm, or ceases to do so within 2 consecutive days, the possessor of the land may occupy or retain the same.
Ownership is not transferred by contract merely but by tradition or delivery. Contracts only constitute titles or rights to transfer or acquisition of ownership, while delivery is the mode of accomplishing the same. Mode
The 20 days to be counted from their occupation by another person. This period having expired, they shall pertain to him who has caught and kept them. Occupation of domesticated animals Wild animals are possessed only while they are under one's control; domesticated or tamed animals are considered domestic or tame if they retain the habit of returning to the premises of the possessor.
Title
Directly and immediately Serves merely to give the produces a real right occasion for its acquisition or existence Cause
Means
Proximate cause
Remote cause
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Pigeons and fish Pigeons and fish which from their respective breeding places pass to another pertaining to a different owner shall belong to the latter, provided they have not been enticed by some artifice or fraud.
Essence of the right Means whereby that which is to be created or “essence” is transmitted transmitted
Hidden treasure He who by chance discovers hidden treasure in another’s property: ½ shall be allowed to the finder.
OCCUPATION Note: Ownership of land cannot be acquired by occupation
If the finder is a trespasser, he shall not be entitled to any share of the treasure.
REQUISITES
(a) Corporeal personal property (b) Property susceptible of appropriation (c) Seizure with intent to appropriate (d) Res nullius (no owner) or res derelict (abandoned property) (e) Observance of conditions prescribed by law
If the things found be of interest to science or the arts, the State may acquire them at their just price, which shall be divided in conformity with the rule stated Lost movables; procedure after finding lost movables Whoever finds a movable, which is not treasure, must return it to its previous possessor.
KINDS
Of Animals (1) Wild or feral animals – seizure (hunting/fishing) in open season by means NOT prohibited (2) Tamed/domesticated animals – General Rule: belong to the tamer, but upon recovering freedom, are susceptible to occupation UNLESS claimed within 20days from seizure by another (3) Tame/domestic animals – not acquired by occupation EXCEPT when ABANDONED
If unknown, the finder shall immediately deposit it with the mayor of the city or municipality where the finding has taken place. The finding shall be publicly announced by the mayor for two consecutive weeks in the way he deems best. If the movable cannot be kept without deterioration, or without expenses which considerably diminish its value, it shall be sold at a public auction eight days after the publication.
Of Other Personal Property (1) Abandoned – may be acquired (2) Lost (3) Hidden treasure – finder gets ½ by occupation; landowner gets ½ by accession; EXCEPT in CPG system, share goes to the partnership
Six months from the publication having elapsed without the owner having appeared, the thing found, or its value, shall be awarded to the finder. The finder
SPECIAL RULES
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and the owner shall be obliged, as the case may be, to reimburse the expenses.
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WHAT MAY NOT BE DONATED
Future property (1) Donations cannot comprehend future property. (2) “Future property” is understood anything which the donor cannot dispose of at the time of the donation.
If the owner should appear in time, he shall be obliged to pay, as a reward to the finder, one-tenth of the sum or of the price of the thing found. DONATION Donation is an act of liberality whereby a person disposes gratuitously of a thing or right in favor of another, who accepts it.
KINDS OF DONATIONS
As to its taking effect (1) Donation Inter Vivos (NCC 729) Donation which shall take effect during the lifetime of the donor, though the property shall not be delivered till after the donor's death
OTHER INSTANCES CONSIDERED AS DONATION
(1) When a person gives to another a thing or right on account of the latter's merits or of the services rendered by him to the donor, provided they do not constitute a demandable debt (2) When the gift imposes upon the donee a burden which is less than the value of the thing given
Takes effect independently of the donor’s death Irrevocable EXCEPT for the ff grounds: (a) Subsequent birth of the donor’s children (b) Donor’s failure to comply with imposed conditions (c) Donee’s ingratitude (d) Reduction of donation by reason of inofficiousness
NATURE
(1) BILATERAL contract creating UNILATERAL obligations on the donor’s part (2) Requires CONSENT of BOTH donor and donee though it produces obligations only on the side of the DONOR
(2) Donation by Reason of Marriage/ Donation Propter Nuptias (FC 86) Requisites (a) Must be made BEFORE the celebration of marriage (b) Made in CONSIDERATION of the marriage (c) Made in FAVOR of ONE or BOTH of the future spouses
Requisites (1) CONSENT and CAPACITY of the parties (2) ANIMUS DONANDI (intent to donate) (3) DELIVERY of thing donated (4) FORM as prescribed by law (5) IMPOVERISHMENT of donor’s patrimony and ENRICHMENT on part of donee
Ordinary v. Propter Nuptias Ordinary
WHAT MAY BE DONATED
All present property or part thereof of the donor (1) Provided he reserves, in full ownership or usufruct, sufficient means for support of himself and all relatives entitled to be supported by donor at the time of acceptance (2) Provided that no person may give or receive by way of donation, more than he may give or receive by will (NCC 752); also, reserves property sufficient to pay donor’s debts contracted before donation, otherwise, donation is in fraud of creditors (NCC 759, 1387) (3) If donation exceeds the disposable or free portion of his estate, donation is inofficious (4) EXCEPTIONS: (a) Donations provided for in marriage settlements between future spouses – not more than 1/5 of present property (b) Donation propter nuptias by an ascendant consisting of jewelry, furniture or clothing not to exceed 1/10 of disposable portion
Propter Nuptias Express acceptance
Necessary
Not required As to minors
Can’t be made by minors May be made by minors (FC 78) As to future property Cannot include property
future May include future property (same rule as wills)
Limit as to donation of present property No limit to donation of If present property is present property provided donated and property legitimes are not impaired regime is ACP, limited to 1/5 Grounds for revocation Law on donations
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Causes for revocation of donation propter nuptias: (1) If the marriage is not celebrated or judicially declared void ab initio, except donations made in the marriage settlements (2) When the marriage takes place without the consent of the parents or guardian, as required by law; (3) When the marriage is annulled, and the donee acted in bad faith; (4) Upon legal separation, the donee being the guilty spouse; (5) If it is with a resolutory condition and the condition is complied with; (6) When the donee has committed an act of ingratitude as specified by the provisions of the Civil Code on donations in general. Donation between spouses GENERAL RULE: Every donation or grant of gratuitous advantage, direct or indirect, between the spouses during the marriage shall be void. The prohibition applies to persons living together as husband and wife without a valid marriage
Inter vivos of the donor
the donor, the donation being effective only after the death of donor. Acceptance during the donor’s lifetime is premature and ineffective because there can be no contract regarding future inheritance
Ownership is immediately transferred. Delivery of Ownership is transferred possession is allowed after death after death As to revocation Irrevocable – may be Revocable upon the revoked only for the exclusive will of the donor reasons provided in CC 760, 764, 765 As to reduction or suppression When it is excessive or When it is excessive or inofficious, being inofficious, it is reduced preferred, it is reduced first, or even suppressed only after the donations mortis causa had been reduced or exhausted
(3) Donation Mortis Causa (NCC 728) (a) Becomes effective upon the death of donor (b) Donor’s death ahead of the donee is a suspensive condition for the existence of the donation Characteristics: (a) Transferor retains ownership and control of the property while alive (b) Transfer is revocable at will before his death (c) Transfer will be VOID if the transferor should survive the transferee
Note: (a) NATURE of the act, whether it’s one of disposition or of execution, is CONTROLLING to determine whether the donation is mortis causa or inter vivos. (b) What is important is the TIME of TRANSFER of ownership even if transfer of property donated may be subject to a condition or a term. (c) 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; Austria-Magat v. CA)
Inter Vivos v. Mortis Causa Mortis causa As to formalities Executed and accepted Must be in the form of a with formalities will, with all the prescribed by CC formalities for the validity of wills
As to cause or consideration (1) Simple - made out of pure liberality or because of the merits of the donee (2) Remuneratory - made for services already rendered to the donor (3) Onerous - imposes a BURDEN inferior in value to property donated (a) Improper - burden EQUAL in value to property donated
As to effectivity Effective during the Effective after the death lifetime of the donor of the donor As to acceptance Acceptance must be made during the lifetime
Mortis causa
As to transfer of ownership for right of disposition
EXCEPTION: Moderate gifts which the spouses may give each other on the occasion of any family rejoicing.
Inter vivos
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Acceptance must be made after the death of
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(b) Sub-modo or modal - imposes a prestation upon donee as to how property donated will be applied (c) Mixed donations – e.g. sale for price lower than value of property
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QUALIFICATIONS OF DONOR, DONEE
Who May Give Donations All persons who may contract and dispose of their property may make a donation (NCC 735) NOTE: (1) Donor’s capacity shall be determined as of the time of the making of the donation. (NCC 737) (2) Capacity to donate is required for donations inter vivos and NOT mortis causa (3) Donor’s capacity determined as of the time of the donation. Subsequent incapacity is immaterial.
As to effectivity or extinguishment (1) Pure – donation is without conditions or periods (2) Conditional – donation is subject to suspensive or resolutory conditions (3) With a term FORMALITIES REQUIRED
How made and accepted Movables (NCC 748) (1) The donation of a movable may be made orally or in writing. (2) Oral donation: requires the simultaneous delivery of the thing or of the document representing the right donated. (3) If the value of the movable donated exceeds P5000, the donation and the acceptance should be in writing, otherwise, donation is void
Who May Receive Donations (1) All who are not specially disqualified by law (NCC 738) (2) Minors and others who cannot enter into a contract: acceptance made through their parents or legal representatives (NCC 741) (3) Donations made to conceived and unborn children: accepted by those persons who would legally represent them if they were already born (NCC 737)
Immovables (NCC 749) (1) Must be in a public instrument specifying donated property and burdens assumed by the done (2) Acceptance must be either: (a) In the same instrument or (b) In another public instrument notified to the donor in authentic form and noted in both deeds (3) Exceptions: (a) Donations propter nuptias – need no express acceptance (b) Onerous donations – form governed by the rules of contracts
Who May Not Give or Receive Donations By reason of public policy (NCC 739) (1) Those made between persons guilty of adultery or concubinage at the time of donation (2) Those made between persons guilty of the same criminal offense if the donation is made in consideration thereof (3) Those made to a public officer, his spouse, descendants, and/or ascendants by reason of the office By reason of donee’s unworthiness [NCC 1032 and 1027 except (4)] NCC 1032: (1) Parents who have abandoned their children or induced their daughters to lead a corrupt or immoral life, or attempted against their virtue; (2) Any person who has been convicted of an attempt against the life of the testator, his or her spouse, descendants, or ascendants; (3) Any person who has accused the testator of a crime for which the law prescribes imprisonment for six years or more, if the accusation has been found groundless; (4) Any heir of full age who, having knowledge of the violent death of the testator, should fail to report it to an officer of the law within a month, unless the authorities have already taken action; this prohibition shall not apply to cases wherein, according to law, there is no obligation to make an accusation; (5) Any person convicted of adultery or concubinage with the spouse of the testator;
Perfection Acceptance (1) Donation is perfected upon the donor’s learning of the acceptance (2) Acceptance may be made during the lifetime of both donor and donee Who May Accept Donee: must accept personally or through an authorized person with special power for the purpose (NCC 745) Time Of Acceptance During lifetime of donor and donee
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(6) Any person who by fraud, violence, intimidation, or undue influence should cause the testator to make a will or to change one already made; (7) Any person who by the same means prevents another from making a will, or from revoking one already made, or who supplants, conceals, or alters the latter's will; (8) Any person who falsifies or forges a supposed will of the decedent.
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(b) Donation to husband and wife jointly with right of accretion UNLESS donor provides otherwise Special Provisions Reservation by donor of power to dispose (in whole or in part) or to encumber property donated (NCC 755) (1) The right to dispose of some things donated, or of some amount which shall be a charge thereon, may be reserved by the donor (2) But if he should die without having made use of this right, the property or amount reserved shall belong to the donee.
NCC 1027: (a) The priest who heard the confession of the testator during his last illness, or the minister of the gospel who extended spiritual aid to him during the same period (b) The relatives of such priest or minister of the gospel within the fourth degree, the church, order, chapter, community, organization, or institution to which such priest or minister may belong (c) A guardian with respect to testamentary dispositions given by a ward in his favor before the final accounts of the guardianship have been approved, even if the testator should die after the approval thereof; nevertheless, any provision made by the ward in favor of the guardian when the latter is his ascendant, descendant, brother, sister, or spouse, shall be valid (d) Any physician, surgeon, nurse, health officer or druggist who took care of the testator during his last illness (e) Individuals, associations and corporations not permitted by law to inherit
Donation of naked ownership to one donee and usufruct to another (NCC 756) (1) May be donated (2) Provided all the donees are living at the time of the donation Conventional reversion in favor of donor or other person (NCC 757) (1) In favor of donor, for any case and circumstance (2) In favor of other persons who must be living at the time of donation (3) If rule is violated, reversion is void but donation is not nullified Payment of donor’s debt (NCC 758) (1) If expressly stipulated - donee to pay only debts contracted before the donation unless specified otherwise. But in no case shall donee be responsible for debts exceeding value of property donated unless clearly intended (2) if there’s no stipulation - donee answerable only for donor’s debt only in case donation is in fraud of creditors
By reason of prejudice to creditors or heirs (voidable) EFFECTS OF DONATION/LIMITATIONS
In general (1) Donee may demand actual delivery of thing donated (2) Donee is SUBROGATED to rights of donor in the property donated (3) Donor NOT obliged to warrant things donated EXCEPT in onerous donations in which case donor is liable for eviction up to extent of burden (ART. 754) (4) Donor is liable for EVICTION or HIDDEN DEFECTS in case of BF on his part (ART. 754) (5) In donation propter nuptias, donor must RELEASE property donated from mortgages and other encumbrances UNLESS the contrary has been stipulated (6) Donations to several donees jointly – NO right of accretion EXCEPT: (a) Donor provides otherwise
Illegal or impossible conditions (NCC 1183) (1) Impossible conditions, those contrary to good customs or public policy and those prohibited by law shall annul the obligation which depends upon them. (2) If the obligation is divisible, that part thereof which is not affected by the impossible or unlawful condition shall be valid. (3) The condition not to do an impossible thing shall be considered as not having been agreed upon. Double donations Rule: Priority in time, priority in right (1) If movable – one who first took possession in good faith (2) If immovable – one who recorded in registry of property in good faith (a) no inscription, one who first took possession in good faith
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(b) in absence thereof, present oldest title
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one
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In fraud of creditors (NCC 759) (1) Donation is always presumed to be in fraud of creditors, when at the time thereof the donor did not reserve sufficient property to pay his debts prior to the donation (2) Donee shall be responsible therefor only when the donation has been made in fraud of creditors
Excessive/Inofficious Donations A donation in which a person gives or receives more than what he may give or receive by will (NCC 752) Donation inter vivos, made by a person having no children or descendants, legitimate or legitimated by subsequent marriage, or illegitimate, may be revoked or reduced by the happening of any of these events: (1) If the donor, after the donation, should have legitimate or legitimated or illegitimate children, even though they be posthumous; (2) If the child of the donor, whom the latter believed to be dead when he made the donation, should turn out to be living; (3) If the donor subsequently adopt a minor child
VOID DONATIONS (NCC 739-740, 1027)
(1) Those made between persons who were guilty of adultery or concubinage at the time of the donation; NOTE: The action for declaration of nullity may be brought by the spouse of the donor or donee; and the guilt of the donor and donee may be proved by preponderance of evidence in the same action (2) Those made between persons found guilty of the same criminal offense, in consideration thereof;
The donation shall be revoked or reduced insofar as it exceeds the portion that may be freely disposed of by will, taking into account the whole estate of the donor at the time of the birth, appearance or adoption of a child
(3) Those made to a public officer or his wife, descendants and ascendants, by reason of his office.
Inofficious Donations (1) Shall be reduced with regard to the excess; (2) But this reduction shall not prevent the donations from taking effect during the life of the donor, nor shall it bar the donee from appropriating the fruits (3) Only those who at the time of the donor's death have a right to the legitime and their heirs and successors in interest may ask for the reduction or inofficious donations (4) If, there being two or more donations, the disposable portion is not sufficient to cover all of them, those of the more recent date shall be suppressed or reduced with regard to the excess.
(4) Those made to persons incapacitated to succeed by will [Art 1027]
Scope of amount (NCC 750-752) (1) The donations may comprehend all the present property of the donor, or part thereof
Reduction (1) Inofficiousness A donation in which a person gives or receives more than what he may give or receive by will is inofficious (NCC 752) (2) Subsequent birth, reappearance of child or adoption of minor by donor
REVOCATION AND REDUCTION
Revocation
Reduction
Total, whether the Made insofar as the legitime is impaired or legitime is prejudiced not Benefits the donor
Provided he reserves, in full ownership or in usufruct, sufficient means for the support of himself, and of all relatives who, at the time of the acceptance of the donation, are by law entitled to be supported by the donor
Benefits the donor’s heirs (except when made on the ground of the appearance of a child)
Effects: (1) Donation is VALID if not exceeding the free part computed as of the birth, adoption or reappearance of the child (2) Donee must return the property or its value at the time of the donation (3) Fruits to be returned from the filing of the action
(2) Donations cannot comprehend future property. Future property is understood anything which the donor cannot dispose of at the time of the donation
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(4) Mortgages by the donee are valid but may be discharged subject to reimbursement from the donee
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Effect as to fruits (NCC 768) When the donation is revoked for any of the causes stated in NCC 760, or by reason of ingratitude, or when it is reduced because it is inofficious, donee shall not return the fruits except from the filing of the complaint (1) If the revocation is based upon noncompliance with any of the conditions imposed in the donation, the donee shall return not only the property but also the fruits thereof which he may have received after having failed to fulfill the condition
Extent of revocation – only to the extent of the presumptive legitime of the child Prescription – 4yrs Revocation Ingratitude In the following cases: (1) If the donee should commit some offense against the person, the honor or the property of the donor, or of his wife or children under his parental authority; (2) If the donee imputes to the donor any criminal offense, or any act involving moral turpitude, even though he should prove it, unless the crime or the act has been committed against the donee himself, his wife or children under his authority; (3) If he unduly refuses him support when the donee is legally or morally bound to give support to the donor. Applies to all donations EXCEPT: (1) Mortis causa (2) Propter nuptias (3) Onerous Founded on moral duty – one who received a donation must be grateful to his benefactor Conviction NOT necessary Time to file action for revocation – within 1yr from knowledge of the offense Who may file Donor must bring action himself; not transmissible to his heirs Effect of revocation on alienations and encumbrances (NCC 766) (1) Alienations and mortgages effected before the notation of the complaint for revocation in the Registry of Property shall subsist (2) Later ones shall be void
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What may be donated All present property of the donor or part thereof
Limitation: (1) He reserves in full ownership or in usufruct, sufficient means for his support and for all relatives who are at the time of the acceptance of the donation are, by law, entitled to be supported Effect of non-reservation: reduction of the donation (2) He reserves sufficient property at the time of the donation for the full settlement of his debts Effect of non-reservation: considered to be a donation in fraud of creditors, and donee may be liable for damages
What may not be donated (1) Future property; those which the donor cannot dispose of at the time of the donation (Article 751) (2) More than what he may give or receive by will (Article 752) If exceeds: inofficious Donations made to several persons jointly No accretion – one donee does not get the share of Exception: those given to husband and wife, except the other donees who did not accept (Article 753) when the donor otherwise provides Donor Who are allowed: All persons who may contract (of legal age) and dispose of their property (Article 735)
Who are not allowed: (1) Guardians and trustees with respect to the property entrusted to them (Article 736) Donor’s capacity is determined at the time of the (2) Made between person who are guilty of adultery making of donation (Article 737) or concubinage (Article 739) Made between persons found guilty of the same criminal offense, in consideration thereof (Article 739) Donee Who are allowed to accept donations: Those who are not specifically disqualified by law (Article 738)
Who are not allowed: (1) Made between person who are guilty of adultery or concubinage (Article 739) Those who are allowed, with qualifications: (2) Made between persons found guilty of the same (1) Minors and others who are incapacitated (see criminal offense, in consideration thereof (Article Article 38), provided that their acceptance is done 739) through their parents or legal representatives (3) Made to a public officer or his wife, descendant (Article 741) and ascendants, by reason of his office (Article (2) Conceived and unborn children, provided that the 739) donation is accepted by those who would legally (4) Those who cannot succeed by will (Article 740) represent them if they were already born Those made to incapacitated persons, although simulated under the guise of another contract (Article 743) Acceptance of the donation Who may accept (Article 745): (1) Donee personally
When to accept: during the lifetime of the donor or donee (Article 746)
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(2) Authorized person with a special power for the purpose or with a general sufficient power What the donee acquires with the thing He shall be subrogated to all the rights and actions that would pertain to the donor in case of eviction (Article 754) Obligation of the donor No obligation to warrant (Article 754)
Exception: when the donation is onerous Obligation of the donee
If the donation so states, the donee may be obliged to Exception: when contrary intention appears pay the debts previously contracted by the donor and in no case shall he be responsible for the debts exceeding the value of the thing donated (Article 758) What may be reserved by the donor Right to dispose of some of the things donated, or of If the donor dies without exercising this right some amount which shall be a charge thereon Reversion The property donated may be restored or returned to (1) Donor or his estate; or (2) Another person
Limitation to (2): the third person would be living at the time of the donation
Revocation/Reduction Time of Action
Transmissibility
Effect
Liability (Fruits)
Birth, appearance, adoption Within 4 years from birth, Transmitted to children Property returned/ value Fruits returned from the legitimation and adoption and descendants upon (if sold)/ redeem filing of the complaint the death of donor mortgage with right to recover Non-compliance with condition Within 4 years from non- May be transmitted to compliance donor’s heirs and may be exercised against donee’s heirs
Property returned, Fruits received after alienations and having failed to fulfill mortgages void subject to condition returned rights of third persons in good faith
Ingratitude Within 1 year after Generally not transmitted Property returned, but Fruits received from the knowledge of the fact to heirs of donor/ donee alienations and filing of the complaint mortgages effected returned before the notation of the complaint for revocation in the registry of property subsist Failure to reserve sufficient means for support At any time, by the donor or relatives entitled to Not transmissible support
Reduced to the extent Donee entitled necessary to provide support
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Time of Action
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Transmissibility
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Effect
Liability (Fruits)
Inofficiousness for being in excess of what the donor can give by will Within 5 years from the Transmitted to donor’s Donation takes effect on Donee entitled death of the donor heirs the lifetime of donor. Reduction only upon his death with regard to the excess Fraud against creditors Rescission within 4 years Transmitted to creditor’s Returned for the benefit Fruits returned/ if from the perfection of heirs or successors-in- of the creditor who impossible, indemnify donation/ knowledge of interest brought the action creditor for damages the donation
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TRADITION
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where the delivery is effected solely by virtue of an express provision of law
CONCEPT
It is a derivative mode of acquiring ownership and other real rights by virtue of which, there being intention and capacity on the part of the grantor and grantee and the pre-existence of said rights in the estate of the grantor, they are transmitted to the grantee through a just title.
Prescription DEFINITION By prescription, one acquires ownership and other real rights through the lapse of time in the manner and under the conditions laid down by law.
REQUISITES
(1) Pre-existence in the estate of the grantor of the right to be transmitted (2) Just cause or title for the transmission (3) Intention on the part of the grantor to grant and on the part of the grantees to acquire (4) Capacity to transmit and to acquire (5) An act which gives it outward form, physically, symbolically, or legally
In the same way, rights and conditions are lost by prescription. It is a means of acquiring ownership and other real rights or losing rights or actions to enforce such rights through the lapse of time
PURPOSE
(1) Ownership is transferred, among other means, by tradition. (2) The delivery of a thing constitutes a necessary and indispensable requisite for the purpose of acquiring the ownership of the same by virtue of a contract
RATIONALE It is purely statutory in origin. It is founded on grounds of public policy which requires for the peace of society, that juridical relations susceptible of doubt and which may give rise to disputes, be fixed and established after the lapse of a determinate time so that ownership and other rights may be certain for those who have claim in them
KINDS
(1) Real Tradition: physical delivery (2) Constructive Tradition: when the delivery of the thing is not real or material but consists merely in certain facts indicative of the same (a) Symbolical Tradition: done through the delivery of signs or things which represent that which is being transmitted (e.g. keys or title itself) (b) Tradition by public instrument: consists in the substitution of real delivery of possession by a public writing with the delivery of a document which evidences the transaction (c) Tradicio longa manu: made by the grantor pointing out to the grantee the thing to be delivered (d) Tradicio brevi manu: takes place when the grantee is already in possession of the thing (e.g. when the lessee buys the thing leased to him) (e) Tradicion constitutum possessorium: similar to brevi manu but in the opposite sense – when the owner alienates a thing but remains in possession in another concept as lesee or depositary (3) Quasi tradition: delivery of incorporeal things or rights by the use by the grantee of his rights with the grantor’s consent (4) Tradicion by operation of law: delivery which is not included in the foregoing modes of delivery and
KINDS OF PRESCRIPTION (1) Acquisitive prescription (2) Extinctive prescription ACQUISITIVE PRESCRIPTION
(1) The acquisition of ownership and other real rights
through possession of a thing in the manner and condition provided by law (2) May be ordinary or extraordinary (a) Ordinary: requires possession of things in good faith and with just title for the time fixed by law. (b) Extraordinary: acquisition of ownership and other real rights without need of title or of good faith or any other condition Prescription where possession in good faith converted into possession in bad faith: Ordinary (1) Movables- 4 years (2) Immovables- 10 years Extraordinary: (1) Movables- 8 years (2) Immovables- 30 years Note: Since the period of extraordinary prescription for movables is two times longer than ordinary
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prescription (8:4) than ordinary prescription for movables and three times longer (30:10) than that for immovables, the period of possession in good faith should be computed twice or thrice, as the case may be, when tacked to the possession in bad faith.
NO PRESCRIPTION APPLICABLE BY OFFENDER
Movables possessed through a crime can never be acquired through prescription by the offender REGISTERED LANDS - PD 1529 (AMENDING AND CODIFYING THE LAWS RELATIVE TO REGISTRATION OF PROPERTY AND FOR OTHER PURPOSES)
As a mode of acquisition, prescription requires existence of following: (1) Capacity of the claimant to acquire by prescription; (2) A thing capable of acquisition by prescription; (3) Adverse possession of the thing under certain conditions; and (4) Lapse of time provided by law (5) Good faith of the possessor (6) Proof of just title
No title to registered land in derogation of the title of the registered owner shall be acquired by prescription or adverse possession RIGHTS NOT EXTINGUISHED BY PRESCRIPTION (NCC 1143)
(1) To demand a right of way, regulated in NCC 649 (2) To bring an action to abate a public or private nuisance
Note: (1) For extraordinary prescription, only first 4 are required (2) Possession has to be in the concept of an owner, public, peaceful, and uninterrupted (UPPO)
ACTION TO QUIET TITLE IF PLAINTIFF IS IN POSSESSION
(1) When plaintiff is in possession of the property:
the action to quiet title does not prescribe
(2) The reason is that the owner of the property or
right may wait until his possession is disturbed or his title is assailed before taking steps to vindicate his right
EXTINCTIVE PRESCRIPTION
The loss or extinguishment of property rights or actions through the possession by another of a thing for the period provided by law or through failure to bring the necessary action to enforce one’s right within the period fixed by law Acquisitive Prescription
Extinctive Prescription
Requires positive action of the possessor (a claimant) who is not the Owner
Requires inaction of the owner out of possession or neglect of one with a right to bring his action
Applicable to ownership and other real rights
Applicable to all kinds of rights, whether real or personal
VOID CONTRACTS
(1) The action or defense for the declaration of the inexistence of a contract does not prescribe (NCC 1410) (2) The title is susceptible to direct as well as to collateral attack (Ferrer v. Bautista, 1994) ACTION TO DEMAND PARTITION
No prescription shall run in favor of a co-owner or coheir against his co-owners or co-heirs so long as he expressly or impliedly recognizes the co-ownership (NCC 494) PROPERTY OF PUBLIC DOMINION
Prescription, both acquisitive and extinctive, does not run against the State in the exercise of its sovereign function to protect its interest EXCEPT with respect to its patrimonial property which may be the object of prescription (NCC 1113)
Vests the property and Vests the property and raise a new title in the raise a new title in the occupant occupant Results in the acquisition of ownership or other real rights in a person as well as the loss of said ownership or real rights in another
Merely results in the loss of a real or personal right, or bars the cause of action to enforce said right
Can be proven under the general issue without its being affirmatively pleaded
Should be affirmatively pleaded and proved to bar the action or claim of the adverse party
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PRESCRIPTION DISTINGUISHED FROM LACHES Prescription
Laches
Concerned with the fact of Concerned with the effect delay of delay A question or a matter of Principally a question of time inequity of permitting a claim to be enforced, this inequity being founded on some subsequent change in the condition or the
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Prescription
(3) Actions that Prescribe in 6 Years (NCC 1145) (a) Upon an oral contract (b) Upon a quasi-contract
Laches relation of the parties
Statutory
NOT statutory
Applies at law
Applies at equity
(4) Actions that Prescribe in 4 Years (NCC 1145) (a) Upon an injury to the rights of the plaintiff (b) Upon a quasi-delict BUT when the action arises from any act of any public officer involving the exercise of powers arising from Martial Law including the arrest, detention and/or trial of the plaintiff, the same must be brought within 1 year.
Cannot be availed of Being a defense of equity, unless it is especially need not be specifically pleaded as an affirmative pleaded allegation Based on a fixed time
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NOT based on a fixed time
(5) Actions that Prescribe in One Year or Less (NCC 1147) (a) For forcible entry or unlawful detainer (b) For defamation
PRESCRIPTION OR LIMITATION OF ACTIONS TO RECOVER MOVABLES
(1) Prescribe 8 years from the time the possession
thereof is lost (NCC 1140)
(6) Other Actions that Prescribe in 1 Year under the Civil Code (a) To recover possession de facto (NCC 554 (4)] (b) To revoke a donation on the ground of ingratitude (NCC 769) (c) To rescind or recover damages if immovable is sold with non-apparent burden or servitude [NCC 1560 (3,4)] (d) To enforce warranty of solvency in assignment credits (NCC 629)
(2) However, the action shall not prosper if it is
brought after 4 years when the possessor has already acquired title by ordinary acquisitive prescription (NCC 1132) (3) If the possessor acquired the movable in good faith at a public sale, the owner cannot obtain its return without reimbursing the price paid TO RECOVER IMMOVABLES
(1) Real actions prescribe after 30 years (NCC 1141) (2) UNLESS the possessor has acquired ownership of
(7) Where Periods of Other Actions Not Fixed in the Civil Code and in Other Laws All other actions whose periods are not fixed in the Civil Code or in other laws must be brought within 5 years from the time the right of action accrues (NCC 1149)
the immovable by ordinary acquisitive prescription through possession of 10 years (NCC 1134) (3) Action for reconveyance (a) Based on fraud: prescribes 4 years from the discovery of fraud (b) Based on implied or constructive trust: 10 years from the alleged fraudulent registration or date of issuance of certificate of title over the property
(8) Interruption (NCC 1155) The prescription of actions is interrupted when: (a) They are filed before the court (b) When there is a written extrajudicial demand by the creditors (c) When there is any written acknowledgment of the debt by the debtor
OTHER ACTIONS
(1) Action to foreclose mortgage: prescribes after 10 years from the time the obligation secured by the mortgage becomes due and demandable (2) Actions that Prescribe in 10 Years (NCC 1144) (a) Upon a written contract (b) Upon an obligation created by law (c) Upon a judgment
Civil actions are deemed commenced from the date of the filing and docketing of the complaint with the Clerk of Court [Cabrera v. Riano (1963)] A written extrajudicial demand wipes out the period that has already elapsed and starts anew the prescriptive period [The Overseas Bank of Manila v. Geraldez, (1979)]
The computation of the period of prescription of any cause or right of action, which is the same as saying prescription of the action, should start from the date the cause of action accrues or from the day the right of the plaintiff is violated. (Nabus v. CA, 1991)
Not all acts of acknowledgement of a debt interrupt prescription. To produce such effect, the acknowledgment must be “written”, so that the payment, if not coupled with the communication
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signed by the payor would interrupt the running of the period of prescription [PNB v. Osete (1968)]
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OBLIGATIONS
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OBLIGATIONS
Definition
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FROM THE AFFIRMATIVENESS OR NEGATIVENESS OF THE OBLIGATION: (1) Positive/affirmative - obligation to give or to do (2) Negative – obligation not to do or not to give
ARTICLE 1156
Art. 1156. An obligation is a juridical necessity to give, to do or not to do.
FROM THE VIEWPOINT OF PERSONS OBLIGED: (1) Unilateral – only one of the parties is bound (2) Bilateral – both parties are bound (a) Reciprocal – performance by one is dependent on the other (b) Non-reciprocal – performance by one is independent of the other [Paras, 2008]
Elements of an Obligation ELEMENTS OF AN OBLIGATION [De Leon, 2003] (1) ACTIVE SUBJECT (Obligee/Creditor): The person who has the right or power to demand the prestation. (2) PASSIVE SUBJECT (Obligor/Debtor): The person bound to perform the prestation. (3) PRESTATION (Object): The conduct required to be observed by the debtor/obligor (to give, to do, or not to do). (4) VINCULUM JURIS (Juridical or Legal Tie; Efficient Cause): That which binds or connects the parties to the obligation.
Sources of Obligations, Arts. 1156-1157 SINGLE ACT OR OMISSION CAN GIVE RISE TO DIFFERENT CAUSES OF ACTION Barredo vs Garcia (1942): “…[A] concurrence of scope in regard to negligent acts does not destroy the distinction between the civil liability arising from a crime and the responsibility for cuasi-delitos or culpa extracontractual. The same negligent act causing damages may produce civil liability arising from a crime... or create an action for cuasi-delito or culpa extra-contractual.”
Different Kinds of Prestations (1) TO GIVE: real obligation; to deliver either (1) a specific or determinate thing, or (2) a generic or indeterminate thing. (2) TO DO: positive personal obligation; includes all kinds of work or service. (3) NOT TO DO: negative personal obligation; to abstain from doing an act; includes the obligation not to give.
NATURAL OBLIGATIONS ARTICLE 1423 Art. 1423. Obligations are civil or natural. Civil obligations give a right of action to compel their performance. Natural obligations, not being based on positive law but on equity and natural law, do not grant a right of action to enforce their performance, but after voluntary fulfillment by the obligor, they authorize the retention of what has been delivered or rendered by reason thereof. Some natural obligations are set forth in the following articles.
Classification of Obligations FROM THE VIEWPOINT OF “SANCTION”: (1) Civil obligation (or perfect obligation) – the sanction is judicial process (2) Natural obligation – the sanction is the law (3) Moral obligation (or imperfect obligation) – the sanction is conscience or morality
ARTICLE 1424
Art. 1424. When a right to sue upon a civil obligation has lapsed by extinctive prescription, the obligor who voluntarily performs the contract cannot recover what he has delivered or the value of the service he has rendered.
FROM THE VIEWPOINT OF SUBJECT MATTER: (1) Real obligation – obligation to give (2) Personal obligation – obligation to do or not to do
ARTICLE 1425
Art. 1425. When without the knowledge or against the will of the debtor, a third person pays a debt which the obligor is not legally bound to pay because
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the action thereon has prescribed, but the debtor later voluntarily reimburses the third person, the obligor cannot recover what he has paid.
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ARTICLE 2143
Art. 2143. The provisions for quasi-contracts in this Chapter do not exclude other quasi-contracts which may come within the purview of the preceding article.
ARTICLE 1426
Art. 1426. When a minor between eighteen and twenty-one years of age who has entered into a contract without the consent of the parent or guardian, after the annulment of the contract voluntarily returns the whole thing or price received, notwithstanding the fact the he has not been benefited thereby, there is no right to demand the thing or price thus returned.
Negotiorum Gestio ARTICLE 2144 Art. 2144. Whoever voluntarily takes charge of the agency or management of the business or property of another, without any power from the latter, is obliged to continue the same until the termination of the affair and its incidents, or to require the person concerned to substitute him, if the owner is in a position to do so. This juridical relation does not arise in either of these instances:
ARTICLE 1427
Art. 1427. When a minor between eighteen and twenty-one years of age, who has entered into a contract without the consent of the parent or guardian, voluntarily pays a sum of money or delivers a fungible thing in fulfillment of the obligation, there shall be no right to recover the same from the obligee who has spent or consumed it in good faith.
(1)When the property or business is not neglected or abandoned; (2) If in fact the manager has been tacitly authorized by the owner. In the first case, the provisions of Articles 1317, 1403, No. 1, and 1404 regarding unauthorized contracts shall govern.
ARTICLE 1428
Art. 1428. When, after an action to enforce a civil obligation has failed the defendant voluntarily performs the obligation, he cannot demand the return of what he has delivered or the payment of the value of the service he has rendered.
In the second case, the rules on agency in Title X of this Book shall be applicable. ARTICLE 2145
Art. 2145. The officious manager shall perform his duties with all the diligence of a good father of a family, and pay the damages which through his fault or negligence may be suffered by the owner of the property or business under management.
ARTICLE 1429
Art. 1429. When a testate or intestate heir voluntarily pays a debt of the decedent exceeding the value of the property which he received by will or by the law of intestacy from the estate of the deceased, the payment is valid and cannot be rescinded by the payer.
The courts may, however, increase or moderate the indemnity according to the circumstances of each case. ARTICLE 2146
ARTICLE 1430
Art. 2146. If the officious manager delegates to another person all or some of his duties, he shall be liable for the acts of the delegate, without prejudice to the direct obligation of the latter toward the owner of the business. The responsibility of two or more officious managers shall be solidary, unless the management was assumed to save the thing or business from imminent danger.
Art. 1430. When a will is declared void because it has not been executed in accordance with the formalities required by law, but one of the intestate heirs, after the settlement of the debts of the deceased, pays a legacy in compliance with a clause in the defective will, the payment is effective and irrevocable. EXTRA-CONTRACTUAL OBLIGATIONS QUASI-CONTRACTS ARTICLE 2142 Art. 2142. Certain lawful, voluntary and unilateral acts give rise to the juridical relation of quasicontract to the end that no one shall be unjustly enriched or benefited at the expense of another.
ARTICLE 2147
Art. 2147. The officious manager shall be liable for any fortuitous event:
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(1) If he undertakes risky operations which the owner was not accustomed to embark upon; (2) If he has preferred his own interest to that of the owner; (3) If he fails to return the property or business after demand by the owner; (4) If he assumed the management in bad faith.
owner, and there shall be no right of action between the owner and third persons. These provisions shall not apply: (1) If the owner has expressly or tacitly ratified the management, or (2) When the contract refers to things pertaining to the owner of the business.
ARTICLE 2148
ARTICLE 2153
Art. 2148. Except when the management was assumed to save property or business from imminent danger, the officious manager shall be liable for fortuitous events: (1) If he is manifestly unfit to carry on the management; (2) If by his intervention he prevented a more competent person from taking up the management.
Art. 2153. The management is extinguished: (1) When the owner repudiates it or puts an end thereto; (2) When the officious manager withdraws from the management, subject to the provisions of Article 2144; (3) By the death, civil interdiction, insanity or insolvency of the owner or the officious manager. Solutio Indebiti ARTICLE 2154 Art. 2154. If something is received when there is no right to demand it, and it was unduly delivered through mistake, the obligation to return it arises.
ARTICLE 2149
Art. 2149. The ratification of the management by the owner of the business produces the effects of an express agency, even if the business may not have been successful.
ARTICLE 2155 ARTICLE 2150
Art. 2155. Payment by reason of a mistake in the construction or application of a doubtful or difficult question of law may come within the scope of the preceding article.
Art. 2150. Although the officious management may not have been expressly ratified, the owner of the property or business who enjoys the advantages of the same shall be liable for obligations incurred in his interest, and shall reimburse the officious manager for the necessary and useful expenses and for the damages which the latter may have suffered in the performance of his duties.
ARTICLE 2156
Art. 2156. If the payer was in doubt whether the debt was due, he may recover if he proves that it was not due.
The same obligation shall be incumbent upon him when the management had for its purpose the prevention of an imminent and manifest loss, although no benefit may have been derived.
ARTICLE 2157
Art. 2157. The responsibility of two or more payees, when there has been payment of what is not due, is solidary.
ARTICLE 2151
ARTICLE 2158
Art. 2151. Even though the owner did not derive any benefit and there has been no imminent and manifest danger to the property or business, the owner is liable as under the first paragraph of the preceding article, provided: (1) The officious manager has acted in good faith, and (2) The property or business is intact, ready to be returned to the owner.
Art. 2158. When the property delivered or money paid belongs to a third person, the payee shall comply with the provisions of Article 1984. ARTICLE 2159
ARTICLE 2152
Art. 2159. Whoever in bad faith accepts an undue payment, shall pay legal interest if a sum of money is involved, or shall be liable for fruits received or which should have been received if the thing produces fruits.
Art. 2152. The officious manager is personally liable for contracts which he has entered into with third persons, even though he acted in the name of the
He shall furthermore be answerable for any loss or impairment of the thing from any cause, and for
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damages to the person who delivered the thing, until it is recovered.
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Art. 2166. When the person obliged to support an orphan, or an insane or other indigent person unjustly refuses to give support to the latter, any third person may furnish support to the needy individual, with right of reimbursement from the person obliged to give support. The provisions of this article apply when the father or mother of a child under eighteen years of age unjustly refuses to support him.
ARTICLE 2160
Art. 2160. He who in good faith accepts an undue payment of a thing certain and determinate shall only be responsible for the impairment or loss of the same or its accessories and accessions insofar as he has thereby been benefited. If he has alienated it, he shall return the price or assign the action to collect the sum.
ARTICLE 2167
Art. 2167. When through an accident or other cause a person is injured or becomes seriously ill, and he is treated or helped while he is not in a condition to give consent to a contract, he shall be liable to pay for the services of the physician or other person aiding him, unless the service has been rendered out of pure generosity.
ARTICLE 2161
Art. 2161. As regards the reimbursement for improvements and expenses incurred by him who unduly received the thing, the provisions of Title V of Book II shall govern. ARTICLE 2162
ARTICLE 2168
Art. 2162. He shall be exempt from the obligation to restore who, believing in good faith that the payment was being made of a legitimate and subsisting claim, destroyed the document, or allowed the action to prescribe, or gave up the pledges, or cancelled the guaranties for his right. He who paid unduly may proceed only against the true debtor or the guarantors with regard to whom the action is still effective.
Art. 2168. When during a fire, flood, storm, or other calamity, property is saved from destruction by another person without the knowledge of the owner, the latter is bound to pay the former just compensation. ARTICLE 2169
Art. 2169. When the government, upon the failure of any person to comply with health or safety regulations concerning property, undertakes to do the necessary work, even over his objection, he shall be liable to pay the expenses.
ARTICLE 2163
Art. 2163. It is presumed that there was a mistake in the payment if something which had never been due or had already been paid was delivered; but he from whom the return is claimed may prove that the delivery was made out of liberality or for any other just cause.
ARTICLE 2170
Art. 2170. When by accident or other fortuitous event, movables separately pertaining to two or more persons are commingled or confused, the rules on co-ownership shall be applicable.
OTHER QUASI-CONTRACTS ARTICLE 2164
ARTICLE 2171
Art. 2164. When, without the knowledge of the person obliged to give support, it is given by a stranger, the latter shall have a right to claim the same from the former, unless it appears that he gave it out of piety and without intention of being repaid.
Art. 2171. The rights and obligations of the finder of lost personal property shall be governed by Articles 719 and 720. ARTICLE 2172
ARTICLE 2165
Art. 2172. The right of every possessor in good faith to reimbursement for necessary and useful expenses is governed by Article 546.
Art. 2165. When funeral expenses are borne by a third person, without the knowledge of those relatives who were obliged to give support to the deceased, said relatives shall reimburse the third person, should the latter claim reimbursement.
ARTICLE 2173
Art. 2173. When a third person, without the knowledge of the debtor, pays the debt, the rights of the former are governed by Articles 1236 and 1237.
ARTICLE 2166
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ARTICLE 2174
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Guardians are liable for damages caused by the minors or incapacitated persons who are under their authority and live in their company. The owners and managers of an establishment or enterprise are likewise responsible for damages caused by their employees in the service of the branches in which the latter are employed or on the occasion of their functions.
Art. 2174. When in a small community a nationality of the inhabitants of age decide upon a measure for protection against lawlessness, fire, flood, storm or other calamity, any one who objects to the plan and refuses to contribute to the expenses but is benefited by the project as executed shall be liable to pay his share of said expenses.
Employers shall be liable for the damages caused by their employees and household helpers acting within the scope of their assigned tasks, even though the former are not engaged in any business or industry.
ARTICLE 2175
Art. 2175. Any person who is constrained to pay the taxes of another shall be entitled to reimbursement from the latter.
The State is responsible in like manner when it acts through a special agent; but not when the damage has been caused by the official to whom the task done properly pertains, in which case what is provided in Article 2176 shall be applicable.
QUASI-DELICTS ARTICLE 2176
Art. 2176. Whoever by act or omission causes damage to another, there being fault or negligence, is obliged to pay for the damage done. Such fault or negligence, if there is no pre-existing contractual relation between the parties, is called a quasi-delict and is governed by the provisions of this Chapter.
Lastly, teachers or heads of establishments of arts and trades shall be liable for damages caused by their pupils and students or apprentices, so long as they remain in their custody.
ARTICLE 2177
The responsibility treated of in this article shall cease when the persons herein mentioned prove that they observed all the diligence of a good father of a family to prevent damage.
Art. 2177. Responsibility for fault or negligence under the preceding article is entirely separate and distinct from the civil liability arising from negligence under the Penal Code. But the plaintiff cannot recover damages twice for the same act or omission of the defendant.
ARTICLE 2181
Art. 2181. Whoever pays for the damage caused by his dependents or employees may recover from the latter what he has paid or delivered in satisfaction of the claim.
ARTICLE 2178
Art. 2178. The provisions of Articles 1172 to 1174 are also applicable to a quasi-delict.
ARTICLE 2182
ARTICLE 2179
Art. 2182. If the minor or insane person causing damage has no parents or guardians, the minor or insane person shall be answerable with his own property in an action against him where a guardian ad litem shall be appointed.
Art. 2179. When the plaintiff's own negligence was the immediate and proximate cause of his injury, he cannot recover damages. But if his negligence was only contributory, the immediate and proximate cause of the injury being the defendant's lack of due care, the plaintiff may recover damages, but the courts shall mitigate the damages to be awarded.
ARTICLE 2183
Art. 2183. The possessor of an animal or whoever may make use of the same is responsible for the damage which it may cause, although it may escape or be lost. This responsibility shall cease only in case the damage should come from force majeure or from the fault of the person who has suffered damage.
ARTICLE 2180
Art. 2180. The obligation imposed by Article 2176 is demandable not only for one's own acts or omissions, but also for those of persons for whom one is responsible.
ARTICLE 2184
The father and, in case of his death or incapacity, the mother, are responsible for the damages caused by the minor children who live in their company.
Art. 2184. In motor vehicle mishaps, the owner is solidarily liable with his driver, if the former, who was in the vehicle, could have, by the use of the due diligence, prevented the misfortune. It is disputably PAGE 136
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presumed that a driver was negligent, if he had been found guilty or reckless driving or violating traffic regulations at least twice within the next preceding two months.
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(1) By the explosion of machinery which has not been taken care of with due diligence, and the inflammation of explosive substances which have not been kept in a safe and adequate place; (2) By excessive smoke, which may be harmful to persons or property; (3) By the falling of trees situated at or near highways or lanes, if not caused by force majeure; (4) By emanations from tubes, canals, sewers or deposits of infectious matter, constructed without precautions suitable to the place.
If the owner was not in the motor vehicle, the provisions of Article 2180 are applicable. ARTICLE 2185
Art. 2185. Unless there is proof to the contrary, it is presumed that a person driving a motor vehicle has been negligent if at the time of the mishap, he was violating any traffic regulation. ARTICLE 2186 Art. 2186. Every owner of a motor vehicle shall file with the proper government office a bond executed by a government-controlled corporation or office, to answer for damages to third persons. The amount of the bond and other terms shall be fixed by the competent public official.
ARTICLE 2192
Art. 2192. If damage referred to in the two preceding articles should be the result of any defect in the construction mentioned in Article 1723, the third person suffering damages may proceed only against the engineer or architect or contractor in accordance with said article, within the period therein fixed. ARTICLE 2193
Art. 2193. The head of a family that lives in a building or a part thereof, is responsible for damages caused by things thrown or falling from the same.
ARTICLE 2187
Art. 2187. Manufacturers and processors of foodstuffs, drinks, toilet articles and similar goods shall be liable for death or injuries caused by any noxious or harmful substances used, although no contractual relation exists between them and the consumers.
ARTICLE 2194
Art. 2194. The responsibility of two or more persons who are liable for quasi-delict is solidary.
ARTICLE 2188
Art. 2188. There is prima facie presumption of negligence on the part of the defendant if the death or injury results from his possession of dangerous weapons or substances, such as firearms and poison, except when the possession or use thereof is indispensable in his occupation or business.
Nature and Effect of Obligations OBLIGATION TO GIVE A DETERMINATE OR SPECIFIC THING AN INDETERMINATE OR GENERIC THING
ARTICLE 2189
Art. 2189. Provinces, cities and municipalities shall be liable for damages for the death of, or injuries suffered by, any person by reason of the defective condition of roads, streets, bridges, public buildings, and other public works under their control or supervision.
Specific Thing Particularly designated or physically segregated from all other of the same class; identified by individuality.
ARTICLE 2190
Art. 2190. The proprietor of a building or structure is responsible for the damages resulting from its total or partial collapse, if it should be due to the lack of necessary repairs.
Cannot be substituted.
ARTICLE 2191
Art. 2191. Proprietors shall also be responsible for damages caused:
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Generic Thing Object is designated only by its class/ genus/ species. Debtor can give anything of the same class as long as it is of the same kind. Can be substituted by any of the same class and same kind.
Limited Generic Thing When the generic objects are confined to a particular class.
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Duties of the Debtor Duties of the Debtor
(3) To pay for damages in case of breach
To Give Specific Thing (1) To preserve or take (1) To compel specific care of the thing due performance (2) To deliver the thing (2) To recover damages itself in case of breach of (3) To deliver the fruits of the obligation, the thing exclusive or in (4) To deliver the addition to specific accessions and performance accessories (3) Entitlement to fruits (5) To pay for damages in and interests from case of breach the time the obligation to deliver arises To Give Generic Thing (1) To deliver a thing of (1) To ask for the quality intended by performance of the the parties taking into obligation consideration the (2) To ask that the purpose of the obligation be obligation and other complied with by a circumstances third person at the (2) Creditor cannot expense of the demand a thing of debtor superior quality (3) To recover damages neither can the debtor in case of breach of deliver a thing of obligation inferior quality (3) To be liable for damages in case of breach
what should not have been done, because of : (a) the very nature of the act itself; (b) rights acquired by third persons who acted in good faith; (c) when the effects of the acts prohibited are definite in character and will not cease even if the thing prohibited be undone.
BREACH OF OBLIGATIONS COMPLETE FAILURE TO PERFORM
OBLIGATION TO DO OR NOT TO DO Duties of the Debtor
Rights of the creditor
Rights of the creditor
Substantial Breach
Slight or Casual Breach
(1) Total breach (2) Amounts to nonperformance; basis for rescission (resolution) under Art. 1191 and for payment of damages.
(1) Partial breach (2) Obligation is partially performed, or substantial performance in good faith (3) Gives rise to liability for damages only
DEFAULT, DELAY, OR MORA
DEFAULT or DELAY (MORA): failure to perform an obligation on time which constitutes breach of the obligation [De Leon, 2003].
Rights of the creditor
To do (1) To do it (1) To compel (2) To shoulder the performance cost of having (2) To recover damages someone else do it where personal (3) To undo what has qualifications of the been poorly done debtor are involved (4) To pay for damages in case of breach Not to do (1) Not to do what should (1) To ask to undo what not be done should not be done (2) To shoulder the cost (2) To recover damages, of undoing what where it would be should not have been physically or legally done impossible to undo
Rules on Mora, Delay or Default Unilateral Obligations
Reciprocal Obligations
General Rule: “No demand, no delay.”
General Rule: Delay occurs from the moment one party fulfills his undertaking, while the other does not comply or is not ready to comply in a proper manner with what is incumbent upon him.
The mere expiration of the period fixed by the parties is not enough in order that the debtor may incur in delay. Those obliged to deliver or to do something incur
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No delay if neither party
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Unilateral Obligations
Reciprocal Obligations
in delay from the time the obligee judicially or extrajudicially demands from them the fulfillment of their obligation [Art. 1169 par. 1].
performs his undertaking [Art. 1169, par. 2].
Mora Solvendi the debtor within the period agreed upon. (3) Demand, judicial or extra-judicial, by the creditor.
Mora Accipiendi prestation. (3) Creditor refuses the performance without just cause.
Effects (1) The debtor is liable for (1) The responsibility of damages. the debtor is reduced (2) The debtor is liable to fraud and gross even if the loss is due negligence. to fortuitous events. (2) The debtor is (3) For determinate exempted from risk of objects, the debtor loss of the thing shall bear the risk of which is borne by the loss. creditor. (3) The expenses incurred by the debtor for the preservation of the thing after the mora shall be chargeable to the creditor. (4) If the obligation bears interest, the debtor does not have to pay from the time of delay. (5) The creditor is liable for damages. (6) The debtor may relieve himself of the obligation by consigning the thing.
Exceptions: ARTICLE 1169 Art. 1169. par 2-3: xxx However, the demand by the creditor shall not be necessary in order that delay may exist: (1) When the obligation or the law expressly so declares; or (2) When from the nature and the circumstances of the obligation it appears that the designation of the time when the thing is to be delivered or the service is to be rendered was a controlling motive for the establishment of the contract; (time is of the essence) or (3) When demand would be useless, as when the obligor has rendered it beyond his power to perform. In reciprocal obligations, neither party incurs in delay if the other does not comply or is not ready to comply in a proper manner with what is incumbent upon him. From the moment one of the parties fulfills his obligation, delay by the other begins. (1) Mora solvendi- Delay on the part of the debtor to fulfill his obligation either to give (ex re) or to do (ex persona) No Mora Solvendi in: (a) Negative obligations because delay is impossible [De Leon, 2003] (b) Natural obligations [Tolentino, 1987] (2) Mora accipiendi- Delay on the part of the creditor to accept the performance of the obligation. (3) Compensatio morae- Delay of both parties in reciprocal obligations. Effect: As if there is no default. Mora Solvendi
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FRAUD (DOLO) IN THE PERFORMANCE OF OBLIGATION
Fraud (dolo): deliberate or intentional evasion of the normal fulfillment of an obligation [De Leon, 2003]. Waiver of future fraud is void. [Art. 1171] Past Fraud: Can be subject of a valid waiver by the aggrieved party. [De Leon, 2003] Woodhouse vs. Halili (1953): “...[I]n order that fraud may vitiate consent, it must be the dolo causante and not merely the dolo incidente, inducement to the making of the contract. The false representation was used by plaintiff to get from defendant a bigger share of net profits. This is just incidental to the matter in agreement. Because despite plaintiff’s deceit, respondent would have still entered into the contract.”
Mora Accipiendi
Requisites (1) Obligation must be (1) Debtor offers liquidated, due and performance. demandable. (2) Offer must be in (2) Non-performance by compliance with the
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NEGLIGENCE OBLIGATION
OBLIGATIONS
(CULPA) IN THE PERFORMANCE OF
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ARTICLE 2000
Art. 2000. The responsibility referred to in the two preceding articles shall include the loss of, or injury to the personal property of the guests caused by the servants or employees of the keepers of hotels or inns as well as strangers; but not that which may proceed from any force majeure. The fact that travelers are constrained to rely on the vigilance of the keeper of the hotels or inns shall be considered in determining the degree of care required of him.
Negligence or fault (culpa): Omission of that diligence which is required by the nature of the obligation and corresponds with the circumstances of the person, of the time and of the place. [Art. 1173] DILIGENCE NORMALLY REQUIRED IS ORDINARY DILIGENCE OR DILIGENCE OF A GOOD FATHER OF A FAMILY; EXCEPTIONS IN ARTS. 1998-2002.
Diligence Required [De Leon, 2003] (a) By stipulation: that agreed upon by the parties. (b) By law: in the absence of stipulation, that required by law in the particular case. (c) Diligence of a good father of a family: if both the contract and law are silent. (d) Future Negligence: may be waived except in cases where the nature of the obligation or the public requires another standard of care (i.e. extraordinary diligence as for a common carrier)
ARTICLE 2001
Art. 2001. The act of a thief or robber, who has entered the hotel is not deemed force majeure, unless it is done with the use of arms or through an irresistible force. ARTICLE 2002
Art. 2002. The hotel-keeper is not liable for compensation if the loss is due to the acts of the guest, his family, servants or visitors, or if the loss arises from the character of the things brought into the hotel.
Exceptions: ARTICLE 1733 Art. 1733. Common carriers, from the nature of their business and for reasons of public policy, are bound to observe extraordinary diligence in the vigilance over the goods and for the safety of the passengers transported by them, according to all the circumstances of each case.
Mandarin Villa Inc. v. CA (1996): Test of negligence: Did the defendant in doing the alleged negligent act use the reasonable care and caution, which an ordinary and prudent person would have used in the same situation? If not, then he is guilty of negligence.
Such extraordinary diligence in the vigilance over the goods is further expressed in Articles 1734, 1735, and 1745, Nos. 5, 6, and 7, while the extraordinary diligence for the safety of the passengers is further set forth in Articles 1755 and 1756.
EXTENT OF DAMAGES TO BE AWARDED
ARTICLE 1998
Art. 1998. The deposit of effects made by the travelers in hotels or inns shall also be regarded as necessary. The keepers of hotels or inns shall be responsible for them as depositaries, provided that notice was given to them, or to their employees, of the effects brought by the guests and that, on the part of the latter, they take the precautions which said hotel-keepers or their substitutes advised relative to the care and vigilance of their effects.
Bad Faith Debtor is liable for all damages, which can be reasonably attributed to the non-performance of the obligation. Any waiver or renunciation made in anticipation of such liability is null and void.
Good Faith Debtor is liable only for the natural and probable consequences of the breach of obligation and fortuitous events.
Culpa Contractual
Culpa Aquiliana
Negligence is merely incidental in the performance of an obligation. There is always a preexisting contractual relation. The source of obligation of defendant to pay damages is the breach or non-fulfillment of the
ARTICLE 1999
Art. 1999. The hotel-keeper is liable for the vehicles, animals and articles which have been introduced or placed in the annexes of the hotel.
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Negligence is substantive and independent. There may or may not be a pre-existing contractual obligation. The source of obligation is the defendant’s negligence itself.
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(e) debtor has promised to deliver the same thing to two or more persons who do not have the same interest [Art. 1165 par. 3] (f) the thing is lost due to the obligor’s fraud, negligence, delay or contravention of the tenor of the obligation [Art. 1170] (g) the obligation to deliver a specific thing arises from a crime [Art. 1268] (h) the object is a generic thing, i.e. the genus never perishes
Culpa Aquiliana
contract. Proof of the existence of The negligence of the the contract and of its defendant must be breach or non-fulfillment proved. is sufficient prima facie to warrant recovery. Proof of diligence in the Proof of diligence in the selection and supervision selection and of the employees is NOT supervision of the available as defense. employee is a defense.
Requisites for Exemption (a) The event must be independent of the debtor’s will (fraud or negligence). (b) The event must be unforeseeable or inevitable. (c) The event renders it impossible for debtor to fulfill his obligation in a normal manner. (d) The debtor must be free from any participation in the aggravation of the injury to the creditor [Tolentino, 1987; De Leon, 2003]. (e) It must be the only and sole cause, not merely a proximate cause.
CONTRAVENTION OF THE TENOR OF OBLIGATION
Contravention of the tenor of obligation: Violation of the terms and conditions stipulated in the obligation, which must not be due to a fortuitous event or force majeure [De Leon, 2003]. “In any manner contravenes the tenor” means any illicit act, which impairs the strict and faithful fulfillment of the obligation, or every kind of defective performance [Tolentino, 1987]. LEGAL EXCUSE FOR BREACH FORTUITOUS EVENT; REQUISITES
OF
OBLIGATION
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-
REMEDIES AVAILABLE TO CREDITOR IN CASE OF BREACH
Fortuitous event (force majeure): Any event which could not be foreseen, or which though foreseen is inevitable [Art. 1174].
SPECIFIC PERFORMANCE
Performance by the debtor of the prestation itself. SUBSTITUTED PERFORMANCE BY A THIRD PERSON OF ANOTHER’S OBLIGATION TO DELIVER A GENERIC THING OR OF AN OBLIGATION TO DO, UNLESS IT IS PURELY PERSONAL ACT.
A happening independent of the will of the debtor and which makes the normal fulfillment of the obligation impossible [De Leon, 2003].
Substituted performance: Someone else performs or something else is performed at the debtor’s expense.
(1) Act of God: An accident, due directly or exclusively to natural causes without human intervention, which by no amount of foresight, pains or care, reasonably to have been expected, could have been prevented. (2) Act of Man: Force majeure is a superior or irresistible force, which is essentially an act of man; includes unavoidable accidents, even if there has been an intervention of human element, provided that no fault or negligence can be imputed to the debtor.
RESCISSION (RESOLUTION IN RECIPROCAL OBLIGATIONS)
Right to rescind or cancel the contract. Rescission / Resolution Rescission [Art. 1380] [Art. 1191] Based on non-performance or non-fulfillment of obligation. Action is instituted only by the injured party.
Liability in case of Fortuitous Event No person shall be responsible for fortuitous events, UNLESS: (a) expressly specified by law [Arts. 552 (2), 1942, 2147, 2148, 2159] (b) liability specified by stipulation (c) the nature of the obligations requires assumption of risk [Art. 1174] (d) debtor is guilty of concurrent or contributory negligence
In some cases, court may grant a term. Nonperformance by the other party is important.
Based on lesion or fraud upon creditors. Action is instituted by either party or by a third person. Court cannot grant a period or term within which one must comply. Nonperformance by the other party is immaterial.
DAMAGES, IN ANY EVENT ARTICLE 1170
Art. 1170. Those who in the performance of their obligations are guilty of fraud, negligence, or delay,
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and those who in any manner contravene the tenor thereof, are liable for damages. SUBSIDIARY REMEDIES OF CREDITORS [ART. 1177] General rule: Contracts are binding only between the parties thereto, their heirs, assignees, and the estate [Art. 1311]. Exceptions: Accion subrogatoria and accion pauliana
ACCION DIRECTA [ARTS. 1652, 1608, 1729, 1893] ARTICLE 1652
Art. 1652. 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.
ACCION SUBROGATORIA Right of creditor to exercise all of the rights and bring all of the actions which his debtor may have against third persons; novation by change of debtor [Art. 1291, par. 3]. Requisites: (1) Debtor to whom the right of action properly pertains must be indebted to the creditor (2) The debt is due and demandable (3) The creditor must be prejudiced by the failure of the debtor to collect his own debt from third persons, either through malice or negligence (4) The debtor’s assets are insufficient (debtor is insolvent) (5) The right of action is not purely personal to the debtor
Payments of rent in advance by the sublessee shall be deemed not to have been made, so far as the lessor’s claim is concerned, unless said payment were effected in virtue of the custom of the place. ARTICLE 1608
Art. 1608. The vendor may bring his action against every possessor whose right is derived from the vendee, even if in the second contract no mention should have been made of the right to repurchase, without prejudice to the provisions of the Mortgage Law and the Land Registration Law with respect to third persons. ARTICLE 1729
ACCION PAULIANA Rescission, which involves the right of the creditor to attack or impugn by means of a rescissory action any act of the debtor which is in fraud and to the prejudice of his rights as creditor.
Art. 1729. Those who put their labor upon or furnish materials for a piece of work undertaken by the contractor have an action against the owner up to the amount owing from the latter to the contractor at the time the claim is made. However, the following shall not prejudice the laborers, employees and furnishers of materials: 1. Payments made by the owner to the contractor before they are due 2. Renunciation by the contractor of any amount due him from the owner This article is subject to the provisions of special laws.
Rescinds the contract entered into in fraud of creditors. Requisites: (CASAL) (1) There is a credit in favor of plaintiff prior to alienation. (2) The debtor has performed a subsequent contract conveying a patrimonial benefit to third person(s). (3) The creditor has no other legal remedy to satisfy his claim. (4) The debtor’s acts are fraudulent to the prejudice of the creditor. (5) The third person who received the property is an accomplice in the fraud. Accion Subrogatoria Not necessary that creditor’s claim is prior to the acquisition of the right by the debtor No need for fraudulent intent No period for prescription
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ARTICLE 1893
Art. 1893. In the cases mentioned in Nos. 1 and 2 of the preceding article, the principal may furthermore bring an action against the substitute with respect to the obligations which the latter has contracted under the substitution.
Accion Pauliana Credit must exist before the fraudulent act
Siguan v. Lim (1999): “Petitioner cannot invoke the credit of a different creditor to justify the rescission of the subject deed of donation, because the only creditor who may benefit from the rescission is the creditor who brought the action; those who are strangers to the action cannot benefit from its effects.”
Fraudulent intent is required if the contract rescinded is onerous Prescribes in 4 years from the discovery of the fraud PAGE 142
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Kinds of Civil Obligations
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POTESTIVE – CASUAL OR MIXED
Casual Condition: The fulfillment of the condition depends upon chance and/or upon the will of a third person [Art. 1182].
PURE, ARTS. 1179-1180 ARTICLE 1179 Art. 1179. Every obligation, whose performance does not depend upon a future or uncertain event, or upon a past event unknown to the parties, is demandable at once.
Mixed Condition: The fulfillment of the condition depends partly upon the will of a party to the obligation and partly upon chance and/or will of a third person.
Every obligation which contains a resolutory condition shall also be demandable, without prejudice to the effects of the happening of the event.
OBLIGATIONS SUBJECT TO POTESTATIVE SUSPENSIVE CONDITIONS ARE VOID [ART. 1182]. ARTICLE 1182
Art. 1182. When the fulfillment of the condition depends upon the sole will of the debtor, the conditional obligation shall be void. If it depends upon chance or upon will of a third person, the obligation shall take effect in conformity with the provisions of this Code.
ARTICLE 1180
Art. 1180. When the debtor binds himself to pay when his means permit him to do so, the obligation shall be deemed to be one with a period, subject to the provisions of Article 1197.
Exclusively upon the Creditor’s Will
Pure Obligation Its effectivity or extinguishment does not depend upon the fulfillment or non-fulfillment of a condition or upon the expiration of a term or period and characterized by the quality of its being IMMEDIATELY DEMANDABLE.
Condition and obligation are valid.
CONDITIONAL, ART. 1181 ARTICLE 1180 Art. 1181. In conditional obligations, the acquisition of rights, as well as the extinguishment or loss of those already acquired, shall depend upon the happening of the event which constitutes the condition. Conditional Obligation Its effectivity is subject to the fulfillment or nonfulfillment of a condition, which is characterized to be a FUTURE and UNCERTAIN event. SUSPENSIVE CONDITION
Obligation shall only be effective upon the fulfillment of the condition [Art.1181]. What is acquired by the obligee upon the constitution of the obligation is mere hope or expectancy, but is protected by law. RESOLUTORY CONDITION
Exclusively upon the Debtor’s Will in case of a Suspensive Condition [Art. 1182] Condition and obligation are void because to allow such condition would be equivalent to sanctioning obligations which are illusory. It also constitutes a direct contravention of the principle of mutuality of contracts. There is nothing to demand until the debtor wishes to.
Exclusively upon the Debtor’s Will in case of a Resolutory Condition [Art. 1179, par. 2] Condition and obligation are valid because in such situation, the position of the debtor is exactly the same as the position of the creditor when the condition is suspensive. It does not render the obligation illusory.
Osmeña v. Rama (1909): Defendant executed an endorsement saying that she’ll pay her debt if the house in which she lives is sold. Such condition depended upon her exclusive will; thus, it is void.
Obligation becomes demandable immediately after its establishment or constitution. The rights are immediately vested to the creditor, but always subject to the threat or danger of extinction by the happening of the resolutory condition [Tolentino, 1987].
Hermosa v. Longara (1953):
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(3) The mere intention of the debtor to prevent, without actually preventing fulfillment is not sufficient. Constructive fulfillment will not hold when the debtor acts pursuant to a right. There is constructive fulfillment when: (a) Intent of the obligor is to prevent fulfillment; and (b) There is actual prevention of compliance.
The condition that payment should be made by Hermosa as soon as he receives funds from the sale of his property in Spain is a mixed condition. The condition implies that the obligor already decided to sell the house and all that was needed to make the obligation demandable is that the sale be consummated and the price thereof remitted to the islands. There were still other conditions that had to concur to effect the sale, mainly that of the presence of a buyer, ready, able and willing to purchase the property under the conditions set by the intestate.
Principle of Retroactivity in Suspensive Conditions Art.1187, par.1: Once the condition is fulfilled, its effects must logically retroact to the moment when the essential elements, which gave birth to the obligation have taken place. The condition which is imposed is only accidental, not an essential element of the obligation. (This is applied only to consensual contracts. No application to real contracts which can only be perfected by delivery.)
EFFECT OF THE HAPPENING OF SUSPENSIVE CONDITION (ART. 1187); RESOLUTORY CONDITION ARTICLE 1187 Art. 1187. The effects of a conditional obligation to give, once the condition has been fulfilled, shall retroact to the day of the constitution of the obligation. Nevertheless, when the obligation imposes reciprocal prestations upon the parties, the fruits and interests during the pendency of the condition shall be deemed to have been mutually compensated. If the obligation is unilateral, the debtor shall appropriate the fruits and interests received, unless from the nature and circumstances of the obligation it should be inferred that the intention of the person constituting the same was different.
To Give
To Do/Not To Do
If reciprocal, the fruits and interests shall be deemed to have been mutually compensated as a matter of justice and convenience [Art. 1187, par. 1].
In obligations to do or not to do, the court shall determine the retroactive effect of the condition that has been complied with [Art. 1187, par. 2]. The power of the court includes the determination of whether or not there will be any retroactive effect. This rule shall likewise apply in obligations with a resolutory condition [Art. 1190 par. 3].
If unilateral, the debtor shall appropriate the fruits and interests received, unless from the nature and circumstance it should be inferred that the intention of the persons constituting the same was different. Resolutory Condition
In obligations to do and not to do, the courts shall determine, in each case, the retroactive effect of the condition that has been complied with.
Suspensive Condition Before Fulfillment The demandability and acquisition or effectivity of the rights arising from the obligation is suspended. Anything paid by mistake during such time may be recovered.
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After Fulfillment The obligation arises or becomes effective. The obligor can be compelled to comply with what is incumbent upon him.
Before Fulfillment Preservation of creditor’s rights (Art. 1188, par. 1) also applies to obligations with a resolutory condition.
Doctrine of Constructive Fulfillment of Suspensive Conditions Art. 1186: The condition shall be deemed fulfilled when the obligor actually prevented the obligee from complying with the condition, and that such prevention must have been voluntary or willful in character. (1) Applicable to suspensive conditions but not to resolutory conditions. (2) The article can have no application to an external contingency which is lawfully within the control of the obligor. PAGE 144
After Fulfillment Whatever may have been paid or delivered by one or both of the parties upon the constitution of the obligation shall have to be returned upon the fulfillment of the condition. There is no return to the status quo. However, when the condition is not fulfilled, rights are consolidated and they become absolute in character.
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EFFECT OF LOSS OF SPECIFIC THING, OR DETERIORATION OR IMPROVEMENT OF SPECIFIC THING BEFORE FULFILLMENT OF SUSPENSIVE CONDITION [ART. 1189]; OR IN CASE OF A RESOLUTORY CONDITION IN AN OBLIGATION TO DO OR NOT TO DO [ART. 1190, PAR. 3]
the obligation OR bringing an action for specific performance, with damages in either case. Improvement mprovement at the Improvement by the debtor’s expense, the thing’s nature or by time debtor shall ONLY have shall inure to the benefit usufructuary rights. of the creditor.
ARTICLE 1189
Art. 1189. When the conditions have been imposed with the intention of suspending the efficacy of an obligation to give, the following rules shall be observed in case of the improvement, loss or deterioration of the thing during the pendency of the condition:
Loss, defined: “when [the thing] perishes, or goes out of commerce, or disappears in such a way that its existence is unknown or it cannot be recovered” [Art. 1189, no. 2].
(1) If the thing is lost without the fault of the debtor, the obligation shall be extinguished;
OBLIGATIONS WITH A PERIOD OR TERM ARTICLE 1193 Art. 1193. Obligations for whose fulfillment a day certain has been fixed, shall be demandable only when that day comes.
(2) If the thing is lost through the fault of the debtor, he shall be obliged to pay damages; it is understood that the thing is lost when it perishes, or goes out of commerce, or disappears in such a way that its existence is unknown or it cannot be recovered;
Obligations with a resolutory period take effect at once, but terminate upon arrival of the day certain.
(3) When the thing deteriorates without the fault of the debtor, the impairment is to be borne by the creditor;
A day certain is understood to be that which must necessarily come, although it may not be known when.
(4) If it deteriorates through the fault of the debtor, the creditor may choose between the rescission of the obligation and its fulfillment, with indemnity for damages in either case;
If the uncertainty consists in whether the day will come or not, the obligation is conditional, and it shall be regulated by the rules of the preceding Section.
(5) If the thing is improved by its nature, or by time, the improvement shall inure to the benefit of the creditor; (6) If it is improved at the expense of the debtor, he shall have no other right than that granted to the usufructuary.
Period or Term: Interval of time, which either suspends demandability or produces extinguishment. The period must be: future, certain, and possible [Tolentino, 1987]. A fortuitous event does not interrupt the running of the period. It only relieves the contracting parties from the fulfillment of their respective obligations during the period.
ARTICLE 1190
Art. 1190, par. 3. As for the obligations to do and not to do, the provisions of the second paragraph of Article 1187 shall be observed as regards the effect of the extinguishment of the obligation. Without Debtor’s Fault/Act
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Kinds of Period [Art. 1193]: (1) Ex die - period with a suspensive effect. Obligation becomes demandable after the lapse of the period. (2) In diem - period with a resolutory effect. Obligation is demandable at once but is extinguished upon the lapse of the period.
With Debtor’s Fault/Act
Loss is Obligation is converted into one of indemnity for damages. Deterioration Impairment to be borne Creditor may choose by the creditor. between bringing an action for rescission of Obligation extinguished.
ARTICLE 1180
Art. 1180. When the debtor binds himself to pay when his means permit him to do so, the obligation shall be deemed to be one with a period, subject to the provisions of Article 1197.
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(3) Debtor by his own acts Impaired said guaranties or securities after their establishment, and when through a fortuitous event they disappear, unless he immediately gives new ones equally satisfactory (4) Debtor Violates any undertaking, in consideration of which the creditor agreed to the period (5) Debtor attempts to Abscond (6) By Law or stipulation (7) Parties stipulate an Acceleration Clause
Term/Period and Condition Distinguished Term/Period Interval of time which is future and certain
Condition Fact or event which is future and uncertain
Must necessarily come, although it may not be known when Exerts an influence upon the time of demandability or extinguishment of an obligation No retroactive effect unless there is an agreement to the contrary When it is left exclusively to the will of the debtor, the existence of the obligation is not affected
May or may not happen
In the cases provided, the obligation becomes immediately due and demandable even if the period has not yet expired. The obligation is thus converted into a pure obligation [Tolentino, 1987].
Exerts an influence upon the very existence of the obligation itself Has retroactive effect
RESOLUTORY PERIOD
Obligation is demandable at once but is extinguished upon the lapse of the period.
When it is left exclusively to the will of the debtor, the very existence of the obligation is affected
DEFINITE OR INDEFINITE PERIOD (1) INSTANCES WHEN COURTS MAY FIX THE PERIOD (ART.
1197) Art. 1197: As a general rule, the court is not authorized to fix a period for the parties [De Leon, 2003].
SUSPENSIVE PERIOD
Benefit of the Period Presumption: The period in an obligation is presumed to be established for the benefit of both the creditor and debtor, UNLESS from the tenor of the obligation or other circumstances, it shall appear that the period has been established in favor of either the creditor or debtor [Art. 1196].
Araneta v. Phil. Sugar Estates, provides— First, the Court shall determine: (a) If the obligation does not fix a period, but from its nature and circumstances, it can be inferred that a period was intended. (b) If the period is void, such as when it depends upon the will of the debtor. (c) If the debtor binds himself when his means permit him to do so. Second, it must decide what period was “probably contemplated by the parties”.
Period for the Benefit of either Creditor or Debtor Creditor Debtor Creditor may demand the fulfillment or performance of the obligation at any time but the obligor cannot compel him to accept payment before the expiration of the period.
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Debtor may oppose any premature demand on the part of the obligee for the performance of the obligation, or if he so desires, he may renounce the benefit of the period by performing his obligation in advance.
Art. 1197 does not apply to contract of services and to pure obligations. The court, however, to prevent unreasonable interpretations of the immediate demandability of pure obligations, may fix a reasonable time in which the debtor may pay [Tolentino, 1987]. (2) CREDITOR MUST ASK COURT TO SET THE PERIOD, BEFORE HE CAN DEMAND PAYMENT.
If Period Given for the Benefit of Debtor Alone When Debtor Loses Right to Use Period Art.1198: I GIV A LA— (1) Debtor becomes Insolvent, unless he gives a guaranty or security for his debt, after obligation is contracted (2) Debtor fails to furnish the Guaranties or securities promised
THE ONLY ACTION THAT CAN BE MAINTAINED BY THE CREDITOR UNDER ART. 1197 IS THE ACTION TO ASK THE COURTS TO FIX THE TERM WITHIN WHICH THE DEBTOR MUST COMPLY WITH HIS OBLIGATION. THE FULFILLMENT OF THE OBLIGATION ITSELF CANNOT BE DEMANDED UNTIL AFTER THE COURT HAS FIXED THE PERIOD FOR
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COMPLIANCE ARRIVED.
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THEREWITH,
AND
SUCH
PERIOD
The effect of the notice is to limit the obligation to the object or prestation selected. Notice of selection or choice may be in any form provided it is sufficient to make the other party know that the selection has been made. It can be: (a) oral (b) in writing (c) tacit (d) any other equivocal means
HAS
ALTERNATIVE OR FACULTATIVE DIFFERENCE BETWEEN ALTERNATIVE AND FACULTATIVE OBLIGATIONS
Alternative Obligations Several objects are due. May be complied with by delivery of one of the objects or by performance of one of the prestations which are alternatively due. Choice may pertain to debtor, creditor, or third person.
Facultative Obligations Only one object is due. May be complied with by the delivery of another object or by the performance of another prestation in substitution of that which is due. Choice pertains only to the debtor.
Loss/impossibility of all object/prestation due to fortuitous event shall extinguish the obligation. The loss/impossibility of one of the things does not extinguish the obligation. Culpable loss of any of the objects alternatively due before the choice is made may give rise to liability on the part of the debtor.
Loss/impossibility of the object/prestation due to fortuitous event is sufficient to extinguish the obligation.
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Choice of the debtor when communicated to the creditor does not require the latter’s concurrence. When the choice is rendered impossible through the creditor’s fault, the debtor may bring an action to rescind the contract with damages [Art. 1203]. Obligation is converted into a simple obligation when: (a) The person with the right of choice has communicated his choice [Art. 1201]. (b) Only one prestation is practicable [Art. 1202]. Facultative Obligation Only one prestation has been agreed upon but the debtor may render another in substitution [De Leon, 2003]. Debtor always has the right of choice.
Culpable loss of the object which the debtor may deliver in substitution before the substitution is effected does not give rise to any liability on the part of the debtor.
Effect of Loss of Substitute Before Substitution is After Substitution is Made Made If due to bad faith or fraud The loss or deterioration of obligor: obligor is liable. of the substitute on account of the obligor’s delay, negligence, or If due to the negligence of fraud, renders the the obligor: obligor is not obligor liable because liable. once the substitution is made, the obligation is converted into a simple one with the substituted thing as the object of the obligation.
Alternative Obligations Several prestations are due but the performance of one is sufficient [De Leon, 2003]. Right of Choice: Art. 1200: Belongs to the debtor, UNLESS: (1) when it is expressly granted to the creditor (2) when it is expressly granted to a third person
EFFECT OF LOSS OF SPECIFIC THINGS OR IMPOSSIBILITY OF PERFORMANCE OF ALTERNATIVE, THROUGH FAULT OF DEBTOR/CREDITOR OR THROUGH FORTUITOUS EVENTS
Limitations to the right of choice: (1) impossible prestations (2) unlawful prestations (3) those which could not have been the object of the obligation (4) only one prestation is practicable [Art. 1202; De Leon, 2003]
Art. 1204: Debtor’s Choice Fortuitous Event
Debtor’s Fault All Lost
When choice shall produce effect Art. 1201: Choice shall produce no effect except from the time it has been communicated.
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Debtor is released from Creditor shall have a the obligation. right to indemnity for damages based on the value of the last thing which disappeared or service which become impossible. Some Debtor to deliver that Debtor to deliver that which he shall choose which the creditor shall from among the choose from among the remainder. remainder without damages. One Remains Debtor to deliver that Debtor to deliver that which remains. which remains.
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PRESUMPTION OF JOINT OBLIGATION
Presumption: Obligation is presumed joint if there is a concurrence of several creditors, of several debtors, or of several creditors and debtors in one and the same obligation (Art. 1207). Exceptions: (1) When the obligation expressly states that there is solidarity (2) When the law requires solidarity i.e. quasi-delicts (3) When the nature of the obligation requires solidarity (4) When the nature or condition is imposed upon heirs or legatees, and the testament expressly makes the charge or condition in solidum (5) When the solidary responsibility is imputed by a final judgment upon several defendants PRESUMPTION OF EQUAL DIVISION
Presumption: Credit or debt shall be presumed to be divided into as many equal shares as there are creditors or debtors. Joint creditor cannot act in representation of the others, neither can a joint debtor be compelled to answer for the liability of others.
Art. 1205: Creditor’s Choice Fortuitous Event
Debtor’s Fault
All Lost Debtor is released from Creditor may claim the the obligation. price/value of any of them with indemnity for damages. Some Debtor to deliver that Creditor may claim any which he shall choose of those subsisting from among the without a right to remainder. damages OR price/value of the thing lost with right to damages. One Remains Creditor may claim the Creditor may claim the remaining thing without remaining thing without a right to damages OR a right to damages OR the price/value of the the price/value of the thing lost with right to thing lost with right to damages. damages.
EACH CREDIT IS DISTINCT FROM ONE ANOTHER, THEREFORE A JOINT DEBTOR CANNOT BE REQUIRED TO PAY THE SHARE OF ANOTHER DEBTOR, ALTHOUGH HE MAY PAY IF HE WANTS TO [ART. 1208]. EFFECT OF INSOLVENCY OF A JOINT DEBTOR [ART. 1209].
Each creditor can demand only for the payment of his proportionate share of the credit, while each debtor can be liable only for the payment of his proportionate share of the debt. Principal Effects of Joint Liability (1) Demand by one creditor upon the debtor, produces the effects of default only with respect to the creditor who demanded and the debtor on whom the demand was made, but not with respect to others. (2) Interruption of prescription by the judicial demand of one creditor upon a debtor does not benefit the other creditors nor interrupt the prescription as to other debtors. (3) Vices of each obligation arising from the personal defect of a particular debtor or creditor do not affect the obligation or right of the others. (4) Insolvency of a debtor does not increase the responsibility of his co-debtors, nor does it authorize a creditor to demand anything from his co-debtors. (5) Defense of res judicata is not extended from one debtor to another.
Joint and Solidary Obligation JOINT (DIVISIBLE) OBLIGATION One where a concurrence of several creditors, or of several debtors, or of several creditors and debtors, by virtue of which, each of the creditors has a right to demand, and each of the debtors is bound to render compliance with his proportionate part of the prestation which constitute the object of the obligation (obligacion mancomunada).
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JOINT (INDIVISIBLE) OBLIGATION
SOLIDARY OBLIGATION An obligation where there is concurrence of several creditors, or of several debtors, or of several creditors and several debtors, by virtue of which, each of the creditors has the right to demand, and each of the debtors is bound to render, entire compliance with the prestation which constitutes the object of the obligation (obligacion solidaria).
OBLIGATION CANNOT BE PERFORMED IN PARTS BUT DEBTORS ARE BOUND JOINTLY ARTICLE 1209
Art. 1209. If the division is impossible, the right of the creditors may be prejudiced only by their collective acts, and the debt can be enforced only by proceeding against all the debtors. If one of the latter should be insolvent, the others shall not be liable for his share.
ANYONE OF THE SOLIDARY CREDITORS MAY COLLECT OR DEMAND PAYMENT OF WHOLE OBLIGATION; THERE IS MUTUAL AGENCY AMONG SOLIDARY DEBTORS (ARTS.
Art. 1209: No creditor can act in representation of the other; no debtor can be compelled to answer for the liability of the others.
1214, 1215) ARTICLE 1214 Art. 1214. The debtor may pay any one of the solidary creditors; but if any demand, judicial or extrajudicial, has been made by one of them, payment should be made to him.
If there are two or more debtors, the fulfillment of or compliance with the obligation requires the concurrence of all the debtors, although each for his own share and for the enforcement of the obligation
ARTICLE 1215
Plurality of Creditors: If one or some of the creditors demands the prestation, the debtor may legally refuse to deliver to them, he can insist that all the creditors together receive the thing, and if any of them refuses to join the others, the debtor may deposit the thing in court by way of consignation [Tolentino, 1987].
Art. 1215. Novation, compensation, confusion or remission of the debt, made by any of the solidary creditors or with any of the solidary debtors, shall extinguish the obligation, without prejudice to the provisions of Article 1219. Active solidary obligation (solidarity among creditors): Each creditor has the authority to claim and enforce the rights of all, with the resulting obligation of paying everyone of what belongs to him.
IN CASE OF FAILURE OF ONE OF THE JOINT DEBTORS TO PERFORM HIS PART (SHARE), THERE IS DEFAULT BUT ONLY THE GUILTY DEBTOR SHALL BE LIABLE FOR DAMAGES
In case of breach where one of the joint debtors fails to comply with his undertaking, the obligation can no longer be fulfilled or performed.
Creation of a relationship of mutual agency among co-creditors. A solidary creditor cannot assign his rights without the consent of the others [Art. 1213].
Consequently, it is converted into one of indemnity for damages.
Each debtor may pay to any solidary creditor, but if any demand, judicial or extrajudicial, has been made by one of them, payment must be made to him [Art. 1214]
In case of insolvency of one of the debtors, the others shall not be liable for his share. To hold otherwise would destroy the joint character of the obligation. Joint Divisible Obligations In case of breach of obligation by one of the debtors, damages due must be borne by him alone.
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Mixed solidary obligation (solidarity among creditors and debtors): Solidarity is not destroyed by the fact that the obligation of each debtor is subject to different conditions or periods. The creditor can commence an action against anyone of the debtors for the compliance with the entire obligation minus the portion or share which corresponds to the debtor affected by the condition or period.
Joint Indivisible Obligations In case of breach where one of the joint debtors fails to comply with his undertaking, the obligation can no longer be fulfilled or performed. Thus, the action must be converted into one for indemnity for damages.
ANY OF THE SOLIDARY DEBTORS MAY BE REQUIRED TO PAY THE WHOLE OBLIGATION; THERE IS MUTUAL GUARANTY AMONG SOLIDARY DEBTORS [ARTS. 1216,
1217, 1222]
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(2) Those personal to him (3) Those pertaining to his own share (4) Those personally belonging to other co-debtors but only as regards that part of the debt for which the latter are responsible.
ARTICLE 1216
Art. 1216. The creditor may proceed against any one of the solidary debtors or some or all of them simultaneously. The demand made against one of them shall not be an obstacle to those which may subsequently be directed against the others, so long as the debt has not been fully collected.
Demand Upon a Solidary Debtor The demand made against one of them shall not be an obstacle to those which may subsequently be directed against the others so long as the debt has not been fully collected [Art. 1216]. The creditor may proceed against any one of the solidary debtors or all simultaneously [Art. 1216].
ARTICLE 1217
Art. 1217. Payment made by one of the solidary debtors extinguishes the obligation. If two or more solidary debtors offer to pay, the creditor may choose which offer to accept. He who made the payment may claim from his codebtors only the share which corresponds to each, with the interest for the payment already made. If the payment is made before the debt is due, no interest for the intervening period may be demanded. When one of the solidary debtors cannot, because of his insolvency, reimburse his share to the debtor paying the obligation, such share shall be borne by all his co-debtors, in proportion to the debt of each.
A creditor’s right to proceed against the surety exists independently of his right to proceed against the principal
ARTICLE 1222
Art. 1222. A solidary debtor may, in actions filed by the creditor, avail himself of all defenses which are derived from the nature of the obligation and of those which are personal to him, or pertain to his own share. With respect to those which personally belong to the others, he may avail himself thereof only as regards that part of the debt for which the latter are responsible.
Payment by a Debtor Full payment made by one of the solidary debtors extinguishes the obligation [Art. 1217].
If two or more solidary debtors offer to pay, the creditor may choose which offer to accept [Art. 1217]. The solidary debtor who made the payment shall have the right to claim from his co-debtors the share which corresponds to them with interest, UNLESS barred by prescription or illegality [Art. 1218].
When a solidary debtor pays the entire obligation, the resulting obligation of the co-debtors to reimburse him becomes joint. If payment was made before the debt became due, no interest during the intervening period may be demanded [Art. 1217 par. 2]. When one of the solidary debtors cannot reimburse his share to the debtor paying the obligation due to insolvency, such share shall be borne by all his codebtors, in proportion to the debt of each [Art. 1217, par. 2].
Passive solidary obligation (solidarity among debtors): Each debtor can be made to answer for the others, with the right on the part of the debtor-payor to recover from the others their respective shares. Creation of a relationship of mutual guaranty among co-debtors. The total remission of the debt in favor of a debtor releases all the debtors. All the debtors are liable for the loss of the thing due, even if such loss is caused by the fault of only one of them, and for delay, even if it is caused by just one of them.
Inchausti v. Yulo (1914): Debtors obligated themselves solidarily, so creditor can bring its action against any of them. Remission of any part of the debt, made by the creditor in favor of one of the solidary debtors, inures to the benefit of the rest of them.
The interruption of prescription as to one debtor affects all the others; but the renunciation by one debtor of prescription already had does not prejudice the others. Defenses Available to a Solidary Debtor [Art. 1222] (1) Those derived from the nature of the obligation
Each one of the solidary creditors may do whatever maybe useful to the others, but not anything prejudicial to them [Art. 1212]; however, any novation, compensation, confusion or remission of debt executed by any solidary creditor shall extinguish the
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obligation without prejudice to his liability for the shares of the other solidary creditors
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DIVISIBLE AND INDIVISIBLE, ART. 1225 Divisible Obligations Ones which are susceptible to partial performance, that is, the debtor can legally perform the obligation by parts and the creditor cannot demand a single performance of the entire obligation [Tolentino, 1987].
ARTICLE 1212
Art. 1212. Each one of the solidary creditors may do whatever may be useful to the others, but not anything which may be prejudicial to the latter. ARTICLE 1215
Indivisible Obligations Ones which cannot be validly performed in parts [Tolentino, 1987].
Art. 1215. Novation, compensation, confusion or remission of the debt, made by any of the solidary creditors or with any of the solidary debtors, shall extinguish the obligation, without prejudice to the provisions of Article 1219.
(a) Divisibility/indivisibility refers to the performance of the prestation and not to the thing which is the object thereof. The thing may be divisible, yet the obligation may be indivisible. (b) When the obligation has for its object the execution of a certain number of days of work, the accomplishment of work by metrical units, or analogous things which by their nature are susceptible of partial performance, it shall be divisible [Art.1225, par. 2]. (c) Even though the object or service may be physically divisible, an obligation is indivisible if so provided by law or intended by the parties. (d) In obligations not to do, divisibility or indivisibility shall be determined by the character of the prestation in each particular case. (e) When there is plurality of debtors and creditors, the effect of divisibility/indivisibility of the obligation depend upon whether the obligation is joint or solidary. (f) A joint indivisible obligation gives rise to indemnity for damages from the time any one of the debtors does not comply with his undertaking [Art. 1224].
ARTICLE 1219
Art. 1219. The remission made by the creditor of the share which affects one of the solidary debtors does not release the latter from his responsibility towards the co-debtors, in case the debt had been totally paid by anyone of them before the remission was effected. Effects of Prejudicial and Beneficial Acts [Art.1212] (1) Each one of the solidary creditors may do whatever may be useful or beneficial to the others, but not anything which may be prejudicial to the latter. (2) As far as the debtors are concerned, a prejudicial act performed by a solidary creditor is binding. (3) As between the solidary creditors, the creditor who performed such act shall incur the obligation of indemnifying the others for damages.
Effect Creditor cannot be compelled to receive partially the prestation in which the obligation consists; neither may the debtor be required to make the partial payment [Art. 1248], UNLESS: (1) The obligation expressly stipulates the contrary. (2) The different prestations constituting the objects of the obligation are subject to different terms and conditions. (3) The obligation is in part liquidated and in part unliquidated.
Indivisibility Solidarity It refers to the prestation It refers to the legal tie which constitutes the or vinculum, and object of the obligation. consequently, to the subjects or parties of the obligation. Plurality of subjects is not Plurality of subjects is required. indispensable. In case of breach, When there is liability obligation is converted into on the part of the indemnity for damages debtors because of the because the indivisibility of breach, the solidarity the obligation is among the debtors terminated. remains.
OBLIGATIONS WITH A PENAL CLAUSE, ARTS. 1226, 1228-1230 ARTICLE 1226 Art. 1226. In obligations with a penal clause, the penalty shall substitute the indemnity for damages and the payment of interests in case of
The indivisibility of an obligation does not necessarily give rise to solidarity. Nor does solidarity itself imply indivisibility [Art. 1211].
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noncompliance, if there is no stipulation to the contrary. Nevertheless, damages shall be paid if the obligor refuses to pay the penalty or is guilty of fraud in the fulfillment of the obligation.
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Chartacteristics of Penalty (1) The penalty shall substitute the indemnity for damages and payment of interest in case of noncompliance [Art. 1226], UNLESS: (a) There is a stipulation to the contrary (b) The obligor refuses to pay the penalty (c) The obligor is guilty of fraud
The penalty may be enforced only when it is demandable in accordance with the provisions of this Code.
(2) Debtor cannot exempt himself from the performance of the principal obligation by paying the stipulated penalty unless this right has been expressly reserved for him [Art. 1227].
ARTICLE 1228
Art. 1228. Proof of actual damages suffered by the creditor is not necessary in order that the penalty may be demanded.
(3) Creditor cannot demand the fulfillment of the principal obligation and demanding the satisfaction of the penalty at the same time unless the right has been clearly granted to him [Art. 1227]. Tacit or implied grant is admissible. (a) If the creditor has chosen fulfillment of the principal obligation and the performance thereof becomes impossible without his fault, he may still demand the satisfaction of the penalty. (b) If there was fault on the part of the debtor, creditor may demand not only the satisfaction of the penalty but also the payment of damages. (c) If the creditor chooses to demand the satisfaction of the penalty, he cannot afterwards demand the fulfillment of the obligation.
ARTICLE 1229
Art. 1229. The judge shall equitably reduce the penalty when the principal obligation has been partly or irregularly complied with by the debtor. Even if there has been no performance, the penalty may also be reduced by the courts if it is iniquitous or unconscionable. ARTICLE 1230
Art. 1230. The nullity of the penal clause does not carry with it that of the principal obligation. The nullity of the principal obligation carries with it that of the penal clause. Penal Clause: An accessory undertaking to assume greater liability in case of breach [De Leon, 2003]. It is attached to an obligation in order to ensure performance. The enforcement of the penalty can be demanded by the creditor only when the nonperformance is due to the fault or fraud of the debtor.
Proof of Actual Damage Art. 1228: That proof of actual damages is not necessary is applicable only to the general rule stated in Art. 1226, but not to the exceptions. The penalty is exactly identical with what is known as “liquidated damages” in Art. 2226.
If the principal obligation is void, the penal clause shall also be void. However, the nullity of the penal clause does not carry with it the nullity of the principal obligation [Art.1230].
When Penalty may be Reduced [Art. 1229]: (1) If the principal obligation has been partly complied with. (2) If the principal obligation has been irregularly complied with. (3) If the penalty is iniquitous or unsconscionable even if there has been no performance.
Purposes of Penalty (1) Funcion coercitiva de garantia - to insure the performance of the obligation. (2) Funcion liquidatoria - to liquidate the amount of damages to be awarded to the injured party in case of breach of the principal obligation (compensatory). (3) Function estrictamente penal - to punish the obligor in case of breach of the principal obligation (punitive).
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In the meantime, the action derived from the original obligation shall be held in the abeyance. EXTRAORDINARY INFLATION OF DEFLATION [ART. 1250] ARTICLE 1236
PAYMENT, ARTS. 1236-1238 ARTICLE 1236 Art. 1236. The creditor is not bound to accept payment or performance by a third person who has no interest in the fulfillment of the obligation, unless there is a stipulation to the contrary.
Art. 1250. In case an extraordinary inflation or deflation of the currency stipulated should supervene, the value of the currency at the time of the establishment of the obligation shall be the basis of payment, unless there is an agreement to the contrary.
Whoever pays for another may demand from the debtor what he has paid, except that if he paid without the knowledge or against the will of the debtor, he can recover only insofar as the payment has been beneficial to the debtor.
APPLICATION OF PAYMENT [ART. 1252-1254] Application of Payment [Art. 1252] Designation of the debt to which should be applied a payment made by a debtor who owes several debts to the same creditor.
ARTICLE 1237
Rules on Application (1) Preferential right of debtor - debtor has the right to select which of his debts he is paying. (2) The debtor makes the designation at the time he makes the payment. (3) If not, the creditor makes the application, by so stating in the receipt that he issues, unless there is cause for invalidating the contract. (4) If neither the creditor nor debtor exercises the right to apply, or if the application is not valid, the application is made by operation of law. (5) If debt produces interest, the payment is not to be applied to the principal unless the interests are covered. (6) When no application can be inferred from the circumstances of payment, it is applied: (a) to the most onerous debt of the debtor; or (b) if debts due are of the same nature and burden, to all the debts in proportion (7) Rules of application of payment may not be invoked by a surety or solidary guarantor.
Art. 1237. Whoever pays on behalf of the debtor without the knowledge or against the will of the latter, cannot compel the creditor to subrogate him in his rights, such as those arising from a mortgage, guaranty, or penalty. ARTICLE 1238
Art. 1238. Payment made by a third person who does not intend to be reimbursed by the debtor is deemed to be a donation, which requires the debtor's consent. But the payment is in any case valid as to the creditor who has accepted it. DATION IN PAYMENT [ART. 1245] ARTICLE 1245
Art. 1245. Dation in payment, whereby property is alienated to the creditor in satisfaction of a debt in money, shall be governed by the law of sales. Delivery and transmission of ownership of a thing by the debtor to the creditor as an accepted equivalent of the performance of the obligation (dacion en pago).
Reparations Commission vs. Universal Deep Sea Fishing Corp. (1978): Rules on application of payment cannot be made applicable to a person whose obligation as a mere surety is both contingent and singular. There must be full and faithful compliance with the terms of the contract.
FORM OF PAYMENT [ART. 1249] ARTICLE 1249
Art. 1249. The payment of debts in money shall be made in the currency stipulated, and if it is not possible to deliver such currency, then in the currency which is legal tender in the Philippines. The delivery of promissory notes payable to order, or bills of exchange or other mercantile documents shall produce the effect of payment only when they have been cashed, or when through the fault of the creditor they have been impaired.
TENDER OF PAYMENT AND CONSIGNATION [ARTS.
1261]
1256-
Tender of payment: Manifestation made by the debtor to the creditor of his desire to comply with his obligation, with offer of immediate performance. (1) Preparatory act to consignation (2) Extrajudicial in character
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Consignation: Deposit of the object of obligation in a competent court in accordance with the rules prescribed by law whenever the creditor unjustly refuses payment or because of some circumstances which render direct payment to the creditor impossible or inadvisable. (1) Principal act which constitutes a form of payment (2) Judicial in character
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Requisites and Effects Application of Tender and Dation Payment Consignation Requisites (1) Plurality of (1) Should not (1) There is a debts be prejudicial debt due (2) Debts are of to other (2) Consignation the same creditors is made kind (2) Should not because of (3) Debts are constitute a some legal owed to the pactum cause same creditor commissoriu (3) Previous and by the m notice of same debtor consignation (4) All debts was given to must be due those (5) Payment persons made is not interested in sufficient to the cover all performance debts of the obligation (4) Amount or thing due was placed at the disposal of the court (5) After the consignation has been made, the persons interested were notified thereof
When Tender and Refusal Not Required [Art. 1259] (1) Creditor is absent or unknown, or does not appear at the place of payment. (2) Creditor is incapacitated to receive the thing due at the time of payment. (3) Without just cause, creditor refuses to give receipt. (4) Two or more persons claim the same right to collect. (5) Title of the obligation has been lost. Effects of Withdrawal by Debtor [Arts. 1260- 1261] (1) Before approval of the court - Obligation remains in force. (2) After approval of the court or acceptance by the creditor, with the consent of the latter Obligation remains in force, but guarantors and co-debtors are liberated. Preference of the creditor over the thing is lost. (3) After approval of the court or acceptance by the creditor, and without creditor’s consent Obligation subsists, without change in the liability of guarantors and co-debtors, or the creditor’s right of preference. What constitutes valid consignation In order that the consignation of the thing due may release the obligor, it must first be announced to the persons interested in the fulfilment of the obligation. The consignation shall be ineffectual if it is not made strictly in consonance with the provisions which regulate payment. [Art. 1257].
Payment of debt designated as to corresponding amount
How consignation is made Consignation shall be made by depositing the things due at the disposal of judicial authority, before whom the tender of payment shall be proved, in a proper case, and the announcement of the consignation in other cases. The consignation having been made, the interested parties shall also be notified thereof. Who bears the expenses The expenses of consignation, when properly made, shall be charged against the creditor. [Art. 1259]
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Effects Extinguishment of debt as an equivalent of the performance of the obligation
If accepted by the creditor or declared properly made by the Court: (1) Debtor is released in same manner as if he had performed the obligation at the time of consignation (2) Accrual of interest is suspended
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Dation
Effects of Loss Obligation to Deliver a Specific Thing Extinguishment of the obligation if the thing was destroyed without fault of the debtor and before he has incurred delay.
Tender and Consignation from the moment of consignation. (3) Deterioration or loss of the thing or amount consigned, occurring without the fault of debtor, must be borne by creditor from the moment of deposit Any increment or increase in the value of the thing after consignation inures to the benefit of the creditor.
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Obligation to Deliver a Generic Thing Loss of a generic thing does not extinguish an obligation, EXCEPT in case of delimited generic things, where the kind or class is limited itself, and the whole class perishes.
Action against third persons - creditor shall have all the rights of action the debtor may have against third persons by reason of the loss. Presumption: The loss was due to the debtor’s fault, UNLESS there is proof to the contrary. Other cases where loss is attributed to debtor: (1) Law provides that the debtor shall be liable even if the loss is due to fortuitous events [Arts. 1942, 1979, 2147, 2159]. (2) Obligor is made liable by express stipulation. (3) Nature of the obligation requires an assumption of risk. (4) Fault or negligence concurs with the fortuitous event. (5) Loss occurs after delay. (6) Debtor has promised to deliver the same thing to two or more different parties. (7) Obligation arises from a criminal act. (8) Borrower in commodatum: saves his own things and not the thing of the creditor during a fortuitous event.
Payment by Cession [Art. 1255] The debtor may cede or assign his property to his creditors in payment of his debts. This cession, unless there is stipulation to the contrary, shall only release the debtor from responsibility for the net proceeds of the things assigned. The agreements which, on the effect of the cession, are made between the debtor and his creditors shall be governed by special laws.
In Reciprocal Obligations Extinguishment of the obligation due to loss of the thing or impossibility of performance affects both the creditor and debtor; the entire juridical relation is extinguished.
Cession or assignment of rights in favor of creditors (1) Process by which debtor transfers property to his creditors so that the latter may sell them and thus apply the proceeds to their credits. (2) What is given to creditors is not ownership (as distinguished from dacion en pago) but only authority to sell. (3) Debtor is released only for the net proceeds unless there is a stipulation to the contrary.
Partial loss Art. 1264: Partial loss due to a fortuitous event does not extinguish the obligation; thing due shall be delivered in its present condition, without any liability on the part of the debtor, UNLESS the obligation is extinguished when the part lost was of such extent as to make the thing useless.
LOSS OF DETERMINATE THING DUE OR IMPOSSIBILITY OR DIFFICULTY OF PERFORMANCE, ARTS. 1262, 1266-1267 Loss A thing is lost when it perishes, goes out of commerce or disappears in such a way that its existence is unknown or it cannot be recovered [Art. 1189, no. 2]
Loss of the thing when in possession of the debtor: Loss was due to the debtor’s fault. Burden of explaining the loss of the thing falls upon him, UNLESS due to a natural calamity: earthquake, flood, storm, etc. Subjective impossibility: Where there is no physical or legal loss, but the thing belongs to another, the
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performance by the debtor becomes impossible. The debtor must indemnify the creditor for damages.
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Effect Art. 1273: Renunciation of the principal debt shall extinguish the accessory obligations, but remission of the latter leaves the principal obligation in force.
Impossibility of Performance [Arts. 1266-1267] When prestation becomes legally or physically impossible (by fortuitous event or force majeure), the debtor is released. Impossibility must have occurred without fault of debtor, and after the obligation has been constituted.
EXPRESS – FORMALITY OF DONATION [ART. 1270]
Made formally; in accordance with forms of ordinary donations.
Partial Impossibility (1) Courts shall determine whether it is so important as to extinguish the obligation. (2) If debtor has performed part of the obligation when impossibility occurred, creditor must pay the part done as long as he benefits from it. (3) If debtor received full payment from creditor, he must return excess amount corresponding to part which was impossible to perform.
IMPLIED [ARTS. 1271, 1272, 1274]
Presumptions [Arts. 1271, 1272, 1274] (1) Whenever the private document in which the debt is found is in the possession of the debtor, it shall be presumed that the creditor delivered it voluntarily, unless the contrary is proved. (2) Delivery of a private document evidencing credit made voluntarily by the creditor to the debtor implies the renunciation of the action of creditor against the latter. (3) Accessory obligation of pledge has been remitted when thing after its delivery is found in the possession of the debtor or third person.
Doctrine of Unforeseen Events When the service has become so difficult as to be manifestly beyond the contemplation of all the parties, the obligor may be released in whole or in part [De Leon, 2003]. Requisites (1) Event could not have been foreseen at the time of the constitution of the contract. (2) Event makes performance extremely difficult but not impossible. (3) Event not due to any act of the parties. (4) Contract is for future prestation.
CONFUSION, ARTS. 1275-1272 Confusion - The meeting in one person of the qualities of creditor and debtor of the same obligation. Requisites (1) It should take place between principal debtor and creditor. (2) It must be complete and definite – Parties must meet all the qualities of creditor and debtor in the obligation/ in the part affected.
CONDONATION OR REMISSION OF DEBT, ART. 1270 ARTICLE 1270 Art. 1270. Condonation or remission is essentially gratuitous, and requires the acceptance by the obligor. It may be made expressly or impliedly.
Effects [Arts. 1275- 1277]: (1) The obligation is extinguished from the time the characters of the debtor and creditor are merged in the same person. (2) In joint obligations, confusion does not extinguish the obligation except as regards the corresponding share of the creditor or debtor in whom the two characters concur. (3) In solidary obligations, confusion in one of the solidary debtors extinguishes the entire obligation.
One and the other kind shall be subject to the rules which govern inofficious donations. Express condonation shall, furthermore, comply with the forms of donation. Condonation An act of liberality, by virtue of which, without receiving any equivalent, creditor renounces the enforcement of the obligation. The obligation is extinguished either in whole or in such part of the same to which remission refers.
Obligation is not extinguished when confusion takes place in the person of subsidiary debtor (e.g. guarantor), but merger in the person of the principal debtor shall benefit the former.
Requisites: (1) Debt must be existing and demandable. (2) Renunciation must be gratuitous; without any consideration. (3) Debtor must accept the remission.
COMPENSATION Compensation - Offsetting of two obligations which are reciprocally extinguished if they are of the same
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value, or extinguished to the concurrent amount if of different values.
obligations of a depositary or of a bailee in commodatum.
Compensation There must always be two obligations.
Confusion Involves only one obligation.
Neither can compensation be set up against a creditor who has a claim for support due by gratuitous title, without prejudice to the provisions of paragraph 2 of Article 301.
There are two persons who are mutually debtors and creditors of each other in two separate obligations, each arising from the same cause.
There is only one person whom the characters of the creditor and debtor meet.
ARTICLE 1288
Art. 1288. Neither shall there be compensation if one of the debts consists in civil liability arising from a penal offense. ARTICLE 1289
Art. 1289. If a person should have against him several debts which are susceptible of compensation, the rules on the application of payments shall apply to the order of the compensation.
Compensation: Requisites (1) Each obligor is bound principally, and at the same time a principal creditor of the other (2) Both debts must consist in a sum of money, or if the things due are FUNGIBLE, of the same kind & quality (3) Both debts are due (4) Debts are liquidated and demandable (5) There must be no retention or controversy over either of the debts, commenced by third persons and communicated in due time to the debtor (6) Compensation is not prohibited by law
Effects (1) Effects rise from the moment all the requisites concur. (2) Debtor claiming its benefits must prove compensation; once proven, effects retroact from the moment when the requisites concurred. (3) Both debts are extinguished to the concurrent amount, even though the creditors and debtors are not aware of the compensation. (4) Accessory obligations are also extinguished.
ARTICLE 1290
Art. 1290. When all the requisites mentioned in Article 1279 are present, compensation takes effect by operation of law, and extinguishes both debts to the concurrent amount, even though the creditors and debtors are not aware of the compensation. (2) AGREEMENT [ART. 1282] Parties agree to compensate their mutual obligations even when some requisite in Art. 1279 is lacking. (3) VOLUNTARY [ART. 1282] ARTICLE 1282 Art. 1282. The parties may agree upon the compensation of debts which are not yet due. (4) JUDICIAL [ART. 1283] Decreed by court when there is counterclaim; effective upon final judgment
KINDS (1) LEGAL COMPENSATION [ARTS. 1286-1290]
ARTICLE 1283
Art. 1283. If one of the parties to a suit over an obligation has a claim for damages against the other, the former may set it off by proving his right to said damages and the amount thereof.
Takes place by operation of law ARTICLE 1286
Art. 1286. Compensation takes place by operation of law, even though the debts may be payable at different places, but there shall be an indemnity for expenses of exchange or transportation to the place of payment.
(5) FACULTATIVE When it can be claimed by one of the parties who, however, has the right to object to it.
ARTICLE 1287
Compensation which can only be set up at the option of a creditor, when legal compensation cannot take place because some legal requisites in favor of the creditor are lacking. Creditor may renounce his right
Art. 1287. Compensation shall not be proper when one of the debts arises from a depositum or from the
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to compensation, and he himself may set it up. As opposed to conventional compensation, facultative compensation is unilateral and does not depend upon the agreement of the parties.
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Effects In General
If Original Obligation is Void Old Novation is void if obligation is the original extinguished obligation was and replaced void, except when by the new annulment may one be claimed only stipulated. by the debtor, or when ratification validates acts that are voidable [Art. 1298] 1. Original obligation is void: No novation 2. Original obligation voidable: Effective if contract is ratified before novation.
OBLIGATIONS NOT COMPENSABLE [ARTS. 1287-1288]
Compensation is prohibited in: (1) Contracts of depositum (2) Contracts of commodatum (3) Future support due by gratuitous title (4) Civil liability arising from a penal offense (5) Obligations due to the government (6) Damage caused to the partnership by a partner NOVATION, [ARTS. 1291-1304] Extinguishment of an obligation by the substitution or change of the obligation by a subsequent one which extinguishes or modifies the first either by changing the object or principal conditions, or by substituting the person of the debtor, or by subrogating a third person in the rights of the creditor. A juridical act of dual function—it extinguishes an obligation, and at the same time, it creates a new one in lieu of the old.
If New Obligation is Void New obligation is void, the old obligation subsists, unless the parties intended that the former relations shall be extinguished in any event [Art. 1297] 1. New obligation void: No novation 2. New obligation voidable: Novation is effective
Accessory obligations are also extinguished, but may subsist only insofar as they may benefit third persons who did not give their consent to the novation OR those who may be affected, upon agreement between the parties.
Requisites (1) A previous valid obligation (2) Agreement of all the parties to the new obligation (3) Extinguishment of the old obligation (4) Validity of the new obligation
Original or new obligation with suspensive or resolutory condition Art. 1299: If original obligation was subject to a suspensive or resolutory condition, the new obligation shall be under the same condition, unless it is otherwise stipulated.
Novation is not presumed. Express novation: Parties must expressly disclose their intent to extinguish the old obligation by creating a new one. Implied novation: No specific form is required. There must be incompatibility between the old and new obligation or contract.
Compatible Conditions (a) Fulfillment of both conditions: new obligation becomes demandable (b) Fulfillment of condition concerning the original obligation: old obligation is revived; new obligation loses force (c) Fulfillment of condition concerning the new obligation: no novation; requisite of a previous valid and effective obligation lacking
California Bus Line v. State Investment [2003]: In the absence of an unequivocal declaration of extinguishment of the pre-existing obligation, only proof of incompatibility between the old and new obligation would warrant a novation by implication. Test of Incompatibility Whether or not the old and new obligation can stand together, each one having an independent existence. No incompatibility exists when they can stand together. Hence, there is no novation. Incompatibility exists when they cannot stand together. Hence, there is novation.
Incompatible Conditions (a) Original obligation is extinguished, while new obligation exists (b) Demandability shall be subject to fulfillment/ nonfulfillment of the condition affecting it
Objective Novation (1) Change of the subject matter (2) Change of cause or consideration
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(3) Change of the principal conditions or terms
Conventional subrogation Debtor’s consent is necessary. Extinguishes an obligation and gives rise to a new one.
Subjective Novation (1) Substitution of the Debtor: Consent of creditor is an indispensable requirement both in expromision and delegacion. Expromision Initiative for change does not emanate from the debtor, and may even be made without his knowledge.
Delegacion Debtor (delegante) offers or initiates the change, and the creditor (delegatorio) accepts a third person (delegado) as consenting to the substitution. Requisites (1) Consent of the Consent of old debtor, creditor and the new new debtor, and creditor debtor (2) Knowledge or consent of the old debtor is not required Effects (1) Old debtor is (1) Insolvency of the new released debtor revives the (2) Insolvency of the new obligation of the old debtor does not debtor if it was revive the old anterior and public, obligation in case the and known to the old old debtor did not debtor. agree to expromision (2) New debtor can (3) If with knowledge demand and consent of old reimbursement of the debtor, new debtor entire amount he has can demand paid from the original reimbursement of the debtor. He may entire amount paid compel creditor to and with subrogation subrogate him to all of creditor’s rights. of his rights. (4) If without knowledge of the old debtor, new debtor can demand reimbursement only up to the extent that the latter has been benefited without subrogation of creditor’s rights.
Defects/vices in the old obligation are cured.
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Assignment of credit Debtor’s consent is not required. Refers to the same right which passes from one person to another, without modifying or extinguishing the obligation. Defects/vices in the old obligation are not cured.
(b) Legal subrogation: by operation of law Legal subrogation is not presumed, except in the following circumstances: (1) When creditor pays another creditor who is preferred, even without the debtor’s knowledge (2) When a third person not interested in the obligation pays with the express or tacit approval of the debtor (3) When, even without the knowledge of the debtor, a person interested in the fulfillment of the obligation pays, without prejudice to the effects of confusion as to the latter’s share Effects Total (1) Transfers to the person subrogated the credit with all the rights thereto appertaining, either against the debtor or third persons. (2) Obligation is not extinguished, even if the intention is to pay it. (3) Defenses against the old creditor are retained, unless waived by the debtor.
(2) Subrogation of a third person in the rights of the creditor (a) Conventional subrogation: by agreement of the parties; Requisites: the consent of the third person, and of the original parties (Art. 1301).
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Partial (1) A creditor, to whom partial payment has been made, may exercise his right for the remainder, and shall be preferred to the person subrogated in his place in virtue of the partial payment.
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Essential Requisites
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position to deliberate whether or not he would purchase the yacht and invitation to a proposal being made to him, which might be accepted by him or not”
ARTICLE 1318
Art. 1318. There is no contract unless the following requisites concur: (1) Consent of the contracting parties; (2) Object certain which is the subject matter of the contract; (3) Cause of the obligation which is established.
OFFER TERMINATES upon: (a) Rejection by the offeree (b) Incapacity (death, civil interdiction, insanity, or insolvency) of the offeror or offeree before acceptance is conveyed (c) Counter-offer (d) Lapse of the time stated in the offer without acceptance being conveyed (e) Revocation of the offer before learning of acceptance (f) Supervening illegality before acceptance [J.B.L. Reyes]
CONSENT (a) The meeting of the minds between the parties on the subject matter and the cause of the contract. (b) The manifestation of the meeting of the offer and the acceptance upon the thing and the cause which are to constitute the contract. Requisites of Consent: (1) It must be manifested by the concurrence of the offer and acceptance [Arts. 1319-1326]. (2) The contracting parties must possess the necessary legal capacity [Arts. 1327-1329]. (3) It must be intelligent, free, spontaneous, and real (not vitiated) [Arts. 1330-1346].
ACCEPTANCE
Requisites: (a) Unqualified and unconditional, i.e. it must conform with all the terms of the offer, otherwise it is a counter-offer (Art. 1319) (b) Communicated to the offeror and learned by him (Arts. 1319, 1322). If made through an agent, the offer is accepted from the time the acceptance is communicated to such agent. (c) Express/implied, but is not presumed.
CONCURRENCE OF OFFER AND ACCEPTANCE
Offer: a unilateral proposition which one party makes to the other for the celebration of the contract [Tolentino].
OPTION CONTRACT: A preparatory contract in which one party grants to the other, for a fixed period, the option to decide whether or not to enter into a principal contract [Art. 1324].
Requisites: (a) Definite (b) Intentional (c) Complete
With consideration
Invitation to make offers (advertisements) (a) Business advertisements of things for sale are NOT definite offers, just invitations to make an offer, UNLESS the contrary appears (Art. 1325). (b) Advertisements for bidders are invitations to make proposals, the advertiser is NOT bound to accept the lowest or highest bid; UNLESS the contrary appears. The bidder is the offeror (Art. 1326). (c) Statements of intention: no contract results even if accepted.
Without consideration
Offeror cannot Offeror may withdraw by unilaterally withdraw his communicating offer. withdrawal to the offeree before acceptance. LEGAL CAPACITY
Persons Incapacitated to Give Consent (a) Minors, UNLESS, the minor’s consent is operative in contracts: (1) For necessaries [Art.1427] (2) Where the minor actively misrepresents his age (estoppel) Mercado v. Espiritu, 1917: Minors held in estoppel through active misrepresentation. Bambalan v. Maramba, 1928: There is no estoppel if the minority was known by the other party. (b) Insane or demented persons, UNLESS they contract during a lucid interval. (c) Deaf-mutes who do not know how to read AND write.
Rosenstock v. Burke (1924): FACTS: Elser, in a letter, informed Burke that he was “in a position and is willing to entertain” the purchase of the yacht under some terms. HELD: “The word “entertain” applied to an act does not mean the resolution to perform said act, but simply a position to deliberate for deciding to perform or not to perform said act. It was merely a
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Disqualified to contract [art. 1329]: (a) Those under civil interdiction for transactions inter vivos [RPC Art. 34]. (b) Undischarged insolvents [Insolvency Law, Sec. 24]. (c) Husband and wife cannot donate to each other [Art. 123, FC], nor sell if the marriage is under ACP [Art.1490]. (d) The ff. cannot purchase [Art. 1491]: (1) The guardian: his ward’s property (2) The agent: the principal’s property (3) Executors and administrators: property under administration (4) Public officers-state: property under their administration (5) Justices, judges, prosecutors, clerks of court, lawyers: property attached in litigation.
Martinez v. HSBC (1910): The conveyance of several properties by the wife to her husband’s creditors, though reluctant, is still consent. She assented to the requirements of the defendants in order that the civil and criminal actions against them would be dropped. A contract is valid even though one of the parties entered into it against his wishes and desires, or even against his better judgment. (3) Violence Irresistible force used to extort consent (J.B.L. Reyes). (4) Undue Influence When a person takes improper advantage of his power over the will of another, depriving the latter of a reasonable freedom of choice [Art. 1337]. Circumstances: (a) Relationship of the parties (family, spiritual, confidential etc.) (b) That the person unduly influenced was suffering from infirmity (mental weakness, ignorance etc.) (Art.1337).
VICES OF CONSENT
(1) Mistake Inadvertent and excusable disregard of a circumstance material to the contract [J.B.L. Reyes]. In order that mistake may invalidate consent, it should refer to the substance of the thing which is the object of the contract, or to those conditions which have principally moved one or both parties to enter into the contract [Art.1331].
(5) Fraud When through insidious words or machinations of one of the contracting parties, the other is induced to enter into a contract which, without them, he would not have agreed to [Art. 1338].
Mistake which vitiates consent is an error of fact, and not an error of law. Ignorance of the law excuses no one from compliance therewith (Art. 3); but the modern tendency is to allow an excusable mistake of law to be invoked as vitiating consent (Tolentino). Mistake of Fact When one or both contracting parties believe that a fact exists when in reality it does not, or vice versa.
Mistake of Law When one or both parties arrive at an erroneous conclusion on the interpretation of a question of law or its legal effects.
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ARTICLE 1339
Art. 1339. Failure to disclose facts, when there is a duty to reveal them, as when the parties are bound by confidential relations, constitutes fraud.
Mutual Mistake (1) Must be as to the legal effect of an agreement (2) Must be mutual (3) Real purpose of the parties must have been frustrated
ARTICLE 1340
Art. 1340. The usual exaggerations in trade, when the other party had an opportunity to know the facts, are not in themselves fraudulent. ARTICLE 1341
Art. 1341. A mere expression of an opinion does not signify fraud, unless made by an expert and the other party has relied on the former's special knowledge, ARTICLE 1342
Art. 1342. Misrepresentation by a third person does not vitiate consent, unless, such misrepresentation has created substantial mistake and the same is mutual.
(2) Intimidation When one of the contracting parties is compelled by a reasonable and well-grounded fear of an imminent and grave evil upon his person or property, or upon the person or property of his spouse, descendants or ascendants, to give his consent [Art. 1335].
ARTICLE 1343
Art. 1343. Misrepresentation made in good faith is not fraudulent but may constitute error.
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SIMULATION OF CONTRACTS takes place when the parties do not really want the contract they have executed to produce the legal effects expressed by its wordings. It may be absolute or relative [Arts. 1345-1346].
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(b) Aleatory contract, where one of the contracting parties assumes the risk that the thing will never come into existence, e.g. insurance. CAUSE DEFINITION
Absolute Simulation No real transaction is intended. Fictitious contract. Void.
The essential and impelling reason why a party assumes an obligation (Manresa). Motive, on the other hand, is the particular reason for a contracting party which does not affect the other.
Relative Simulation Real transaction is hidden. Disguised contract. Bound as to hidden agreement, so long as it does not prejudice a third person and is not contrary to law, morals, good customs, public order or public policy.
REQUISITES:
1. Must exist at the time of the contract is entered into [Arts. 1352, 1409, par. 3]. 2. Must be lawful (ibid). 3. Must be true or real [Art.1353]. CAUSE IN
Onerous Contracts
OBJECT
Renumeratory Contracts
The undertaking The service or or the promise benefit which is of the thing or remunerated service by the other party
DEFINITION:
The subject matter; the thing, right or service which is the subject matter of the obligation arising from the contract [Tolentino]. REQUISITES:
Pure Beneficence Mere liberality of the benefactor
In Villaroel v. Estrada (1940), where a moral obligation is based upon a previous civil obligation, which has already been barred by the statute of limitations at the time the contract is entered into, it constitutes a sufficient cause or consideration to support a contract (natural obligation).
(a) Must be within the commerce of men [Art. 1347] (b) Must not be impossible, legally or physically
[Art.1348] (c) For things as object of contract, must be in
existence or capable of coming into existence [See Arts. 1461, 1493, 1495] (d) Must be determinate or determinable, without the need of a new contract between the parties [Arts. 1349, 1460, par.2]
BUT, In Fisher v. Robb (1939), if the moral obligation arises wholly from ethical consideration, it cannot constitute a sufficient cause to support an onerous contract, as when the promise is made on the erroneous belief that one was morally responsible for the failure of an enterprise (moral obligation).
All things or services may be the object of contracts, EXCEPT: (a) Things which are outside the commerce of men (b) Intransmissible rights (c) Future inheritance except in cases authorized by law (d) Impossible things or services (e) Objects which are indeterminable as to their kind, the genus should be expressed
Cause
Effect
Lack of Cause – If there is no cause absence or total lack whatsoever, contract is VOID; of cause a fictitious sale is VOID.
In order that a thing, right, or service, may be the object of a contract, it should be in existence at the moment of the celebration of the contract, or at least, it can exist subsequently or in the future.
NOTE: Cause must exist at the time of the perfection of the contract; it need not exist later.
A FUTURE THING may be the object of a contract, such contract may be interpreted as a: (a) Conditional contract, where 3its efficacy should depend upon the future existence of the thing.
Contrary to law, If cause is unlawful, morals, good transaction is VOID. customs, public policy
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Cause and public order
REAL Contracts which are perfected not merely by consent but by delivery, actual or constructive, of the object of the obligation [Art.1316]. Example: contract of pledge, commodatum, mutuum.
Effect If parts of a contract are illegal but the rest are supported by lawful cause, claimant of such has the burden of showing proof; otherwise, the whole contract is VOID.
FORMAL OR SOLEMN Contracts for which a special form is necessary for its perfection [Art. 1356].
Contract with illegal cause may still produce effect in certain cases where parties are not of equal guilt: (1) innocent party can’t be compelled to perform his obligation and he may recover what has already been given; (2) if both parties are guilty, neither can sue the other, the law leaving them as they are (in pari delicto).
DONATIONS (ARTS. 748-749) ARTICLE 748
Art. 748. The donation of a movable may be made orally or in writing. An oral donation requires the simultaneous delivery of the thing or of the document representing the right donated. If the value of the personal property donated exceeds five thousand pesos, the donation and the acceptance shall be made in writing, otherwise, the donation shall be void.
Falsity of cause – Contract with a false cause is cause is stated but is merely revocable/voidable. untrue Parties are given a chance to show that a cause really exists, and that said cause is true and lawful. Lesion or inadequacy of cause – cause is not proportionate to object
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ARTICLE 749
Art. 749. In order that the donation of an immovable may be valid, it must be made in a public document, specifying therein the property donated and the value of the charges which the donee must satisfy. The acceptance may be made in the same deed of donation or in a separate public document, but it shall not take effect unless it is done during the lifetime of the donor.
Inadequacy of cause shall not invalidate the contract except when: (1) there is fraud, mistake, undue influence (2) when parties intended a donation
If the acceptance is made in a separate instrument, the donor shall be notified thereof in an authentic form, and this step shall be noted in both instruments.
Liguez v. CA (1957): In making the donation in question, Lopez was not moved exclusively by the desire to benefit Liguez, but also to secure her cohabiting with him, so that he could gratify his sexual impulses. The donation was an onerous transaction and clearly predicated upon an illicit causa.
PARTNERSHIP WHERE REAL PROPERTY IS CONTRIBUTED (ARTS. 1771, 1773) ARTICLE 1771
Art. 1771. A partnership may be constituted in any form, except where immovable property or real rights are contributed thereto, in which case a public instrument shall be necessary.
Kinds of Contracts
ARTICLE 1773
Art. 1773. A contract of partnership is void, whenever immovable property is contributed thereto, if an inventory of said property is not made, signed by the parties, and attached to the public instrument.
CONSENSUAL Contracts which are perfected by mere consent of the parties regarding the subject matter and the cause of the contract [Art.1315].
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ANTICHRESIS (ART. 2134) ARTICLE 2134
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Formal/Solemn Contract
Special Form Required by Law P500 (Art. 748). (3) Partnerships where real Must be in public property contributed instrument; otherwise the contract of partnership is void (Art.1771, 1773). (4) Contracts of antichresis The principal loan and the interest, if any, must be specified in writing; otherwise, the contract of antichresis is void (Art. 2134). (5) Agency to sell real Authority of the agent property or any interest must be in writing; therein otherwise, the sale is null and void (Art.1874). (6) Stipulation to pay Must be expressly interest on loans, interest made in writing for the use of money (Art.1956).
Art. 2134. The amount of the principal and of the interest shall be specified in writing; otherwise, the contract of antichresis shall be void. AGENCY TO SELL REAL PROPERTY OR AN INTEREST THEREIN (ART. 1874) ARTICLE 1874
Art. 1874. When a sale of a piece of land or any interest therein is through an agent, the authority of the latter shall be in writing; otherwise, the sale shall be void. STIPULATION TO CHANGE INTEREST (ART. 1956) ARTICLE 1956
Art. 1956. No interest shall be due unless it has been expressly stipulated in writing. STIPULATION LIMITING COMMON CARRIER’S DUTY OF EXTRAORDINARY DILIGENCE TO ORDINARY DILIGENCE (ART. 1744) ARTICLE 1744
(7) Stipulation limiting common carrier’s duty of extraordinary diligence to ordinary diligence
Art. 1744. A stipulation between the common carrier and the shipper or owner limiting the liability of the former for the loss, destruction, or deterioration of the goods to a degree less than extraordinary diligence shall be valid, provided it be: (1) In writing, signed by the shipper or owner;
(8) Chattel mortgage
(2) Supported by a valuable consideration other than the service rendered by the common carrier; and
(9) Transfer of large cattle
(3) Reasonable, just and not contrary to public policy.
Must be (1) in writing, signed by the shipper or owner; (2) supported by a valuable consideration; and (3) reasonable, just and not contrary to public policy. Must be recorded in the Chattel Mortgage Register (Art. 2140). Requires transfer of the certificate of registration (Rev. Adm. Code, Sec. 523).
CHATTEL MORTGAGE ARTICLE 2140
Art. 2140. By a chattel mortgage, personal property is recorded in the Chattel Mortgage Register as a security for the performance of an obligation. If the movable, instead of being recorded, is delivered to the creditor or a third person, the contract is a pledge and not a chattel mortgage.
Formality STATUTORY BASIS ARTICLE 1356 Art. 1356. Contracts shall be obligatory, in whatever form they may have been entered into, provided all the essential requisites for their validity are present. However, when the law requires that a contract be in some form in order that it may be valid or enforceable, or that a contract be proved in a certain way, that requirement is absolute and indispensable. In such cases, the right of the parties stated in the following article cannot be exercised.
SALE OF LARGE CATTLE
Summary of Formal or Solemn Contracts Formal/Solemn Contract Special Form Required by Law (1) Donations of real Must be in a public property instrument (Art.749). (2) Donations of personal Must be in a written property contract if the donation exceeds
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GENERALLY, form is not required. It is enough that there be consent, subject matter and cause (Art.1318). EXCEPTIONS: (1) Formal contracts and (2) Real contracts
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The necessity for the public document in the contracts enumerated under this article is only for convenience, not for validity or enforceability. Fule v. Court of Appeals (1998): Article 1358, which requires the embodiment of certain contracts in a public instrument, is only for convenience, and registration of the instrument only adversely affects third parties.
When Form is Important: (a) For Validity – e.g. for formal or solemn contracts (b) For Enforceability – e.g. for agreements enumerated under the Statute of Frauds (Art.1403) (c) For Convenience – e.g. for contracts enumerated in Art. 1385
Defective Contracts
ARTICLE 1357
FOUR KINDS OF DEFECTIVE CONTRACTS (PARAS): (a) RESCISSIBLE: Valid until rescinded. All essential requisites of a contract exist but there is injury or damage to one of the parties or to third persons – external or extrinsic defect consisting of an economic damage or lesion. (b) VOIDABLE: Valid until annulled, unless ratified. Defect is more or less intrinsic, as in the case of vitiated consent. (c) UNENFORCEABLE: Cannot be sued upon or enforced, unless it is ratified. Intermediate ground between voidable and void contracts. (d) VOID: No legal effect at all and cannot be ratified or validated. RESCISSIBLE CONTRACTS (ART. 1381) ARTICLE 1381 Art. 1381. The following contracts are rescissible: Those which are entered into by guardians whenever the wards whom they represent suffer lesion by more than one-fourth of the value of the things which are the object thereof; Those agreed upon in representation of absentees, if the latter suffer the lesion stated in the preceding number; Those undertaken in fraud of creditors when the latter cannot in any other manner collect the claims due them; Those which refer to things under litigation if they have been entered into by the defendant without the knowledge and approval of the litigants or of competent judicial authority; All other contracts specially declared by law to be subject to rescission.
Art. 1357. If the law requires a document or other special form, as in the acts and contracts enumerated in the following article, the contracting parties may compel each other to observe that form, once the contract has been perfected. This right may be exercised simultaneously with the action upon the contract. (1279a) This article applies only when form is needed for convenience, not for validity or enforceability. Thus, before the contracting parties may be compelled to execute the needed form, it is essential that the contract be: (1) perfected or valid (Art.1357) and (2) enforceable under the Statute of Frauds (Art.1356). ARTICLE 1358
Art. 1358. The following must appear in a public document: (1) Acts and contracts which have for their object the creation, transmission, modification or extinguishment of real rights over immovable property; sales of real property or of an interest therein a governed by Articles 1403, No. 2, and 1405; (2) The cession, repudiation or renunciation of hereditary rights or of those of the conjugal partnership of gains; (3) The power to administer property, or any other power which has for its object an act appearing or which should appear in a public document, or should prejudice a third person; (4) The cession of actions or rights proceeding from an act appearing in a public document. All other contracts where the amount involved exceeds five hundred pesos must appear in writing, even a private one. But sales of goods, chattels or things in action are governed by Articles, 1403, No. 2 and 1405.
ARTICLE 1382
Art. 1382. Payments made in a state of insolvency for obligations to whose fulfillment the debtor could not be compelled at the time they were effected, are also rescissible.
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Definition (1) Process designated to render inefficacious a contract validly entered into and normally binding, by reason of external conditions, causing an economic prejudice to a party or to his creditors (Scaevola). (2) Remedy granted by law to the contracting parties and to third persons in order to secure reparation for damages caused them by a contract, even if the contract is valid, by means of the restoration of things to their condition prior to the celebration of said contract (Manresa) (3) Relief to protect one of the parties or a third person from all injury and damages which the contract may cause, to protect some preferential right [Aquino v. Tañedo (1919)]. DIFFERENCE FROM RESCISSION ART. 1191 ARTICLE 1191
Art. 1191 – Rescission or Resolution damages for the breach is purely secondary.
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Art. 1381 – Rescission by reason of lesion subordinated to the existence of an economic prejudice. Hence, where the defendant makes good the damages caused, the action cannot be maintained or continued.
VOIDABLE CONTRACTS ARTICLE 1390 Art. 1390. The following contracts are voidable or annullable, even though there may have been no damage to the contracting parties: (1) Those where one of the parties is incapable of giving consent to a contract; (2) Those where the consent is vitiated by mistake, violence, intimidation, undue influence or fraud.
(RESOLUTION) UNDER
Art. 1191. The power to rescind obligations is implied in reciprocal ones, in case one of the obligors should not comply with what is incumbent upon him.
These contracts are binding, unless they are annulled by a proper action in court. They are susceptible of ratification.
The injured party may choose between the fulfillment and the rescission of the obligation, with the payment of damages in either case. He may also seek rescission, even after he has chosen fulfillment, if the latter should become impossible.
Three Ways or Modes of Convalidating a Voidable Contract [Jurado] (1) By prescription of the action for annulment (Art.1391) (2) By ratification or confirmation (Art. 1392-1396) (3) By loss of the thing which is the object of the contract through the fraud or fault of the person who is entitled to institute the action for the annulment (Art.1401)
The court shall decree the rescission claimed, unless there be just cause authorizing the fixing of a period. This is understood to be without prejudice to the rights of third persons who have acquired the thing, in accordance with Articles 1385 and 1388 and the Mortgage Law.
ARTICLE 1391
Art. 1391. The action for annulment shall be brought within four years.
Congregation of the Religious Virgin Mary v. Orola (2008): Art. 1191 – Rescission or Art. 1381 – Rescission by Resolution reason of lesion Applies only to Does not apply to reciprocal obligations, reciprocal obligation, and such that a party’s therefore, action is not breach thereof partakes based on a breach of an of a tacit resolutory obligation. condition which entitles the injured party to rescission. Predicated on breach of Predicated on injury to faith. economic interests of the party plaintiff/lesion. Principal action that is Subsidiary action. retaliatory in character. The reparation of The cause of action is
This period shall begin: In cases of intimidation, violence or undue influence, from the time the defect of the consent ceases. In case of mistake or fraud, from the time of the discovery of the same. And when the action refers to contracts entered into by minors or other incapacitated persons, from the time the guardianship ceases. UNENFORCEABLE CONTRACTS ARTICLE 1403 Art. 1403. The following contracts are unenforceable, unless they are ratified:
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General Rules of Application of Statute of Frauds (a) The Statute of Frauds is a Rule of Exclusion, i.e. oral evidence might be relevant to the agreements enumerated therein and might therefore be admissible were it not for the fact that the law excludes said oral evidence. (b) The defense of the Statute of Frauds may be waived [Art.1405]. (c) Applies only to executory contracts, not partially or completely executed (consummated) contracts. (d) The Statute of Frauds cannot apply if the action is neither for damages because of the violation of an agreement nor for the specific performance of said agreement [Lim vs. Lim, 10 Phil 635]. (e) The Statute of Frauds is exclusive, that is, it applies only to the agreements or contracts enumerated therein [See Quintos v. Morata (1930)]. (f) The Statute of Frauds is a personal defense, that is, a contract infringing it cannot be assailed by third persons [Art.1408]. (g) Contracts infringing the Statute of Frauds are not void, they are merely unenforceable [Art.1403]. (h) The Statute of Frauds does not determine the credibility or weight of evidence. It merely concerns itself with the admissibility thereof. (i) The Statute of Frauds does not apply if it is claimed that the contract does not express the true agreement of the parties. As long as the true or real agreement is not covered by the Statute of Frauds, it is provable by oral evidence [Cayuga v. Santos].
(1) Those entered into in the name of another person by one who has been given no authority or legal representation, or who has acted beyond his powers; (2) Those that do not comply with the Statute of Frauds as set forth in this number. In the following cases an agreement hereafter made shall be unenforceable by action, unless the same, or some note or memorandum, thereof, be in writing, and subscribed by the party charged, or by his agent; evidence, therefore, of the agreement cannot be received without the writing, or a secondary evidence of its contents: (a) An agreement that by its terms is not to be performed within a year from the making thereof; (b) A special promise to answer for the debt, default, or miscarriage of another; (c) An agreement made in consideration of marriage, other than a mutual promise to marry; (d) An agreement for the sale of goods, chattels or things in action, at a price not less than five hundred pesos, unless the buyer accept and receive part of such goods and chattels, or the evidences, or some of them, of such things in action or pay at the time some part of the purchase money; but when a sale is made by auction and entry is made by the auctioneer in his sales book, at the time of the sale, of the amount and kind of property sold, terms of sale, price, names of the purchasers and person on whose account the sale is made, it is a sufficient memorandum; (e) An agreement of the leasing for a longer period than one year, or for the sale of real property or of an interest therein; (f) A representation as to the credit of a third person. (3) Those where both parties are incapable of giving consent to a contract.
VOID CONTRACTS ARTICLE 1409 Art. 1409. The following contracts are inexistent and void from the beginning: Those whose cause, object or purpose is contrary to law, morals, good customs, public order or public policy; Those which are absolutely simulated or fictitious; Those whose cause or object did not exist at the time of the transaction; Those whose object is outside the commerce of men; Those which contemplate an impossible service; Those where the intention of the parties relative to the principal object of the contract cannot be ascertained; Those expressly prohibited or declared void by law. These contracts cannot be ratified. Neither can the right to set up the defense of illegality be waived.
Definition of Unenforceable Contracts Those that cannot be enforced in court or sued upon by reason of certain defects provided by law until and unless they are ratified according to law [De Leon]. Kinds of Unenforceable Contracts: (1) Unauthorized contracts – those entered into by one who has no authority or legal representation or who has acted beyond his powers [Art.1403, par.1]. (2) Those which did not comply with the Statute of Frauds [Art.1403, par.2]. (3) Those where both parties are incapable of giving consent to a contract [Art.1403, par.3].
Definition of Void Contract [De Leon] Those which, because of certain defects, generally produce no effect at all. They are considered as
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inexistent from its inception or from the very beginning.
ARTICLE 1346
Art. 1346. An absolutely simulated or fictitious contract is void. A relative simulation, when it does not prejudice a third person and is not intended for any purpose contrary to law, morals, good customs, public order or public policy binds the parties to their real agreement.
Special Classification of Void Contracts (Paras) (1)INEXISTENT CONTRACTS: like those where essential formalities are not complied with (a) Example: A donation of land in a private instrument (b) This produces no effect whatsoever.
Effect of Simulated Contract (a) If ABSOLUTELY simulated, the contract is void for utter lack of consent. (b) If RELATIVELY simulated, the hidden or intended contract is generally binding (Onglengco v. Ozaeta).
(2) ILLEGAL OR ILLICIT CONTRACTS: (a) Example: A donation made because of an immoral condition, such as illicit sexual intercourse (b) In some way, the donation produces some effect in that that he who gave the donation cannot get back what he has given.
Stipulations must not be contrary to MANDATORY AND PROHIBITIVE LAWS. (1) Pactum commissorium [Arts. 2088, 2130, 1390] A stipulation in a contract of mortgage or pledge which provides that the mortgagee will automatically own the property mortgaged in case the mortgagor fails to pay the loan is VOID [Art. 2088] (2) Pactum de non alienando [Art. 2130] A stipulation forbidding the owner from alienating the immovable mortgaged shall be VOID [Art.2130]. (3) Pactum leonina [Art. 1799] A stipulation which excludes one or more partners from any share in the profits or losses is VOID [Art.1799]
Non-Existing Cause or Object [Paras] Paragraph 3 speaks of contracts “whose object or cause did not exist at the time of the transaction.” This is not exactly correct because there can be valid contracts involving future property; example, sale of future or after-acquired property. Thus, Mr. Justice J. B. L. Reyes notes: “Did not exist at the time of the transaction” should be “Could not come into existence because the object may legally be a future thing.”
Rescissible Damage to a party or to a third person.
Valid until rescinded. 1381 – 1382 Necessary. Can’t be ratified. Prescriptible. Assailable by a party or by a third party who is damaged.
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Voidable
Unenforceable Void Defect Vitiation of Without or in excess of Absolute lack of essential consent authority, or doesn’t requisite in fact or in law. comply with Statute of Fraud, or both parties are incapacitated. Effect Valid until Cannot be enforced by Does not produce any annulled. court action. effect. Grounds 1390 1403 1409 Necessity of Damage Not necessary. Ratification May be ratified. Can’t be ratified. Prescription Imprescriptible. Assailability by third persons Assailable only by a party. Assailable by a party or by a third party who is damaged.
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Effects of Contracts STATUTORY BASIS ARTICLE 1311 Art. 1311. Contracts take effect only between the parties, their assigns and heirs, except in case where the rights and obligations arising from the contract are not transmissible by their nature, or by stipulation or by provision of law. The heir is not liable beyond the value of the property he received from the decedent. If a contract should contain some stipulation in favor of a third person, he may demand its fulfillment provided he communicated his acceptance to the obligor before its revocation. A mere incidental benefit or interest of a person is not sufficient. The contracting parties must have clearly and deliberately conferred a favor upon a third person. GENERAL RULE: Contracts are generally effective only between the parties, their assigns and their heirs (principle of relativity). EXCEPTIONS (a) Obligations arising from the contract are not transmissible by nature, stipulation or law [Art.1311]. (b) Where there is a stipulation pour autrui. STIPULATION POUR AUTRUI (definition): stipulation in favor of a third person conferring clear and deliberate favor which is merely art of the contract entered into by parties, neither of whom acted as agent of third person. (c) Third person induces another to violate his contract (Art. 1314). (d) Where third persons may be adversely affected by a contract where they did not participate [see Arts. 1312, 2150, 2151]. (e) Where law authorizes creditor to sue on a contract entered into by his debtor [accion directa, Art. 1313]
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Introduction
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(1) Specific or Determinate Thing – capable of particular designation, e.g. this car, the car with plate no. XNY 200 (2) Generic or Indeterminate Thing – refers only to a class, to a genus, and cannot be pointed out with particularity, e.g. a car (GENUS NUNQUAM PERIT)
DEFINITION OF SALES – ARTS. 1458, 1470 Art. 1458. By the contract of sale one of the contracting parties obligates himself to transfer the ownership and to deliver a determinate thing, and the other to pay therefor a price certain in money or its equivalent.
NATURE OF OBLIGATIONS CREATED PER DEFINITION IN
ART.1458 [VILLANUEVA]:
(1) For the SELLER: (a) To transfer ownership and (b) To deliver possession of the subject matter (2) For the BUYER: To pay the price
A contract of sale may be absolute or conditional. ESSENTIAL REQUISITES OF A CONTRACT OF SALE – ART. 1505 ESSENTIAL ELEMENTS OF A VALID CONTRACT OF SALE
[CORONEL V. COURT OF APPEALS, 1996]: (4) Consent or meeting of the minds to transfer ownership in exchange for the price (a) Being a consensual contract, the contract of sale is perfected at the moment there is a “meeting of the minds” upon the thing which is the object of the contract and upon the price. [Art. 1475] (b) Requisites: (1) Capacity, (2) Offer and acceptance, and (3) No vitiation of consent (5) Determinate subject matter (6) Price certain in money or its equivalent
CHARACTERISTICS OF A CONTRACT OF SALE (1) Consensual – perfected by mere consent. (2) Bilateral and Reciprocal – imposes obligations on both parties to the relationship. Consequently, power to rescind is implied. (3) Principal – can stand on its own and does not depend on another contract for validity, as contrasted from an accessory contract. (4) Onerous – imposes valuable consideration as prestation, as distinguished from a gratuitous contract. (5) Commutative – because a thing for value is exchanged for equal value, as contrasted from an aleatory contract. (6) Nominate – given a particular name by law
STAGES OF CONTRACT OF SALE PHASES OF A SALE CONTRACT [VILLANUEVA]: (1) Preparation, conception or generation stage – period of negotiation and bargaining, ending at the moment of agreement of the parties. (2) Perfection or “birth” of the contract – moment when the parties come to agree on the terms of the contract; and (3) Consummation or “death” of the contract – process of fulfillment or performance of the terms agreed upon in the contract.
SALE IS TITLE AND NOT MODE Delivery or Tradition is the mode to transfer ownership and possession to the buyer. When a contract of sale is perfected, the seller is merely obligated to transfer ownership and to deliver the property. Transfer of ownership is effected only upon delivery.
OBLIGATIONS CREATED – ART. 1165 Art. 1165. When what is to be delivered is a determinate thing, the creditor, in addition to the right granted him by Article 1170, may compel the debtor to make the delivery.
Equatorial Realty Dev. v. Mayfair Theater (2001): Sale is merely title that creates the obligation on the part of the seller to transfer ownership and deliver possession, but on its own, sale is not a mode that transfers ownership.
If the thing is indeterminate or generic, he may ask that the obligation be complied with at the expense of the debtor.
SALE DISTINGUISHED FROM OTHER CONTRACTS DONATION
Sale
If the obligor delays, or has promised to deliver the same thing to two or more persons who do not have the same interest, he shall be responsible for any fortuitous event until he has effected the delivery.
Donation
Onerous Perfected consent
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mere
Must comply with the formalities required by law. [Art 745, CC]
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When the price of the contract of sale is simulated, the sale may be void but the act may be shown to have been in reality a donation or some other contract. [Art.1471, CC]
There is a novation of the contract of loan into a contract of sale when the creditor agrees to accept a thing in payment of the debt. Hence, if the thing given in payment turns out to belong to another, the creditor’s remedy should be governed by the law on sales, not loan. [Baviera]
BARTER
Sale Consideration is price in money or its equivalent
Barter Consideration another thing
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Bilateral promise to buy and sell [Asked in 80, 91] A promise to buy and sell a determinate thing for a price certain is reciprocally demandable. [Art 479, CC]
is
Barter is a contract where one of the parties binds himself to give one thing in consideration of the other’s promise to give another thing [Art.1638, CC]
Like a sale, the thing must be determinate and the price, certain.
If consideration consists partly in money and partly in another thing, the intention of the parties determines whether the contract is one of sale or barter: If manifest intention is not clear: Barter when the value of thing is more than the amount of money or its equivalent; otherwise, sale. [Art.1468]
CONTRACT OF SALE/CONTRACT TO SELL Contract of Sale Contract to sell Ownership is transferred upon delivery Non-payment is a resolutory condition
CONTRACT FOR A PIECE OF WORK
Sale Goods are manufactured or procured in the ordinary course of business For the general market, whether on hand or not
Contract for a Piece of Work Goods are manufactured for customer upon his special order For a specific customer
Conditional Contract of Sale Sale is already perfected A subsequent buyer is presumed to be a buyer in bad faith
The fact that the object were made by the seller only when customers placed their orders, does not alter the nature of the contract of sale, for it only accepted such orders as called for the employment of such materials as it ordinarily manufactured or was in a position habitually to manufacture such. [Celestino Co & Co vs. Collector, 1956]
Price is more freely agreed upon, fixed by the parties
No perfected sale yet A subsequent buyer is presumed to be a buyer in good faith
CAPACITY OF PARTIES – ARTS. 1489-1492 All persons who have capacity to enter into obligations may enter into a contract of sale [Art 1489, CC] KINDS OF INCAPACITY
DACION EN PAGO
No pre-existing debt Creates an obligation
Contract to sell
Parties to a Contract of Sale
When each product or system executed is always UNIQUE and could not mass-produce the product because of its very nature, such is a contract for a piece of work. [Commissioner vs. Engineering Equipment and Supply Co., 1975]
Sale
Ownership is only transferred upon full payment of price Full payment is a positive suspensive condition, hence nonpayment would not give rise to the obligation to transfer ownership
(1) Absolute incapacity (2) Relative incapacity (3) Specific incapacity/Special disqualifications
Dacion en pago Pre-existing debt Extinguishes the obligation (mode of payment) Price is value of the thing given
ABSOLUTE INCAPACITY – ARTS. 1327, 1397, 1399 (MIND-CI) [ART. 1327, CC] (1) Minors (2) Insane or Demented
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(3) Deaf-mutes who do not know how to write (4) Civil Interdiction (5) Judicially-declared Incompetents (Art. 39) (a) Prodigals (b) Imbeciles (c) Absence & presumption of death (d) Persons not of unsound mind but by reason of age, disease, weak mind, and other similar causes, cannot take care of themselves and manage their property without outside aid (Easy prey for deceit and exploitation)
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(5) Lawyers Cannot acquire or purchase property or rights in litigation in which they take part by virtue of their profession Rationale: Lawyers may have undue influence over client; greed may get the better of the sentiments of loyalty and disinterestedness. [Valencia v Cabanting, 1991] Prohibition is definite and permanent and cannot be cured by ratification. [Rubias v Batiller, 1973]
RELATIVE INCAPACITY: MARRIED PERSONS (1) HUSBAND AND WIFE [ART. 1490, CC] General Rule: Cannot sell property to each other Exceptions: (1) Separation of property in marriage settlement, OR (2) Judicial separation of property.
Exceptions: An assignment to a lawyer by his client of an interest in the property does not violate Art 1491, where: (1) A judgment has been rendered and has become final; and (2) In case of contingency fee arrangements: the interest of the lawyer may be annotated as an adverse claim on the property awarded to his client [Director of Lands v Ababa, 1979]
(2) ALIENAGE [ART. 39, CC] General Rule: Aliens are disqualified from purchasing or acquiring real property. Exception: If acquisition is through hereditary succession
(6) Justices, Judges, prosecuting attorneys, clerks and other officers and employees connected with the administration of justice Cannot acquire or purchase property or rights in litigation or levied upon on execution before the court within whose jurisdiction or territory they exercise their respective functions.
(3) TRUSTEESHIP [ART. 39] SPECIAL DISQUALIFICATIONS – ARTS. 1491-1492 SPECIFIC INCAPACITY/ SPECIAL DISQUALIFICATIONS (ART. 1491, CC) (AGE-PLJ) (1) Agents Cannot purchase or acquire property whose administration or sale was entrusted to them
Rationale: to prevent fraud and to surround their profession with prestige. Prohibition applies only on sales or assignment during the pendency of litigation involving the property. [Macariola v Asuncion, 1963]
Exception: Principal gives consent. (2) Guardian Cannot purchase property of person under his guardianship
Art 1492: The prohibitions in the two preceding articles (Arts. 1490, 1491) are applicable to sales in legal redemption, compromises and renunciations.
Rationale: Guardianship is a trust of the highest order, and the trustee cannot be allowed to have any inducement or neglect his ward’s interest. [Phil Trust Co v Roldan, 1956]
EFFECTS OF INCAPACITY (1) Absolute Incapacity (a) If both parties are incapacitated: UNENFORCABLE [Art. 1403 (3)] (b) If only 1 party is incapacitated: VOIDABLE (c) If necessaries are sold and delivered to an incapacitated person: pay a reasonable price therefor. [Art 1489, CC] “Necessaries” – those which are indispensable for sustenance, dwelling, clothing, medical attendance, education and transportation. [Art 194, Family Code]
(3) Executors and Administrators Cannot acquire or purchase property of estate under their administration (4) Public Officers and Employees Cannot acquire or purchase property of State/any of its subdivisions, GOCC or administration, the administration of which was entrusted to them. Includes judges and government experts who, in any manner whatsoever take part in the sale.
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(2) Relative Incapacity Sale between spouses is VOID. Rationale: (1) To protect 3rd persons who may have contracted with the spouse (2) To avoid undue advantage of the dominant spouse over the weaker spouse. (3) To avoid circumvention of the prohibition against donations between spouses. [Medina v CIR, 1961]
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(b) Church (c) Narcotics or dangerous drugs except upon prescription (RA 6425, the dangerous drugs act of 1972) (2) When right is not intransmissible [Art 1347, CC] Sale of future inheritance is void. [Art. 1347, CC]— The rights to succession are transmitted from the moment of the death of the decedent [Art. 777, CC]. Thus, one cannot sell or promise to sell what he expects to inherit from a living person. [Rivero v. Serrano, 1950]
Such prohibition shall likewise apply to common law spouses. [Calimlim-Canulas v Fortun, 1984] BUT if already sold to a third person who relied on the title of his immediate seller, reconveyance to the seller spouse is no longer available [Cruz v CA, 1997]
When the subject matter is illicit, the contract of sale is void [Art. 1409 (7)] EXISTING, FUTURE, CONTINGENT
The goods which form the subject of a contract of sale may either be— (1) EXISTING goods owned or possessed by the seller; (2) Goods to be manufactured, raised, OR acquired by the seller – “FUTURE GOODS”; (3) Goods whose acquisition by the seller depends upon a CONTINGENCY which may or may not happen. [Art 1462, CC] (4) Things having POTENTIAL existence may be the object of a contract of sale. [Art 1461, CC]
(3) Specific Incapacity/ Special Disqualifications Contracts expressly prohibited by law are void and cannot be ratified. Neither can the right to set-up the defense of illegality be waived. [Art. 1409 (7), CC] Sales entered into by guardians, administrators, and agents (specific incapacities) in violation of Art. 1491 may be ratified by means of and in the form of a new contract when the cause of nullity has ceased to exist. Ratification is valid only from date of execution of the new contract and does not retroact.
Sale of MERE hope or expectancy Valid BUT subject to condition that the thing will come into existence
Those entered into by public officers/employees, justices and judges, and lawyers in violation of Art. 1491 are inexistent and void from the beginning. [Rubias v Batiller, 1973].
Example: “Next catch” of a fisherman. Valid BUT subject to condition that the thing will come into existence
Subject Matter
Example: “Next catch” of a fisherman.
REQUISITES OF A VALID SUBJECT MATTER –
ARTS. 1459-1465
(1) Licit (2) Existing, Future, Contingent (3) Determinate or determinable MUST BE LICIT [ART. 1459]
The thing is licit when— (1) Within the commerce of man [Art 1347, CC] Example of properties that are not within the commerce of man: (a) Those belonging to the State or its political subdivisions intended for public use or public service. (Art 420, CC).
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Sale of VAIN hope or expectancy Void Example: Sale of a falsified raffle ticket which will never win. Void Example: Sale of a falsified raffle ticket which will never win.
Emptio Rei Speratei
Emptio Spei
Valid Contract is dependent upon the existence of the thing (a) If the thing does not come into existence: contract is considered as not made and there is no obligation to pay the price
Void Parties intend the contract to exist at all events (a) Buyer will have to pay the price even if the thing does not actually come into existence
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(4) Things Subject to Resolutory Condition Sale of things subject to a resolutory condition may be the object of a contract of sale. [Art 1465, CC]
Emptio Spei
In case of doubt, the presumption is in favor of emptio rei speratae since it is more in keeping with the commutative character of the contract.
Examples: (a) things acquired under legal or conventional right of redemption; or (b) subject to reserva troncal,
DETERMINATE OR DETERMINABLE
A thing is DETERMINATE when it is particularly designated or physically segregated from all others of the same class. [Art 1460, CC]
(5) Quantity of Subject Matter not determinate The fact that the quantity is not determinate shall not be an obstacle to the existence of the contract provided it is possible to determine the same, without the need of a new contract between the parties. [Art. 1349, CC]
A thing is DETERMINABLE when it is capable of being made determinate at the time the contract was entered into without the necessity of a new or further agreement between the parties. [Art 1460, CC] Failure to state the exact location of the land does not make the subject matter indeterminate, so long as it can be located. [Camacho v CA, 2007] The fact that the exact area of the land specified in the contract of sale is subject to the result of a survey does not render the subject matter indeterminate. [Heirs of Juan San Andres v. Rodriguez, 2000]
Obligations of the Seller to Transfer Ownership
PARTICULAR KINDS (1) Future Goods Sale of future goods or those goods which are to be manufactured, raised, or acquired by seller after the perfection of the sale is valid (Art 1462, CC). “Future goods” are those capable of future existence.
SALE BY A PERSON NOT THE OWNER AT TIME OF DELIVERY – ARTS. 1462, 1505, 1459 General Rule: Ownership is not acquired by the buyer. One cannot give what one does not have. NEMO DAT QUOD NON HABET [Art 1505, CC] Exceptions: (RE-ROM) (1) Seller has a Right to transfer ownership (a) Seller need not be the owner of the thing at the time of perfection of the contract. It is sufficient that seller has a right to transfer ownership thereof at the time it is delivered. [Art. 1459] (b) One who sells something he does not own yet is bound by the sale when he acquires the thing later [Bucton vs Gabar, 1974]
(2) Sale of Undivided Interest or Share (a) Sole owner of a thing may sell an undivided interest therein. [Art 1463, CC] e.g.: a fraction (½) or percentage (50%), or “my share in the property.” (b) The sale of an undivided share in a specific mass of fungible goods makes the buyer a coowner of the entire mass in proportion to the amount he bought. [Art 1464,CC] (c) Co-owner cannot sell more than his share [Yturralde v CA, 1972]
(2) Estoppel: Owner is, by his conduct, precluded from denying the seller’s authority to sell. [Art. 1434]
(3) Sale of Things in Litigation (a) Sale of things under litigation entered into by defendant, without the approval of the litigants or the court is rescissible. [Art 1381 (4)] (b) NO RESCISSION where the thing is legally in the possession of 3rd persons who did not act in bad faith [Art 1385 (2)]
(3) Registered land bought in good faith (a) General rule: Buyer need not go beyond the Torrens title (b) Exception: When he has actual knowledge of facts and circumstances that would impel a reasonably cautious man to make further inquiry (4) Order of courts; Statutory Sale
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(a) In execution sale, the buyer merely steps into the shoes of the judgment debtor [Rule 39, sec. 33, ROC]
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When buyer has an intention to pay and the seller has an expectation to receive the price (a) If simulated: Sale is VOID; BUT act may be shown to have been a donation or some other act or contract. [Art 1471, CC] (b) An admission of non-payment of any centavo in exchange of a property in a contract of sale renders the sale VOID. [Labagala vs. Santiago, 2001] (c) If Price is false – when the real consideration is not the price stated in the contract: i. Sale is void ii. UNLESS proved to be founded on another true and lawful price [Art 1353, CC]
(5) When goods are purchased in Merchant’s store, Fair, or Market [Art 1505, CC] (a) The policy of the law has always been that where the rights and interest of the vendor clash with that of an innocent buyer for value, the latter must be protected. [Sun Brothers and Co. vs. Velasco, 1958] SALE BY A PERSON HAVING A VOIDABLE TITLE – ARTS. 1506, 559 (1) True owner may recover the thing when the ff. requisites concur: (a) Subject matter is movable (b) Owner has either lost the thing or has been unlawfully deprived. [Art 559, CC]
HOW PRICE IS DETERMINED (1) Fixed by agreement of the parties (a) Fixing of price cannot be left to the discretion of one of the parties (b) BUT if such is accepted by the other, sale is perfected. [Art 1473, CC] (2) Determination is left to the judgment of a specified person (a) If unable or unwilling: Sale is inefficacious UNLESS parties subsequently agree about the price. (b) If in bad faith/by mistake: Courts may fix price (c) If 3rd person is prevented from fixing price by fault of seller or buyer: Innocent party may avail of remedies. (3) The price is made in reference to another thing, or when the price fixed is the price of the commodity on a definite day, or in a particular exchange or market, OR when the amount fixed is above or below the price on such day, exchange or market. [Art 1472, CC]
(2) Reimbursement is necessary before owner can recover when: (a) Buyer acted in good faith (b) Acquired at a public auction [Art 559, CC] (3) Recovery no longer possible when: (a) Buyer in good faith (b) Acquired it at a merchant’s store, fair or market. [Art 1506, CC]
Price MEANING OF PRICE – ARTS. 1469-1474 Price signifies the sum stipulated as the equivalent of the thing sold and also every incident taken into consideration for the fixing of the price put to the debit of the buyer and agreed to by him [Inchausti v. Cromwell, 1911]
INADEQUACY OF PRICE – ARTS. 1355, 1470 General Rule: Does not affect a contract of sale. [Art. 1470, CC] The stipulation in a contract of sale which states that the consideration is “P1 and other valuable considerations” does not make the contract void. Gross inadequacy of price does not affect the contract of sale except that it may indicate a defect in consent. [Bagnas v. C.A., 1989]
REQUISITES FOR A VALID PRICE (Ce-MoRe) (1) Certain or ascertainable at the time of perfection (2) In Money or its equivalent (a) Example of “equivalent”: Letters of credit (b) If price is partly in money and partly in another thing: Determine manifest intention of the parties to see whether it was barter or sale. [Art 1468,CC] (c) If intention does not clearly appear, it shall be considered a barter if the value of the thing exceed the amount of money or its equivalent. [Art 1468,CC] (3) Real
Exceptions: (1) It may indicate a defect in consent such as fraud, mistake, or undue influence (2) It may indicate that the contract was in reality a donation or some other act or contract (3) Inadequacy would make the contract of sale rescissible where a contract was entered into by the guardian of a ward or a representative of an absentee, without the court’s approval, and the
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owner suffers lesion by more than ¼ of the value of the thing sold. [Art 1381 (1) (2), CC]
(a) The contract of sale is perfected at the moment there is meeting of the minds upon the thing which is the object of the contract and upon the price. [Art. 1475, par.1, CC] (b) From that moment, the parties may reciprocally demand performance, subject to the provisions of law governing the form of contracts. [Art. 1475, par. 2, CC] (c) A private instrument signed by the defendant reciting that he bought from the plaintiff a property at a specific address for a specific price to be paid as soon as a bill of sale is signed is not a mere draft but a perfected agreement and hence, obligatory, even if there was no statement as to area or price per meter. [Goyena v. Tambunting, 1902] General Rule: Offer may be withdrawn at any time without even communicating such withdrawal to the interested buyer.
WHEN NO PRICE AGREED – ART. 1474 (1) Sale is inefficacious [Art. 1474, CC] (2) But if the thing or part thereof has been delivered and appropriated by the buyer, he must pay a reasonable price therefor. (a) What is a reasonable price is a question of fact dependent on the circumstances of each particular case. [Art 1474, CC] (b) The reasonableness of a price may be determined on the basis of a company’s balance sheet showing the book value or fair market value of its shares. [Philippine Free Press vs. CA, 2005] MANNER OF PAYMENT MUST BE AGREED UPON Disagreement on the manner of payment is tantamount to a failure to agree on the price. [Toyota Shaw vs. CA, 1995]
Exception: When the offerer has allowed the offeree a certain period to accept, the offer may be withdrawn at any time before acceptance by communicating such withdrawal. [Art 1324, CC]
EARNEST MONEY VS. OPTION MONEY – ART.
1482
Earnest Money Definition: paid in advance of the purchase price agreed upon by the parties in a contract of sale, given by the buyer to the seller, to bind the latter to the bargain. [Asked in 93, 02]
Exception to the exception: Cannot be withdrawn within a certain period if offer is founded upon a consideration. [Art 1324 and 1479, CC]
Option Money vs. Earnest Money [Limson vs. CA, 2001] Option Money Earnest Money Separate and distinct consideration from the purchase price Given when sale is not yet perfected When given, the wouldbe-buyer is not required to buy, but may even forfeit it depending on the terms of the option Grantee of option is still undecided whether or not to buy or sell the property [Baviera]
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(2) OPTION CONTRACT – ARTS. 1479, 1324 (a) Definition i. An accepted unilateral promise to buy or sell supported by a consideration distinct from the price (Art 1479, CC) ii. An option contract is a privilege existing in one person, for which he had paid a consideration, which gives him the right to buy, for example, certain merchandise or certain specified property, if he chooses, at any time within the agreed period, at a fixed price. [De la Cavada vs. Diaz, 1918] iii. An option is not of itself a purchase, but merely secures the privilege to buy. iv. A consideration for an optional contract is just as important as the consideration for any other kind of contract. If there was no consideration for the option, then it cannot be enforced any more than any other contract where no consideration exists. [Baviera]
Part of purchase price [Art 1482, CC] Given only when there is already a sale When given, the buyer is bound to pay the balance Buyer manifests his earnest desire to buy the property
Formation of Contract of Sale
(b) Difference from Sale Sale
PREPARATORY – ART. 1479 (1) OFFER – ART. 1475 In General:
Bilateral
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Option Contract Unilateral: gives a right to buy or to sell, but imposes no obligation
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Option Contract
on the part of the option-holder, aside from the consideration for the offer Sale of right to purchase
buy or sell
only a right to match the 1st offer to buy should the grantor decide to sell
The promise made by one party is the consideration for the promise made by the other. [Baviera]
As to enforceability If the right to the first offer is embodied in the contract, it should be executed according to the terms stipulated. The right should be enforced according to the law on contracts and not on the panoramic and indefinite rule on human relations. This juridical relation is not amorphous nor is it merely preparatory. [Equatorial Realty Development vs. Mayfair, 1996]
PERFECTION – ARTS. 1475, 1319, 1325, 1326 WHEN PERFECTED
(1) Contract of sale is a consensual contract, hence perfected at the moment of the meeting of the minds of the parties as to the object of the contract and the price. [Art 1475,CC] (2) It is the proof of all the essential elements of the contract of sale, and not the mere giving of earnest money, which establishes the existence of a perfected sale. [Platinum Plans Phils. vs. Cucueco, 2006]
When the grantee fails to exercise the right Only after the grantee fails to exercise its right of 1st priority under the same terms and conditions within the period agreed upon, could the grantor validly offer to sell the property to a 3rd person under the same terms as offered to the grantee. [Paranaque Kings vs. CA, 1997]
EFFECT OF PERFECTION
From the moment of the perfection of the contract of sale, the parties may reciprocally demand performance, subject to the provisions of the Statute of Frauds. [Art 1475, CC]
As to the effects of the violation of the right (a) A sale made in violation of a right of first refusal is valid but rescissible, and may be the subject of an action for specific performance. [Rosencor Devt. Corp. Vs. Inquing, 2001] (b) However, before the sale to the 3rd person may be rescinded, he must have been actually or constructively aware of the right of 1st refusal at the time he bought it. (c) The sanction for the enforcement of the right of first refusal against third persons is based on Art. 19 of NCC, as no real right was created on the property.
FORM AND OFFER
(a) Offer must be certain as to the object and price [Art. 1319, CC] (b) Business advertisements of things for sale are not offers but mere invitations to make an offer Exception: If otherwise provided [Art. 1325, CC] (c) Advertisements for bidders are simply invitations to make proposals (Asked in 80) Advertiser is not bound to accept the highest or lowest bid. Exception: Unless the contrary appears [Art. 1326, CC]
st
Right of 1 Refusal
Bilateral Price and other terms of payment are certain
Unilateral Price and other terms are yet to be agreed upon The thing to be sold must be determinate
FORMALITIES OF THE CONTRACT – ART. 1403
(D) (E)
General rule: No form required as to validity since sale is perfected by consent of the parties.
Distinction from Option Contract st Option Contract Right of 1 Refusal Separate consideration is necessary Grantee has the right to
st
Right of 1 Refusal
(4) MUTUAL PROMISE TO BUY AND SELL – ART. 1479 A promise to buy and sell a determinate thing for a price certain is reciprocally demandable. [Art 1479]
(3) RIGHT OF FIRST REFUSAL
Difference from Sale Sale
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The sale may be [Art.1483, CC]: (1) Written (2) Oral (3) Partly written and partly oral
No need for a separate consideration No right to buy or sell,
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(4) Inferred from the conduct of the parties
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Where to Deliver (1) A hierarchy is followed (STOR): (a) Stipulation (b) Usage of trade (c) Seller’s place of business (office) (d) Seller’s residence
Exceptions: (1) Statute of Frauds [Art,1403 (2),CC] (a) Contract or some memorandum thereof must be in writing and subscribed by the party or his agent, otherwise contract is unenforceable; unless ratified by failure to object to oral evidence or acceptance of benefits under the contract (b) Statute of Frauds covers: i. Sale of goods, chattels, or things in action at a price not less than P500 ii. Sale not to be performed within 1 year iii. Sale of real property or an interest therein [Art 1358, CC] (c) Applies only to executory contracts, not to contracts either totally or partially performed. [Iñigo v. Estate of Maloto, 1967]
(2) In case of specific goods, which the parties knew to be at some other place when the contract was perfected, that place is the place of delivery (3) If goods are at the time of sale possessed by a third person, then there is no delivery until he acknowledges to the buyer that he holds the goods for the buyer. When to Deliver Absent a stipulation as to time, delivery must be made within a reasonable time; demand or tender of delivery shall be made at a reasonable hour.
(2) Sale of realty by an agent Agent’s authority must be in writing, otherwise the sale is void [Art.1874, CC]
WHEN DELIVERY DOES NOT TRANSFER TITLE (1) SALE ON APPROVAL, TRIAL, OR SATISFACTION General Rule: Title remains with the seller
(3) Sale of large cattle To be valid, transfer of large cattle must be registered with the municipal treasurer [Sec. 529, Revised Administrative Code]
Exceptions: (a) Buyer signifies his approval or acceptance to the seller or does any other act adopting the transaction (b) Retains the goods without giving notice of rejection after the time fixed has expired; if no time has been fixed, after the expiration of a reasonable time [Art 1502, CC]
Transfer of Ownership
Difference between Sale on Approval and Sale on Return Sale on Approval Sale on Return
MANNER OF TRANSFER – ARTS. 1477, 1496-1501 Obligation to transfer ownership and to deliver is implied in every contract of sale [Arts. 1458-1459]
Ownership does not pass upon delivery
Transfer of ownership requires delivery [Art. 1495] GENERAL CONCEPTS
Delivery comprises 2 obligations in Art. 1495: (1) Actual duty to deliver (2) Transfer of ownership – can only accomplished via delivery
be
Depends on the character or quality of goods Subject to a suspensive condition Risk of loss remains with the seller
What to Deliver (1) Thing sold [Art. 1495] (2) Fruits [Art. 1164 & 1537] (3) Accessions and accessories [Art. 1166 & 1537] (a) Improvements by seller at his expense grants him a usufructuary right. (b) No indemnification (c) But he may remove it to the extent that there is no damage [Art. 1538]
Ownership passes upon delivery, but buyer may revest ownership in the seller by returning or tendering the goods within the time fixed in the contract Depends on the will of the buyer Subject to a resolutory condition Risk of loss remains with the buyer
Express Reservation If it was stipulated that ownership in the thing shall not pass to the purchaser until he has fully paid the price [Art 1478, CC]
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the latter must be protected. [Sun Brothers and Co. vs. Velasco, 1958] Implied Reservation The following are instances when there is an implied reservation of ownership: (a) Goods are shipped, but by the bill of lading goods are deliverable to the seller or his agent, or to the order of the seller or his agent (b) Bill of lading is retained by the seller or his agent. (c) When the seller of the goods draws on the buyer for the price and transmits the bill of exchange and bill of lading to the buyer, and the latter does not honor the bill of exchange by returning the bill of lading to the seller.
(4) SALE BY PERSON HAVING A VOIDABLE TITLE (a) True owner may recover the thing when the ff. requisites concur: i. Subject matter is movable ii. Owner has either lost the thing or has been unlawfully deprived. [Art 559, CC] (b) Reimbursement is necessary before owner can recover when: i. Buyer acted in good faith ii. Acquired at a public auction [Art 559, CC] (c) Recovery no longer possible when: i. Buyer in good faith ii. Acquired it at a merchant’s store, fair or market. [Art 1506, CC]
(2) WHEN SALE NOT VALID eg. When the thing sold is a public property
KINDS OF DELIVERY (1) ACTUAL DELIVERY (a) When deemed made: when the thing sold is placed in the control and possession of the vendee [Art. 1497] (b) Not always essential to passing of title [Art. 1475] (c) Parties may agree when and on what conditions the ownership shall pass to the buyer [E.g.: Art 1478 where ownership will only pass after full payment of the price]
(3) WHEN SELLER IS NOT THE OWNER General Rule: Ownership is not acquired by the buyer. One cannot give what one does not have. [Art 1505, CC] Exceptions: (RE-ROM) (a) Seller has a Right to transfer ownership i. Seller need not be the owner of the thing at the time of perfection of the contract. It is sufficient that seller has a right to transfer ownership thereof at the time it is delivered. [Art. 1459] ii. One who sells something he does not own yet is bound by the sale when he acquires the thing later [Bucton vs Gabar, 1974]
(2) CONSTRUCTIVE DELIVERY (a) Execution of public instrument [Art 1498, par. 1] General rule: produces the same legal effects of actual delivery.
(b) Estoppel: Owner is, by his conduct, precluded from denying the seller’s authority to sell. [Art. 1434]
Exceptions: i. The intention of the parties is otherwise. ii. At the time of execution, the subject matter was not subject to the control of the seller which must subsist for a reasonable length of time after execution. [Pasagui v Villablanca, 1975] “Control” over thing sold must be such that seller is capable of physically transferring it to buyer
(c) Registered land bought in good faith i. General rule: Buyer need not go beyond the Torrens title iii. Exception: When he has actual knowledge of facts and circumstances that would impel a reasonably cautious man to make further inquiry
(b) Symbolic Delivery i. Delivery of keys of the place or depositary where the movable is stored or kept. [Art 1498, CC] ii. Unless otherwise agreed, when symbolic delivery has been made, the seller is not obliged to remove tenants to place the buyer in actual possession of the property as he has already complied with his obligation to transfer ownership of and deliver the thing sold. [Power Commercial
(d) Order of courts; Statutory Sale In execution sale, the buyer merely steps into the shoes of the judgment debtor [Rule 39, sec. 33, ROC] (e) When goods are purchased in Merchant’s store, Fair, or Market [Art 1505, CC] The policy of the law has always been that where the rights and interest of the vendor clash with that of an innocent buyer for value,
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and Industrial Corp. v. CA, 1997; Sabio v. The International Corporate Bank, Inc., 2001]
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(3) 2 or more buyers with conflicting interests at odds over the rightful ownership of the thing sold; (4) Same seller
(c) Tradition Longa Manu (Long Hand) i. Delivery of thing by mere agreement. ii. Example: Seller points to the property without actually transferring physical possession thereof. iii. When an employer assigned all its rights and title to all surplus property salvaged by the contractor, tradition longa manu takes place. Delivery is upon the moment a thing is salvaged. [Board of Liquidators v. Floro, 1960]
RULES GOVERNING SALE OF MOVABLES, IMMOVABLES AND UNREGISTERED LANDS
(1) Sale of Movables Ownership shall be transferred to the person who may have first taken possession in good faith.
(2) Immovables
(a) Ownership belongs to the person who: i. In good faith first recorded it in the Registry of Property; OR ii. If there is no inscription, ownership passes to the person who in good faith was first in possession; OR iii.In the absence thereof, to the person who presents the oldest title, PROVIDED there is good faith.
(d) Tradition Brevi Manu (Short Hand) MOVABLE is delivered when the buyer had the thing already in his possession before the sale took place, not as owner but as lessee, borrower, or depositary. (e) Tradition Constitutum Possessorium Seller continues to be in possession of the property sold, by virtue of a lease contract agreement with the vendee.
“Oldest Title” – any public document showing acquisition of the land in good faith. To constitute “title,” the transmission of ownership must appear in a public document [Art. 1358 (1)]
(f) Delivery to a Common Carrier General Rule: Delivery to the courier or carrier is tantamount to delivery to buyer. Exceptions i. Seller reserved title by the form of the bill of lading, with intent to remain the owner, not merely for the purpose of securing payment, OR ii. Contrary intention appears in the contract (i.e. seller is required to deliver goods to buyer at the point of destination) iii. F.O.B. (Free on Board or Freight on Board): When seller bears the expenses of transportation up to the F.O.B. point. iv. C.I.F. (Cost, Insurance, Freight): Price quoted includes the costs of the goods, insurance, and freight charges on the goods up to the point of destination. v. F.A.S. (Free Alongside): Seller bears the expenses of transportation until he delivers the goods alongside a vessel at a named port.
Examples: Deed of Sale, Deed of Donation, Deed of Trust (b) Registration includes any entry made in the Primary Entry Book of the registry, including both registration in its ordinary and strict sense and cancellation, annotation, and even marginal notes. [Cheng v. Genato, 1998] i. Pencilled entries on the title are not considered registration [AFPMBAI v. Court of Appeals, 1999]. (3) Sale by Virtue of Execution and Attachment Art. 1544 does NOT apply to the sale of unregistered land at an execution sale because a buyer of unregistered land at an execution sale only steps into the shoes of the judgment debtor, and merely acquires the latter's interest in the property sold as of the time the property was levied upon. [Carumba v. CA, 1970]
DOUBLE SALES – ART. 1544 General Rule: Prior tempore, potior jure (“he who is first in time is preferred in right”) applies.
(4) Sale of Unregistered Land (a) Instrument or deeds establishing, transmitting, acknowledging, modifying or extinguishing rights with respect to lands not registered under the Land Registration Act or the Spanish Mortgage Law, are required to be registered in the Registry of Property to prejudice 3rd persons, although such
Requisites [Cheng v Genato, 1998]: (1) 2 or more valid sales; (2) Same subject matter;
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registration is understood to be “w/o prejudice to a 3rd party with a better right”. [PD 1528 Sec 113] (b) Art. 1544 applies to unregistered land subject to a conventional sale (because of Art. 1358) but NOT to unregistered land subject to judicial sale.
Annotation of Adverse Claim causes which may not adjudged invalid or be attributable to the unmeritorious by the claimant Court Both are intended to protect the interest of a claimant by notifying and cautioning other persons that said property is subject to a claim. Lis Pendens
PROPERTY REGISTRATION DECREE (1) REQUISITES FOR REGISTRATION OF DEED OF SALE IN
The two are not contradictory or repugnant to one another; nor does the existence of one automatically nullify the other, and if any of the registrations should be considered unnecessary or superfluous, it would be the notice of lis pendens [A. Doronila Resources Development Inc v CA, 1988]
GOOD FAITH
Purchaser in good faith (a) General Characteristics i. One who buys the property of another, without notice that some other person has a right to or interest in such property, and who pays a full and fair price for the sale, at the time of the purchase or before he has notice of the claim/interest of some other person in the property. [Agricultural and Home Extension Development Group v CA, 1992]
(2) ACCOMPANIED BY VENDORS DUPLICATE CERTIFICATE OF TITLE, PAYMENT OF CAPITAL GAINS TAX, AND DOCUMENTARY TAX REGISTRATION FEES
Must be accompanied by: (a) Vendor’s duplicate certificate of title (b) Payment of capital gains tax – 6% of the selling price or zonal value, whichever is higher (c) Documentary tax registration fees – 1.5% of the selling price or zonal value, whichever is higher
(b) Presumption
General Rule: As a rule, he who asserts the status of a purchaser in good faith and for value has the burden of proving such assertion. This onus probandi cannot be discharged by mere invocation of the legal presumption of good faith, i.e., that everyone is presumed to act in good faith [Mathay v CA, 1998]
Risk of Loss GENERAL RULE – ARTS. 1263, 1189 Res perit domino: Owner bears risk of loss BASIS: Ownership is not transferred until delivery.
When buyer is presumed to be in bad faith: i. Annotation of adverse claim: Places any subsequent buyer of the registered land in bad faith. [Balatbat v CA, 1996] ii. Annotation of Lis Pendens: Buyer cannot be considered an innocent purchaser for value where it ignored the lis pendens on the title. iii.A purchaser of a parcel of land cannot close his eyes to facts which should put a reasonable man upon his guard, such as when the property subject of the purchase is in the possession of persons other than the seller. A buyer who could not have failed to know or discover that the land sold to him was in the adverse possession of another is a buyer in bad faith. (Heirs of Ramon Durano v Uy, 2010) Lis Pendens May be cancelled even before the action is finally terminated for
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WHEN LOSS OCCURRED BEFORE PERFECTION Such loss is borne by seller WHEN LOSS OCCURRED AT TIME OF PERFECTION – ARTS. 1493 AND 1494 Loss must have occurred before the contract was entered into, without the knowledge of both parties
Total Loss Contract is ineffective. Because there can be no contract without an object
Annotation of Adverse Claim May be cancelled only in one instance, i.e., after the claim is
Partial Loss (Or loss which results in substantial change in character) Buyer may withdraw from the contract OR Buy the remainder at a proportionate price
WHEN LOSS OCCURRED AFTER PERFECTION BUT BEFORE DELIVERY
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Seller bears risk of loss Buyer does not bear risk of loss until goods are delivered to him WHEN OWNERSHIP IS TRANSFERRED – ART.
1504
WHEN OWNERSHIP IS TRANSFERRED TO THE BUYER, THE GOODS ARE AT THE BUYER’S RISK
(1) Where delivery of the goods has been made to the buyer or to a bailee for the buyer, in pursuance of the contract and the ownership in the goods has been retained by the seller merely to secure performance by the buyer of his obligations under the contract, the goods are at the buyer’s risk from the time of such delivery (2) Where actual delivery has been delayed through the fault of either the buyer or seller the goods are at the risk of the party in fault. [Art 1504, CC]
Goods are deliverable to bearer
By delivery of the document to another
Endorsed in blank by the person to whose order the goods were supposed to be delivered Goods are deliverable to the order of a specified person
By indorsement of such person [Art. 1509, CC]
WHO MAY NEGOTIATE IT? [ART.1512, CC]
(1) Owner (2) Person to whom the possession or custody of the document has been entrusted by the owner (a) If bailee undertakes to deliver the goods to such person (b) If document is in such form that it may be negotiated by delivery
Documents of Title
A PERSON TO WHOM A DOCUMENT HAS BEEN NEGOTIATED ACQUIRES—
(1) Rights of the vendor (2) Rights of the original consignee
DEFINITION – ART. 1636 A document used in the ordinary course of business in the sale or transfer of goods, as proof of the possession or control of the goods, or authorizing or purporting to authorize the possessor of the document to transfer or receive, either by endorsement or by delivery, goods represented by such document. [Art. 1636]
NON-NEGOTIABLE DOCUMENTS OF TITLE Goods described in a non-negotiable document of title are deliverable only to a specified person. Carrier will not deliver the goods to any holder of the document or to whom such document may have been endorsed by the consignee.
Examples: bill of lading, quedan, warehouse receipts, trust receipts
Must present the deed of sale or donation in his favor.
PURPOSE OF DOCUMENTS OF TITLE (1) As evidence of possession or control of goods described therein (2) As a medium of transferring title and possession over the goods described therein without having to effect actual delivery thereof [Villanueva] (3) The custody of a negotiable warehouse receipts issued to the order of the owner, or to bearer, is a representation of title upon which bona fide purchasers for value are entitled to rely, despite breaches of trust or violations of agreement on the part of the apparent owner. [Siy Cong Bieng vs. HSBC, 56 Phil 598]
“Negotiation” [negotiable document of title] VS. “Transfer” [non-negotiable document of title]: Negotiation (Art. 1508) Transfer
NEGOTIABLE DOCUMENTS OF TITLE Definition: A document of title which states that the goods referred to therein will be delivered to the bearer, or to the order of any person named in such document [Art. 1508, CC] Terms of the Document
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How negotiated
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Delivery of a negotiable document of title to another if by the terms thereof, the goods are deliverable to bearer, or when the document was endorsed in blank by the person to whose order the goods are deliverable.
The assignment of rights of the consignee of a non-negotiable document of title to another; or
In a negotiable document of title, the buyer may acquire a better title than his transferor.
Transferee does not acquire a better title than his transferor
Document of title was ordered sold or assigned, without indorsement.
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Remedies of an Unpaid Seller
WARRANTIES OF SELLER OF DOCUMENTS OF TITLE – ART. 1516
DEFINITION OF UNPAID SELLER – ART. 1525 A seller is considered to be an unpaid seller if the whole price has not been paid or tendered, or when check received as a conditional payment was dishonored by non-payment or insolvency of the buyer [Baviera]
A PERSON WHO NEGOTIATES A DOCUMENT OF TITLE WARRANTS—
(1) Genuineness of document (2) Legal right to negotiate or transfer (3) No knowledge of fact which would impair the validity or worth of the document (4) Right to transfer the title to the goods and merchantability or fitness for a particular purpose, whenever such warranties would have been implied
Term also includes: (1) The agent of the seller to whom the bill of lading was endorsed, (2) The consignor or agent who had paid the price or is responsible for the price (3) Any other person who is in the position of a seller (i.e. buyer who paid the price and had a right to return the goods). [Baviera]
HE DOES NOT WARRANT THAT—
(1) Common carrier will fulfill its obligation to deliver the goods (2) Previous indorsers will fulfill their obligation [Art. 1516-1517, CC]
REMEDIES OF UNPAID SELLER JUDICIAL REMEDIES OF AN UNPAID SELLER
(1) Action for the price or specific performance [Art. 1595]— Conditions: (a) The goods has passed to the buyer (b) Price is payable on a certain day, irrespective of delivery of the goods (c) Buyer can set up the defense that seller could not or did not intend to deliver the goods (d) Seller was notified by the buyer of his repudiation of the contract after the seller has completed the manufacture of the goods or had procured the goods to be delivered and the goods could not readily be resold for a reasonable price
GOODS IN THE HANDS OF THE CARRIER COVERED BY A NEGOTIABLE DOCUMENT CANNOT BE ATTACHED OR LEVIED UPON, UNLESS—
(1) Document is first surrendered to the carrier; or (2) Impounded by the court; or (3) Its negotiation is enjoined. [Art. 1519-1520,CC] RULES ON LEVY/GARNISHMENT OF GOODS – ARTS. 1514, 1519, 1520 Goods in the hands of the carrier covered by a negotiable document cannot be attached or levied upon, UNLESS— (1) Document is first surrendered to the carrier; or (2) Impounded by the court; or (3) Its negotiation is enjoined. [Art. 1519-1520,CC]
(2) Action for damages for non-acceptance, if buyer wrongfully neglects or refuses to accept and pay for the goods (Art. 1596)
The levy of an attachment of execution upon the goods by a creditor of the transferor may defeat the title of the transferee and the right to acquire the obligation of such bailee when: (1) It was done prior to the notification to such bailee by the transferor of a non-negotiable document of title or (2) By a notification to such bailee by the transferor or a subsequent purchaser from the transferor of a subsequent sale of the goods by the transferor. [Art 1514 (3rd par)]
Measure of damages: Estimated loss directly and naturally resulting in the ordinary course of events from the buyer’s breach (a) Where there is available market for goods: Difference between the contract price and the market price at the time the goods ought to have been accepted or if no time was fixed, at the time of refusal to accept (b) If the resale was made with diligence: resale price is evidence of market value, taking into account whether or not the goods could be readily sold (c) Where labor/expense was necessary for seller to fulfill his obligation: Labor performed and expenses made by seller before receiving notice of buyer’s repudiation or countermand
A creditor whose debtor is the owner of a negotiable document of title shall be entitled to such aid from courts in regard to property which cannot be readily attached or levied by ordinary legal process [Art 1520]
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(d) Profit that the seller would have made if sale had been fully performed
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a foreclosure sale resulting in a deficiency. The payment of the sum of P1,250 of Sapinoso was a voluntary act on his part and did not result from a “further action” instituted by Northern Motors. [Motors vs. Sapinoso, 1970] iii.The purpose of the law is to remedy the abuses committed in foreclosure of chattel mortgages. It prevents mortgagees from seizing the mortgaged property, buying it at foreclosure sale for a low price and then bringing the suit against the mortgagor for a deficiency judgment. The almost invariable result of this procedure was that the mortgagor found himself minus the property and still owing practically the full amount of his original indebtedness. [Bachrach Motor Co., Inc. v. Millan, 1935] iv.Remedies are ALTERNATIVE, not cumulative, i.e. exercise of one bars exercise of the others. [Nonato vs. IAC, 1985]
(3) Rescission by giving the buyer notice of the election to rescind [Art. 1597] Under this rule, rescission would bar an action on the contract because it means cancellation of the contractual obligations between the parties. [Baviera] (4) Special rule for sale of movables by installments – Recto Law [Arts. 1484, 1485] Applies in cases of: (a) Sale of movables in installment i. The rule is intended to apply to sales of movables, the price of which is payable in two or more installments, but not to straight-term sales where the price is payable in full, after making a down payment because the law aims to protect improvident buyers who may be tempted to buy beyond their means. [Levy Hermanos vs. Gervacio, 1939] (b) Lease of personal property with option to buy i. When lessor has deprived the lessee of the possession or enjoyment of the thing (Ex.: When lessor files a complaint for replevin against lessee) ii. Also applies when seller assigns his credit to someone else
Performance of Contract DELIVERY OF THING SOLD (1) SALE OF MOVABLES – ARTS. 1522, 1537, 1480 (a) When Quantity less than expected i. Buyer may reject all ii. Buyer accepts with knowledge of seller’s inability to deliver the rest – buyer pays at contract price iii.Buyer has used or disposed prior to knowing seller’s inability to deliver the rest – buyer pays fair value (b) Quantity more than expected i. If divisible, buyer may reject excess ii. If indivisible, buyer may reject all (c) Quality different or different goods i. If divisible, buyer may accept the goods compliant with contract and reject those that are not ii. If indivisible, buyer may reject all [Art. 1522] (d) Sale of specific mass of goods i. In the sale of fungibles where the measure or weight has not been agreed upon nor is there a fixed rate based upon a measurement, the subject matter of the sale is a determinate object – the specific mass; seller is merely required to deliver such mass even if actual quantity falls short of parties’ estimate [Art. 1480] (e) Delivery by installments i. By default, buyer is not bound to accept delivery of goods by installments
ALTERNATIVE REMEDIES OF THE UNPAID SELLER UNDER RECTO LAW
(a) Specific Performance (b) Cancellation of sale: If vendee fails to pay 2 or more installments i. When the seller cancels the sale by repossessing the property sold, he is barred from exacting payment for its price. (c) Foreclosure of Chattel Mortgage: If vendee fails to pay 2 or more installments i. If seller chooses this remedy, he shall have no further action to recover any unpaid balance, and any stipulation to the contrary shall be void ii. What Art 1484 (3) prohibits is “further action against the purchaser to recover any unpaid balance of the price;” and although this Court has construed the word “action” to mean “any judicial or extrajudicial proceeding by virtue of which the vendor may lawfully be enabled to exact recovery of the supposed unsatisfied balance of the purchase price from the purchaser or his privy,” there is no occasion at this stage to apply the restrictive provision of the said article because there has not yet been
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ii. In a contract of delivery by installment to be
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(a) Express: buyer intimates acceptance (b) Implied: i. Goods are delivered to the buyer and he does any act in relation to the goods delivered that is inconsistent with the ownership of the seller. ii. After the lapse of a reasonable time, the buyer retains the goods without intimating to the seller that he has rejected them. [Art.1585]
paid by installment as well, delay or breach may not necessarily mean breach of the entire contract; depending on the circumstances, breach may be severable and the aggrieved party is entitled to damages and not rescission. [Art. 1583]
(2) SALE OF IMMOVABLES – ARTS. 1539, 1543 (a) Sale at a fixed rate per unit of measure i. Seller bound to deliver entire land ii. If the area is less than that stated, buyer may rescind or demand a proportionate reduction in price iii.If a part of the land is not of the quality stated in the contract, buyer may rescind or demand a proportionate reduction in price iv.Buyer may only avail of rescission if the area deficiency is 10% or more of total area or if the inferior value of the part of the land exceeds 10% of the price agreed upon. [Art. 1539] v. If the area turns out to be greater than that stated, buyer may accept area included and reject the excess or accept all and pay a proportionate increase in price [Art. 1540] (b) Sale for a lump sum i. Follows the same rule as the sale of a specific mass which is explained above ii. There is no change in price even if area or number turns out to be greater or lesser than that stated [Art. 1542] iii.Exception: when the excess or deficiency is no longer reasonable [Asian v Jalandoni, 1923: 644 m2 was unreasonable] iv.Exception to the exception: when buyer expressly assumes risk on actual area of the land. [Garcia v Veloso, 1941] v. If the price per unit or measure is not provided for in the contract, then the rules of lump sum sale should prevail. [Sta. Ana v Hernandez, 1966]
(2) Effect of Refusal to accept (a) If buyer refuses to accept goods, having the right to do so, he is not bound to return them to the seller, it being sufficient that he notifies the seller of his refusal to accept i. If he voluntarily constitutes himself a depositary of the goods, he shall be liable as such. [Art.1587] ii. Unjust refusal to accept still results to transfer of ownership. In such case, title to the goods passes to the buyer from the moment they are placed at his disposal, except if ownership has been reserved by the seller [Art.1588] PAYMENT OF PRICE PAY THE PRICE OF THE THING SOLD (ART. 1582)—
Payment of interest: Buyer is liable for interest when: (SFD) (1) Interest is stipulated; (2) Thing sold produces fruits or income; (3) Buyer is in default - interest accrues from the time of judicial or extrajudicial demand for payment Suspension of payments: Buyer may suspend payment when: (1) His ownership or possession of the thing is disturbed; OR (2) He has reasonable grounds to fear such disturbance by a vindicatory action or a foreclosure of mortgage
(3) INSPECTIONS AND ACCEPTANCE Inspections Right of Inspection: The buyer has reasonable opportunity to examine the goods upon delivery. If there is a stipulation that delivery is preconditioned on payment, then buyer has no right of inspection until he has paid. [Art.1584]
Exceptions: buyer cannot suspend payment when: (1) Seller gives security for the return of the price in a proper case (2) It has been stipulated that, notwithstanding any such contingency, the buyer shall be bound to pay [Art. 1590] (a) Suspension may continue until the seller has caused the disturbance or danger to cease
Exception: in case such right of inspection is permitted by agreement or usage of trade. Acceptance Accept Delivery— (1) Form
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(b) However, a mere act of trespass shall not authorize the suspension of the payment. [Art.1590]
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Condition thing or some other circumstance
Sale of real property (1) In the sale of immovable property, buyer may pay even beyond the expiration of the period agreed upon, as long as no demand for rescission of the contract has been made upon him either judicially or by a notarial act, despite a stipulation providing for ipso jure rescission [Art.1592] (2) After demand, court may not grant him a new term [Heirs of Escanlar, et.al. v. CA, 1997] (3) R.A. 6552 (Maceda Law) applies to sale or financing of real estate on installment [Rillo v. Court of Appeals,1997] (a) Buyer is awarded a grace period of 1 month per year of installments paid or 60 days, whichever is higher, within which he may pay without additional interest i. May be used once every 5 years of the life of the contract or any of its extensions (b) If contract is to be cancelled, seller must first: i. Give a 30-day notice of cancellation, and ii. Refund cash surrender value to buyer; iii. CSV is equivalent to 50% of total payments made including deposits, options and down-payments plus 5% for every year in excess of 5 years of the life of the contract or any of its extensions.
If seller has promised that the condition should happen or be performed, the buyer may treat the nonperformance of the condition as a breach of warranty. [Art.1545] EXPRESS WARRANTIES For there to be express warranty, the following requisites must concur: (APIR) (1) An affirmation of fact or any promise relating to the thing sold; (2) The natural tendency of such affirmation or promise is to induce the buyer to buy; (3) The buyer buys the thing relying thereon. [Art. 1546] (4) Made before the sale not upon delivery or any other point An express warranty can be made by and also be binding on the seller even in the sale of a second hand article. [Moles v. IAC, 1989] Express Warranty What is specifically represented as true in said document cannot be considered as mere dealer's talk. [Moles v. IAC, 1989]
Warranties Definition: A statement or representation made by the seller contemporaneously and as part of the contract of sale, having reference to the character, quality, or title of the goods, and by which he promises or undertakes to ensure that certain facts are or shall be as he then represents. CONDITION V. WARRANTY Condition Pertains to and affects the existence of the obligation Non-happening does not amount to breach of contract Must be stipulated May attach either to the seller’s duty to deliver
Warranty seller’s obligations as to the subject matter
Warranty
Dealer’s or Trader’s Talk (a) Affirmation of the value of the thing or statement of the seller’s opinion only is not a warranty unless: i. The seller made it as an expert; ii. It was relied upon by the buyer. [Art.1546] (b) Ordinarily, what does not appear on the face of the written instrument [Moles v. IAC, 1989]
EXPRESS WARRANTY DISTINGUISHED FROM FALSE REPRESENTATION
Goes into the performance of an obligation and may, in itself, be an obligation Non-fulfillment constitutes breach of contract Stipulation or operation of law Always relates to the subject matter or the
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Express Warranty
False Representation
Concealment of facts does not necessarily amount to false representation
When concealment of facts comes with an active misstatement of fact or a partial statement of fact such that withholding of that unsaid portion makes that which is stated absolutely false
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(c) Final judgment based on a right prior to the sale or an act imputable to the vendor (d) Seller is summoned and made co-defendant in the suit for eviction at the instance of the buyer. [Power Commercial and Industrial Corp. v. CA, 1997]
False Representation However, buyer who fails to inspect condition of property despite ample opportunity to do so when there is no opposition on the part of seller to inspect cannot later on allege false representation. [Phil Mftg Co. v Go Jucco, 1926]
IMPLIED WARRANTY AGAINST APPARENT SERVITUDES
ENCUMBRANCE/NON-
Requisites for breach: (1) Thing sold is an immovable (2) Burden or servitude encumbering the thing sold is: (a) Non-apparent to the naked eye (b) Not mentioned in the agreement (c) Of such nature that it must be presumed that the buyer would not have bought it had he been aware of it (d) Not recorded in the Registry of Property unless there is an express warranty that the thing is free from all burdens and encumbrances [Art.1560]
Reason: buyer’s duty to inspect remains despite false representation by the seller; he has the duty to exercise due diligence.
IMPLIED WARRANTY AGAINST HIDDEN DEFECTS
IMPLIED WARRANTIES – ART. 1547
Requisites for breach: (1) The defect renders the thing sold unfit for the use for which it was intended OR diminishes its fitness for such use to such an extent that had the buyer been aware thereof, he would not have bought it or would have paid a lower price; (2) The defect is not patent or visible; (3) The buyer is not an expert who, by reason of his trade or profession, should have known the defect (4) The seller is aware of the hidden fault or defect, OR even if he is not aware thereof, if there is no stipulation to the contrary [Arts.1561 &1566]
(TODS) (1) Implied Warranty of Title (2) Implied Warranty against Encumbrance/NonApparent Servitudes (3) Implied Warranty against Hidden Defects [Art. 1547] (a) Implied warranty as to Merchantable Quality and Fitness of Goods (b) Implied warranty against Redhibitory Defect in the Sale of Animals [Art. 1572] (c) Quality and Fitness of Goods in Sale by Sample or Description (4) Other Warranties
IMPLIED WARRANTY AS TO MERCHANTABLE QUALITY AND FITNESS OF GOODS
Merchantable Quality: (1) Where the goods are brought by description from a seller who deals in goods of that description [Art.1562] (2) In a sale by sample, if the seller is a dealer in goods of that kind and the defect is not apparent on reasonable examination of the sample [Art.1566]
IMPLIED WARRANTY OF TITLE
(1) Implied warranty arises by operation of law and need not be stipulated in the contract of sale. (2) Warranty of Seller’s Right to Sell: Seller warrants his right to sell at the time the ownership is to pass. (a) Inapplicable to a sheriff, auctioneer, mortgagee, pledgee, or other person professing to sell by virtue of authority in fact or law. [Art. 1547] (3) Warranty against Eviction: seller warrants that buyer, from the time ownership passes, shall have and enjoy legal and peaceful possession of the thing. Its requisites are: (a) Buyer is deprived of the whole or a part of the thing sold; (b) Eviction is by final judgment
Fitness for a particular purpose: (1) Where the buyer expressly or impliedly makes known to the seller the particular purpose for which the goods are acquired AND it appears that the buyer relied on the seller’s skill or judgment [Art.1562(1)]
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(following the general rule on rescission of contracts) (2) Remedies: (a) Accept goods + demand diminution/ extinction of price (b) Accept goods + damages (c) Refuse to accept goods + damages (d) Rescind (Refuse to accept or return or offer to return) + recover price paid (3) Rescission not available when buyer: (a) Knew of breach of warranty when he accepted the goods without protest (b) Fails to notify the seller about election to rescind within a reasonable period of time (c) Fails to return or offer to return the goods to the seller in substantially a good condition as they were when delivered, unless deterioration was due to breach of warranty (4) Measure of damages: Difference between value of goods at the time of delivery and the value they would have had if they had answered to the warranty (5) Effects of rescission: (a) Buyer no longer liable for price i. Entitled to the return of any part of price paid, concurrently with or immediately after an offer to return the goods (b) If seller refuses to accept offer to return goods: buyer deemed as bailee for seller and has right of lien to secure payment of part of price paid
IMPLIED WARRANTY AGAINST REDHIBITORY DEFECT IN THE SALE OF ANIMALS (ART. 1572)
Redhibitory defect- a hidden defect of animals of such nature that expert knowledge is not sufficient to discover it, even in a case where a professional inspection has been made No warranty in case of [Art. 1574]: (a) Animals sold at fairs or public auctions (b) Livestock sold as condemned The following sales are void [Art. 1575]: (a) Sale of animals suffering from contagious diseases (b) Sale of animals unfit for the purpose for which they are acquired as stated in the contract Veterinarian liable if he fails to discover or disclose the hidden defect through ignorance or bad faith [Art 1576] Seller liable if animal dies within 3 days after its purchase due to a disease that existed at the time of sale. [Art 1578] EFFECTS OF WARRANTIES (1) Natural tendency is to induce buyer to purchase the subject matter (2) Buyer purchases subject matter relying thereon (3) Seller liable for damages in case of breach
IMPLIED WARRANTY AGAINST EVICTION
EFFECTS OF WAIVERS Only applicable to waiver of warranty against eviction; parties may increase or decrease warranty against eviction but the effect depends on good/bad faith of the seller: (1) Seller in bad faith and there is warranty against eviction – null and void (2) Buyer without knowledge of a particular risk and made general renunciation of warranty – not waiver but merely limits liability of seller in case of eviction (pay value of subject matter at the time of eviction) (3) Buyer with knowledge of risk of eviction assumed its consequences and made a waiver – vendor not liable (4) Waiver to a specific case of eviction – wipes out warranty as to that specific risk but not as to eviction caused by other reasons
[ARTS. 1555,
1556] Total Eviction Enforce eviction
liability
Partial Eviction for
Demand from seller: (VICED) (a) Value of thing sold at time of eviction (b) Income or fruits, if he has been ordered to deliver them to the party who won the eviction suit (c) Costs of eviction suit and in a proper case, suit against seller for warranty (d) Expenses of the contract, if buyer has paid them (e) Damages and
BUYER’S OPTIONS IN CASE OF BREACH OF WARRANTY – ART. 1599 EXPRESS WARRANTY
(1) Prescriptive period: Period specified in express warranty OR 4 years, if no period is specified
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Enforce liability (demand VICED) OR Rescind (a) If he would not have bought the thing sold without the part lost; (b) BUT he must return the thing without other encumbrances than those which it had when he acquired it
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Total Eviction
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Partial Eviction
Due to hidden fault
interests, and ornamental expenses, IF sale was made in bad faith
Due to fortuitous event or fault of buyer
(a) Buyer may demand price and expenses BUT NOT damages Prescriptive period: 6 months from delivery
(1) Rules: (a) Buyer need not appeal from decision to hold seller liable for eviction (b) When adverse possession commenced before sale, but prescription period completed after transfer: seller is not liable (c) If property sold for nonpayment of taxes due and not made known to the buyer before the sale: seller liable (d) Judgment debtor also responsible for eviction in judicial sales, unless it is otherwise decreed in the judgment
IMPLIED WARRANTY AGAINST REDHIBITORY DEFECTS OF ANIMALS
(1) Remedies (a) Withdraw from contract + damages (b) Demand a proportionate reduction of the price + damages (2) If sale is rescinded: (a) Buyer must return animal in the condition in which it was sold and delivered (b) Buyer shall be liable for injury due to his negligence.
(2) If there is waiver of warranty: (a) Seller acted in bad faith: Waiver is void, seller liable for eviction (b) Buyer made waiver without knowledge of risks of eviction: Seller liable only for the value of the thing sold at time of eviction (c) Buyer made waiver with knowledge of risks: Seller not liable; buyer assumed the consequences IMPLIED WARRANTY AGAINST ENCUMBRANCES
1560]
(3) Prescriptive period: 40 days from delivery WARRANTY IN SALE OF CONSUMER GOODS [RA
SEC.68]
IMPLIED WARRANTY AGAINST HIDDEN DEFECTS
7394,
If implied warranty accompanies express warranty, both will be of equal duration. Express Warranty
Implied Warranty
(1) Demand repair (1) Retain the goods within 30 days and recover (a) Extendible for damages causes beyond OR the control of (2) Reject the goods, the warrantor cancel contract (2) Demand refund of and recover from price minus seller so much of amount directly the purchase price attributable to the as has been paid + use of the damages consumer prior to the discovery of the non-conformity
[ART.
(1) Rescission: Within 1 year from execution of deed of sale OR (2) Damages: Within 1 year from execution of deed of sale or discovery of the burden or servitude
1567-1571]
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[ARTS.
(1) If thing is not lost: (a) Withdraw from contract (accion redhibitoria) + damages (b) Demand a proportionate reduction of the price (accion quanti minoris) + damages (2) If thing is lost: Due to hidden fault If seller aware of defect, buyer may demand: (a) Return of price (b) Refund of expenses (c) Damages If seller not aware of defect:
Due to fortuitous event or fault of buyer Demand: (a) Price paid minus value of thing when it was lost (b) Damages, if seller acted in bad faith
Breach of Contract General Remedies [Art. 1191, CC] The following remedies arise from the bilateral nature of the contract of sale: (1) Specific performance (2) Rescission General rule: Rescission of a contract will not be permitted for a slight or casual breach, but only
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for such substantial and fundamental breach as would defeat the very object of the parties in making the agreement. [Song Fo & Co. vs. Hawaiian-Philippine Co., 1925] (3) Damages Neither party incurs in delay if the other does not comply or is not ready to comply in a proper manner with what is incumbent upon him [Art 1169, CC]
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Available when: Vendee becomes INSOLVENT When are goods in transit? (1) From the time of delivery to the carrier or other bailee by the seller, for the purpose of transmission to the buyer, until the buyer or his agent takes such delivery from the carrier. (2) Even when goods have reached their ultimate destination, if buyer rejects them and carrier retains possession (a) To terminate transit by delivery to a middleman, delivery must be to keep, not to transport.
Prescriptive periods (1) 10 years if based on written contract (2) 6 years if based on oral contract REMEDIES OF THE SELLER – ARTS. 1636, 1594
When are goods no longer in transit? (1) Buyer obtained delivery of the goods before they have reached their ultimate destination (2) Goods have arrived at ultimate destination, but carrier refuses to deliver (3) Carrier enters into a new contract with the buyer upon arrival of the goods at their ultimate destination
(1) SALE OF MOVABLES Extrajudicial or Self-Help Remedies- No need to resort to the courts as long as possession of the goods has not yet passed to the buyer (a) Possessory lien over the goods Right to retain possession of goods until payment or tender of the whole price, or unless he agrees to sell on credit [Arts. 15261529, 1503, 1535]
How exercised? (1)By obtaining actual possession of the goods (2) By giving notice of his claim to the carrier/other bailee who has possession of the goods (a) Carrier must redeliver goods to seller, or according to his instructions (b) Carrier not obliged to redeliver until the negotiable document of title, if any, has been surrendered for cancellation
When available: (1) Goods are sold without stipulation as to credit (2) Goods are sold on credit, but term of credit has expired (3) Buyer becomes INSOLVENT When lost: (1) Seller delivers goods to carrier or other bailee for transmission to the buyer under a straight or non-negotiable bill of lading (2) Buyer/his agent lawfully obtains possession of goods (3) Seller waives it (a) But it is not lost with respect to the remainder of the goods when only partial delivery is made (unless such is symbolic delivery of the whole) (b) It is not lost by the mere fact that seller obtained a judgment for the price
Seller’s right to stoppage in transitu is not affected even if buyer has sold or disposed of the goods unless the seller has given his assent thereto. (c) Special right of resale Available to unpaid seller who has a right of lien or who has stopped the goods in transitu [Art. 1533]
When revived: Goods are returned by the buyer in a wrongful repudiation of the contract
Purpose: For seller to liquidate his damages (1) He must do so within a reasonable time and in such manner as to obtain the best price possible. (2) Resale is deemed to be a fair sale if it is undertaken in accordance with established business practices, with no attempt to take advantage of the original buyer.
(b) Right of stoppage in transitu An extension of the lien for the price; entitles unpaid seller to resume possession of the goods while they are in transit before the goods come in possession of the vendee [Arts. 1530-1532, 1535, 1636[2]]
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(3) Resale may be in a private or public sale, but seller cannot buy directly or indirectly. (4) For resale to be valid, buyer need not be notified of an intention to resell or the time and place of the resale.
making a down payment because the law aims to protect improvident buyers who may be tempted to buy beyond their means. [Levy Hermanos vs. Gervacio, 1939] (2) Lease of personal property with option to buy (a) When lessor has deprived the lessee of the possession or enjoyment of the thing (Ex.: When lessor files a complaint for replevin against lessee) (b) Also applies when seller assigns his credit to someone else Alternative Remedies of the unpaid seller under Recto Law (1) Specific Performance (2) Cancellation of sale: If vendee fails to pay 2 or more installments (a) When the seller cancels the sale by repossessing the property sold, he is barred from exacting payment for its price. (3) Foreclosure of Chattel Mortgage: If vendee fails to pay 2 or more installments (a) If seller chooses this remedy, he shall have no further action to recover any unpaid balance, and any stipulation to the contrary shall be void (b) What Art 1484 (3) prohibits is “further action against the purchaser to recover any unpaid balance of the price;” and although this Court has construed the word “action” to mean “any judicial or extrajudicial proceeding by virtue of which the vendor may lawfully be enabled to exact recovery of the supposed unsatisfied balance of the purchase price from the purchaser or his privy,” there is no occasion at this stage to apply the restrictive provision of the said article because there has not yet been a foreclosure sale resulting in a deficiency. The payment of the sum of P1,250 of Sapinoso was a voluntary act on his part and did not result from a “further action” instituted by Northern Motors. [Motors vs. Sapinoso, 1970] (c) The purpose of the law is to remedy the abuses committed in foreclosure of chattel mortgages. It prevents mortgagees from seizing the mortgaged property, buying it at foreclosure sale for a low price and then bringing the suit against the mortgagor for a deficiency judgment. The almost invariable result of this procedure was that the mortgagor found himself minus the property and still owing practically the full amount of his original indebtedness. [Bachrach Motor Co., Inc. v. Millan, 1935] (d) Remedies are ALTERNATIVE, not cumulative, i.e. exercise of one bars exercise of the others. [Nonato vs. IAC, 1985]
Effects: (1) Seller is no longer liable to the original buyer upon the contract of sale or for any profit made by the resale (2) Buyer at resale acquires good title as against the original owner (3) In case resale is at a loss, seller is entitled to recover the difference from the original buyer (4) Seller may recover damages from original buyer for breach of contract (d) Special right to rescind: RETURN of the title over the undelivered goods to the seller, and right to recover DAMAGES for breach of contract [Art. 1534] Available to unpaid seller who has a right of lien or who has stopped the goods in transitu When available: (1) Seller expressly reserved his right to rescind in case buyer defaults (2) Buyer has been in default in payment for an unreasonable time Transfer of title shall not be held to have been rescinded by the unpaid seller until he manifests by notice to the buyer or some other overt act an intention to rescind. (e) When the whole of the price has not been paid or tendered; (f) When a bill of exchange or other negotiable instrument has been received as conditional payment and the condition on which it was received has been broken by reason of the dishonor of the instrument, the insolvency of the buyer, or otherwise. RECTO LAW: SALE OF MOVABLES INSTALLMENT – ARTS. 1484-1486
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Applies in cases of: (1) Sale of movables in installment (a) The rule is intended to apply to sales of movables, the price of which is payable in 2 or more installments, but not to straight-term sales where the price is payable in full, after
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(1) SALE OF IMMOVABLES (a) PD 957, sec. 23, 24 Non-forfeiture of payments (1) No installment payment made by the buyer shall be forfeited in favor of the owner or developer of the condominium or subdivision project, after due notice, when the buyer desists from paying due to the failure of the developer or owner to develop the project according to the approved plans or within the time limit stated. (2) Buyer’s Remedy: At his option, he may reimburse the total amount paid including amortization interest with interest thereon at the legal rate (3) If the buyer fails to pay the installments for reasons other than the failure of the owner or developer to develop the project, his rights shall be governed by RA 6552. (b) Maceda Law: Installment
Sale
of
Immovables
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(4) Seller may go to court for judicial rescission in lieu of a notarial act of rescission (5) During the grace period, buyer shall have the right: (a) To sell or assign his rights, to be evidenced in a notarial instrument (b) To update his account (c) To pay in advance any installment, or the full unpaid balance of the price, without any interest In the sale of immovables (1) Rescission for Anticipatory Breach [Art. 1591] (a) Available when seller has reasonable grounds to fear the loss of the immovable property sold and its price (b) Example: Buyer destroys the building sold, there being no security therefor, and buyer becomes insolvent (c) Court has no discretion to compel the seller to wait for the expiration of the period to pay, or to grant the buyer more time to pay (2) Specific Performance + Damages [Art. 1191] (a) Seller may choose between specific performance and rescission, with damages in either case (b) Court has discretion, for a just cause, to give the buyer more time to pay even if the seller chooses rescission (3) Rescission + Damages [Art. 1191] (a) If seller chose specific performance, and such becomes impossible, he may still avail of rescission (b) If absolute sale, seller must make a demand for rescission i. Judicially, OR ii. By a notarial act (c) Necessary even if automatic rescission is stipulated (d) Effect of lack of demand: Buyer can still pay (e) Effect of demand: Court may not grant buyer a new term
on
RA 6552: An Act To Provide Protection for Buyers of Real Estate on Installment Payments DOES not apply to: (1) Industrial lots (2) Commercial buildings (3) Sale to tenants under Agricultural Reform Code [RA 3844] Imposes ADDITIONAL REQUIREMENTS FOR A VALID RESCISSION: (1) If buyer has paid at least 2 years of installments: (GRN) (a) Grace period: 1 month per year of installment payments made. BUT buyer may only avail of it only once in every 5 years (b) Refund of Cash Surrender Value (CSV): 50% of total amount paid + 5% for every year after the 1st 5 years of installments i. BUT not greater than 90% of total amount paid (c) Notice of cancellation of demand for rescission by notarial act is effective 30 days from the buyer’s receipt thereof and upon full payment of CSV (2) If buyer has paid less than 2 years: (GN) (a) Grace period: at least 60 days (b) Notice of cancellation or demand for rescission by notarial act, effective 30 days upon receipt thereof (3) Down payments, deposits, or options on the contract shall be included in the total number of installments made
REMEDIES OF THE BUYER General rule: Courts will refuse to decree specific performance with respect to chattels, because damages are a sufficient remedy Exception: Buyer is entitled to the specific thing which to him has special value and which he cannot readily obtain in the market OR where damages would not furnish a complete and adequate remedy [Baviera] (1) SALE OF MOVABLE (1) Remedy for breach of obligation to preserve If thing is lost—
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(1) Without fault of seller: No breach; Obligation is extinguished (2) Through fault of seller (or through fortuitous event, if seller is liable): Damages
of price OR Rescission, if: (a) Lack in area is at least 1/10 of what is stated, or inferior value of thing sold exceeds 1/10 of price (b) Buyer would not have bought the property has he been aware of the inferior quality or smaller area
A thing is lost when it— (1) Perishes (2) Goes out of commerce (3) Disappears in such a way that its existence is unknown or it cannot be recovered If thing deteriorates Without fault of seller NO BREACH. Impairment shall be borne by buyer
Through fault of seller Rescission + damages OR Specific performance + damages
OR Accept the whole and pay at contract rate
This rule also applies to judicial sales [Art. 1541] (b) If for a lump sum: Everything is within Not everything is within boundaries, even if less or boundaries more than stated area No remedy Proportional reduction in Where both the area and price the boundaries of the OR immovable are declared, Rescission the area covered within the boundaries of the immovable prevails over the stated area. (Rudolf Lietz, Inc. v. CA, 2005)
(2) Remedy for breach of obligation to deliver Delivery of wrong quantity [Art. 1522]— Goods are less than More what was contracted Reject the goods Reject the excess (Or OR the whole, if indivisible) Accept and pay OR (a) At contract rate if Accept the whole and buyer accepts pay at contract rate knowing that seller won’t perform in full (b) At fair value: If goods were used before knowing that seller won’t be able to perform in full
Prescriptive period: 6 months, counted from date of delivery
Extinguishment of Sale CAUSES – ARTS. 1600, 1231 Generally, extinguished by the same causes as all other obligations [Arts.1600, 1231]
Art. 1464. Civil Code. In the sale of an undivided share of a specific mass of fungible goods, if the mass contains less than the number, weight, or measure bought, the buyer becomes the owner of the whole mass and the seller is bound to make good the deficiency from goods of the same kind and quality, UNLESS a contrary intent appears.
(P-PLAN-C3-R3) (1) Payment/performance (2) Prescription (3) Loss of thing due (4) Annulment (5) Novation (6) Condonation/remission (7) Confusion/merger (8) Compensation (9) Rescission (10) Resolutory condition fulfilled (11) Redemption (Conventional or Legal)
(2) SALE OF IMMOVABLES Real Estate [Arts. 1539-1543] (a) If at the rate of a certain price per unit of measure or number: Less (in area or quality) than what was agreed upon: Proportional reduction
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More Reject the excess
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CONVENTIONAL REDEMPTION – ART. 1601
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(c) Necessary and useful expenses made on the thing sold (2) Complying with any other stipulation agreed upon, if any.
DEFINITION
(1) Vendor reserves the right to repurchase the thing sold, with the obligation to comply with the provisions of Article 1616 and other stipulations which may have been agreed upon. [Art 1601,CC] (2) Available when the seller reserves the right to repurchase the thing sold in the same instrument of sale as one of the stipulations of the contract [Villarica v CA, 1968]
The general rule in redemption is that it is not sufficient that a person offering to redeem manifests his desire to do so. The statement of intention must be accompanied by an actual and simultaneous tender of payment for the full amount of the repurchase price. [BPI Family Savings Bank, Inc. v. Veloso, 2004]
PERIOD
General Rule: Follow period stipulated in contract, but should not exceed 10 years. (1) If no period stipulated, then it shall be four years from the execution of the contract (2) But vendor may still exercise the right to repurchase within thirty days from the time final judgment was rendered in a civil action on the basis that the contract was a true sale with right to repurchase
Tender of payment is enough (i.e., consignation is not necessary), if made on time, as a basis for action against the buyer to compel him to resell. But that tender does not in itself relieve the buyer from his obligation to pay the price when redemption is allowed by the court. [Paez v. Magno, 1949] EFFECT OF REDEMPTION
(1) The seller shall receive the thing free from all charges or mortgages constituted by the buyer BUT he shall respect leases executed by the buyer in good faith and in accordance with local custom. (2) If there are growing fruits at the time of sale and at the time of redemption: no reimbursement or prorating if the buyer did not pay indemnity at the time of sale (3) If there were no growing fruits at the time of sale, but some exist at the time of redemption: fruits prorated (buyer entitled to part corresponding to time he possessed the land in the last year, counted from the anniversary of the date of sale)
BY WHOM EXERCISED
(1) Vendor (2) His heirs, assigns or agents (3) Creditor, if he has exhausted the property of the vendor (4) Co-owners of an immovable, if they sold their interests to the same person, may only redeem their respective shares (a) Vendee cannot be compelled to agree to a partial redemption (b) If the co-owners sold their interest to the same person who previously bought the share of a co-owner subject to a right of redemption, then the latter may be compelled to redeem the whole property
EFFECT OF NON-REDEMPTION
Ownership is consolidated in the buyer BUT the consolidation shall not be recorded in the Registry of property without a judicial order, after the vendor has been duly heard.
FROM WHOM TO REDEEM
(1) Vendee a retro (2) His heirs, assigns or agents (3) Subsequent purchaser of property, even if the right to redeem was not mentioned in the subsequent contract; except if registered land, where the right to redeem must be annotated on the title (4) If several heirs, then the right of redemption can be exercised against each heir for his share of the property
RIGHT TO REDEEM VS. OPTION TO PURCHASE (VILLANUEVA)
HOW EXERCISED
(1) By returning the ff. to the buyer: (PEN) (a) Price of the sale; (b) Expenses of the contract and other legitimate payments made by reason of the sale;
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Right to Redeem
Option to Purchase
Not a separate contract but part of a main contract of sale, and cannot exist unless reserved at the time of the perfection of the main contract of sale Does not need its separate consideration to be valid and effective
Generally a principal contract and may be created independent of another contract
Must have a consideration separate and distinct from the purchase price to be valid and effective [Arts.
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(3) Period of redemption extended (or granted anew) upon or after the expiration of the right to repurchase; (4) Part of the purchase price retained by the seller; (5) Payment of taxes on the thing sold borne by the seller; (6) Any other case where it may be fairly inferred that the Real intention of the parties is for the transaction to secure a debt or other obligation.
Option to Purchase 1324 and 1479]
The maximum period for the exercise of the right to repurchase cannot exceed 10 years Requires in addition a tender of payment of the amount required by law, including consignment thereof if tender of payment cannot be made effectively on the buyer
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The period of the option contract may be beyond the 10-year period May be exercised by notice of its exercise to the offeror
FOR THE PRESUMPTION OF AN EQUITABLE MORTGAGE TO ARISE UNDER ART. 1602, 2 REQUISITES MUST CONCUR (MOLINA V. CA, 2003)
(1) That the parties entered into a contract denominated as a contract of sale, and (2) That their intention was to secure an existing debt by way of a mortgage.
EQUITABLE MORTGAGE – ARTS. 1602-1604 Definition: An equitable mortgage is defined as one which, although lacking in some formality, or form or words, or other requisites demanded by a statute, nevertheless reveals the intention of the parties to charge real property as security for a debt, and contains nothing impossible or contrary to law. [Molina v. CA, 2003]
In case of doubt, a contract purporting to be a sale with right to repurchase shall be construed as an equitable mortgage [Art. 1603] RATIONALE BEHIND PROVISION ON EQUITABLE MORTGAGE
(1) Circumvention of usury law (2) Circumvention of prohibition against pactum commissorium – creditor cannot appropriate the things given by way of pledge or mortgage since remedy is foreclosure.
The Valdehuezas having remained in possession of the land and the realty taxes having been paid by them, the contracts which purported to be pacto de retro transactions are presumed to be equitable mortgages, whether registered or not, there being no third parties involved. [Tan v. Valdehueza, 2003]
REMEDIES OF APPARENT VENDOR
(1) If the instrument does not reflect the true agreement: remedy is reformation (2) If decreed to be an equitable mortgage: any money, fruits or other benefit to be received by the buyer as rent or otherwise considered as interest. (3) If decreed as a true sale with right to purchase: seller may redeem within 30 days from finality of judgment, even if the period for redemption has expired.
A pactum commissorium is a stipulation enabling the mortgagee to acquire ownership of the mortgaged properties without need of foreclosure proceedings which is a nullity being contrary to the provisions of Article 2088 of the Civil Code. The inclusion of such stipulation in the deed shows the intention to mortgage rather than to sell. [Legaspi v. Spouses Ong, 2005]
PERIOD OF REDEMPTION – ART. 1606 Art. 1606. The right referred to in Article 1601, in the absence of an express agreement, shall last four years from the date of the contract.
A pactum commissorium is contrary to the nature of a true pacto de retro sale since 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.
Should there be an agreement, the period cannot exceed ten years.
DISTINGUISHED FROM OPTION TO BUY – ART.
However, the vendor may still exercise the right to repurchase within thirty days from the time final judgment was rendered in a civil action on the basis that the contract was a true sale with right to repurchase.
1602
PRESUMPTION THAT A CONTRACT IS AN EQUITABLE MORTGAGE ARISES WHEN (5P-R)— ART. 1602
(1) Price unusually inadequate; (2) Possession retained by the seller as lessee or otherwise;
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LEGAL REDEMPTION – ART. 1619
Period of Redemption (a) No stipulation: 4 years from the date of contract (b) When there is agreement: Period not to exceed 10 years (c) General Rule: Period starts to run from the date of the execution of the contract (d) Exception: When the efficacy of the sale is subject to a suspensive condition, period should be counted not from the date appearing on the instrument, but from the date when the condition is fulfilled, marking the consummation of the sale [Tolentino citing Manresa].
DEFINITION
(1) Right to be subrogated: (a) upon the same terms and conditions stipulated in the contract, (b) in the place of one who acquires a thing by purchase or dation in payment, or by any other transaction whereby ownership is transmitted by onerous title [Art 1619, CC] (2) Applies to transfers of ownership by onerous title where subrogation is possible. Hence, it cannot apply to barter or to transfer by gratuitous title or hereditary succession. (3) Applies to sales with pacto de retro [Baviera citing MANRESA]
Additional 30 days for Repurchase The last paragraph of Art. 1606 giving the vendor the right to repurchase within 30 days from the time of the rendition of final judgment applies only where the nature and the character of the transaction, whether as a pacto de retro or an equitable mortgage, was put in issue before the court [Gonzales v. De Leon, 4 SCRA 332].
MANNER
(1) a formal offer to redeem or (2) filing of an action in court together with the consignation of the redemption price within the reglementary period PERIOD TO REDEEM
EXERCISE OF THE RIGHT TO REDEEM – ART.
To whom granted
1616
Period
(a) Co-owner [Art 1620]
30 days from notice (a) In writing (b) Adjoining owner of (b) By the seller Rural Land [Art 1621] (c) Of the actual execution and (c) Adjoining owner of delivery of the deed urban land [Art. 1622] of sale
The seller can avail himself of the right of repurchase by returning to the buyer: (a) the price of the sale (b) the expenses of the contract and any other legitimate payments made by reason of the sale (c) the necessary and useful expenses made on the thing sold [Art.1616].
Actual knowledge of the sale is immaterial , absent any showing that the co-owner has been shown a copy of the deed of sale through a written communication. [Doromal v. CA, 1975]
How redemption is exercised (a) The vendor de retro must complete the repurchase before the expiration of the redemption period [Panganiban v. Cuevas, 7 Phil 477]. (b) A sincere or genuine tender of payment is enough. The deposit of the amount of the repurchase money with the Clerk of Court was simply and additional security [Legazpi v. Court of Appeals, 1986] (c) When tender of payment cannot be validly made because the buyer cannot be located, it becomes imperative for the seller a retro to file a suit for consignation with the courts of the redemption price [Catangcatang v. Legayada, 1978]. (d) If the offer or tender of payment for repurchase is refused, it is not necessary for the vendor a retro to consign in court or make judicial deposit of the repurchase price [Rosales v. Reyes, 25 Phil 495].
Debtor in case a credit or incorporeal right in litigation is sold [Art.1634] Taxpayer in case of tax sale [Sec. 215, NIRC] Judgment debtor,
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The law did not provide for a particular mode of written notice, thus any compliance with “written notice” should suffice, including the giving of a copy of the deed of sale. [Conejero v. CA, 1966] 30 days from the date the assignee demands payment from debtor 1 year from date of forfeiture 1 year from the date of
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To whom granted successor–in- interest, or creditor with subsequent lien, in case of execution sale [Rule 39, Sec.27, ROC] Debtor-mortgagor, successors-in- interest, judicial/judgment creditor, any person having a lien on the property, in case of extrajudicial foreclosure of mortgage [Act No. 3135. Sec. 6.] Debtor-mortgagor in case of judicial foreclosure of real estate mortgage IF the mortgagee is a bank or a banking institution. [The General Banking Law of 2000] Agricultural lessee w/o knowledge of sale of landholding [Agrarian Land Reform Code, Sec.12]
Period registration of certificate of sale
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Rationale: Public Policy, since co-ownership is a hindrance to the development and administration of the property. [Baviera]
the
(2) Redemption by Adjoining Land-owners of rural land [Art. 1621]
1 year from the date of the sale
The ff. Requisites must concur: (a) A piece of rural land is alienated (b) Area does not exceed one hectare When not applicable: (a) The grantee does not own any rural land (b) Adjacent lands are separated by brooks, drains, roads and other apparent servitudes for the benefit of other estates
90 days from finality of judgment
Order of preference if two or more wishes to exercise the right: (a) Owner with smaller land area (b) If same land area, then the one who first requested the redemption 2 years from the registration of the sale
What constitutes “rural” or “urban” is to be determined from the character of the community or vicinity in which it is found, and NOT from the nature of the land itself nor the purpose to which it is devoted. [Ortega v. Orcine, 1971]
INSTANCES OF LEGAL REDEMPTION
(3) Redemption by adjoining land-owners of urban land (applies only to small portions of urban land) [Art. 1621]
(1) Redemption by Co-owners [Art. 1621] A co-owner of a thing may exercise the right of redemption in case the shares of all the coowners or any of them are sold to a third person (a) “Third person” refers to all persons who are not heirs of the vendor, by will or intestate succession (b) The right is available not only to original coowners, but to those who had later acquired the share of the co-owner (c) But the right of redemption may be exercised by a co-owner only when part of the community property is sold to a stranger. When the portion is sold to another co-owner, the right does not arise because a new participant is not added to the co-ownership [Fernandez v. Tarun, 2002] If the price of the alienation is grossly excessive, the redemptioner shall pay only a reasonable one. Should two or more co-owners desire to exercise the right, they may also do so in proportion to the share they may respectively have in the thing owned in common.
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Right of Pre-emption
Right of Redemption
Owner of any adjoining land has a right of preemption at a reasonable price when: (a) Urban land is so small and so situated that a major portion of it cannot be used for any practical purpose w/in a reasonable time; (b) Was bought merely for speculation; (c) Was resold Arises before sale No rescission because no sale exists yet The action is directed against prospective seller
If the resale has been perfected, the owner of the adjoining land shall have a right of redemption, also at a reasonable price Priority if 2 or more adjoining owners want to redeem: owner whose intended use of the land appears to be best justified Arises after sale There can be rescission of the original sale Action is directed against buyer
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Who may redeem
(4) Redemption of Credit Available when it is sold while in litigation (From the time the complaint is answered)
(a) within 1 year from the date of the sale
favor of a bank (a) within 1 year after the sale (not available in case of a corporate mortgagor) Amount of redemption (a) Amount of the purchase (b) Interest at 1% per month from the time of the sale up to the time of redemption (c) Any assessment or taxes which the purchaser may have paid
NOT available when the assignment is in favor of: (a) Co-heir/co-owner of right assigned (b) Creditor in payment of his credit (c) Possessor of a tenement or piece of land which is subject to the right assigned How exercised: reimburse the assignee for the: (a) Price paid (b) Judicial expenses incurred (c) Interest on the price from date of payment (5) Under the Public Land Act Coverage: (a) Every conveyance of land acquired under a free patent or homestead (b) The ownership of the land must have been transferred to another. If the transaction is a mere promise to sell, there is no right yet to redeem (c) This refers to conveyances made after the prohibited 5 years from the issuance of the patent or grant
months after the sale
(7) Under the Agrarian Land Reform Code Lessees right of pre-emption (a) The agricultural lessee shall have the preferential right to buy under the same reasonable terms and conditions, in case the lessor decides to hold the landholding (b) Conditions: i. The landholding must be pre-empted by the DAR ii. When two or more lessees, each shall have preferential right only to the extent of the area cultivated by him (c) Period: 180 days from notice in writing
Period: (a) Within 5 years from the date of conveyance (b) If pacto de retro sale, the period to redeem cannot be less than 5 years
Lessees right of redemption (a) Sec. 12 RA 3844: In case landholding is sold to 3rd person without the knowledge of the lessee, the latter shall have the right to redeem the same at a reasonable price and consideration (b) Period: within 180 days from notice in writing
Who may redeem: (a) General Rule: Applicant, widow, or heirs (b) Exception: land is sold to another member of the family of the applicant, or his direct descendant or heir (c) From whom: Subsequent purchasers
AGE REDEMPTION – ART. 1619
(6) Redemption in Foreclosure and Execution Sales Art. 1619. Legal redemption is the right to be subrogated, upon the same terms and conditions stipulated in the contract, in the place of one who acquires a thing by purchase or dation in payment, or by any other transaction whereby ownership is transmitted by onerous title.
Who may redeem In extra judicial foreclosure (a) Debtor (b) Successor in interest (c) Judicial or judgment creditor of said debtor (d) Junior encumbrancer
In execution sales (a) Judgment debtor (b) Successor in interest (c) Creditor having a lien on the property sold by attachment, judgment or mortgage on the property subsequent to the judgment Period to redeem Extra judicial Execution sale If land is foreclosure (a) within 12 mortgaged in
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The Law on Sale of Subdivision and Condominium (PD 957)
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REQUIREMENTS FOR OWNERS AND DEVELOPERS (1) Registration of projects (subdivision/condominium) with the NHA (2) Registration of the owner (3) License to sell of owner or dealer with performance bond [PB, exceptions in Section 7]
DEFINITIONS DEFINITION OF "SALE" OR "SELL" (a) include every disposition, or attempt to dispose, for a valuable consideration, of a subdivision lot, including the building and other improvements thereof, if any, in a subdivision project or a condominium unit in a condominium project. (b) also include a contract to sell, a contract of purchase and sale, an exchange, an attempt to sell, an option of sale or purchase, a solicitation of a sale, or an offer to sell, directly or by an agent, or by a circular, letter, advertisement or otherwise. (c) privilege given to a member of a cooperative, corporation, partnership, or any association and/or the issuance of a certificate or receipt evidencing or giving the right of participation in, or right to, any land in consideration of payment of the membership fee or dues, shall be deemed a sale within the meaning of this definition.
Registration of projects [Section 4, PD 957] The registered owner of a parcel of land who wishes to convert the same into a subdivision project shall submit his subdivision plan to the National Housing Authority. The same procedure shall be followed in the case of a plan for a condominium project except that NHA also approves the building thereon in accordance with the National Building Code. Registration of owner [Section 4, PD 957] The owner or the real estate dealer interested in the sale of lots or units, respectively, in such subdivision project or condominium project shall register the project with the Authority by filing therewith a sworn registration statement. Publication and issuance of registration certificate [Section 4, PD 957] A notice of the filing of the registration statement at the expense of the applicant-owner or dealer, in two newspapers general circulation, one published in English and another in Pilipino, once a week for two consecutive weeks. Notice shall state that subdivision lots or condominium units are open to inspection during business hours by interested parties. The project shall be deemed registered upon completion of the publication requirement. The fact of registration shall be evidenced by a registration certificate issued to the applicant-owner or dealer.
DEFINITION OF "BUY" OR "PURCHASE"
(a) include any contract to buy, purchase, or otherwise acquire for a valuable consideration a subdivision lot, including the building and other improvements, if any, in a subdivision project or a condominium unit in a condominium project. "Owner" shall refer to the registered owner of the land subject of a subdivision or a condominium project. "Developer" shall mean the person who develops or improves the subdivision project or condominium project for and in behalf of the owner thereof.
License to sell [Section 5, PD 957] The registration certificate does NOT authorize the owner or dealer to sell any unit. They must first obtain a license to sell within two weeks from the registration of the project. The license to sell is issued upon examination of the registration statement filed by the owner or dealer showing that: (1) the owner or dealer is of good repute (2) that his business is financially stable (3) that the proposed sale of subdivision lots or condominium units to the public would not be fraudulent
"Dealer" shall mean any person directly engaged as principal in the business of buying, selling or exchanging real estate whether on a full-time or part-time basis. "Broker" shall mean any person who, for commission or other compensation, undertakes to sell or negotiate the sale of a real estate belonging to another.
Performance bond [Section 6, PD 957] A license to sell can only be issued by the NHA if the owner or dealer files a performance bond guaranteeing the construction and maintenance of
"Salesman" shall refer to the person regularly employed by a broker to perform, for and in his behalf, any or all functions of a real estate broker.
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the roads, gutters, drainage, sewerage, water system, lighting systems, and full development of the subdivision project or the condominium project and the compliance by the owner or dealer with the applicable laws and rules and regulations. The bond shall be executed in favor of the Republic of the Philippines and shall authorize the Authority to use the proceeds thereof for the purposes of its undertaking in case of forfeiture as provided in this Decree.
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(2) Payment of prescribed fee (3) Filing of bond or other security (amount fixed by NHA) conditioned upon his faithful compliance with provisions of PD 957 When registration of DBS terminates (1) Termination of employment with dealer or broker (2) Expiration (31st day of Dec each year) Registration of DBS may be renewed not less than 30 nor more than 60 days before Jan 1 and by payment of fee. If renewal is not within said period, it shall be treated as an original application.
When license to sell and performance bond not required [Section 7, PD 957] A license to sell and performance bond shall not be required in any of the following transactions: (a) Sale of a subdivision lot resulting from the partition of land among co-owners and co-heirs. (b) Sale or transfer of a subdivision lot by the original purchaser thereof and any subsequent sale of the same lot. (c) Sale of a subdivision lot or a condominium unit by or for the account of a mortgagee in the ordinary course of business when necessary to liquidate a bona fide debt.
Revocation of registration as DBS [Section 12, PD 957] Grounds (1) Has violated any provision of this Decree or any rule or regulation made hereunder; or (2) Has made a material false statement in his application for registration; or (3) Has been guilty of a fraudulent act in connection with any sale of a subdivision lot or condominium unit; or (4) Has demonstrated his unworthiness to transact the business of dealer, broker, or salesman, as the case may be. The NHA may suspend the DBS' registration pending hearing of the case. The suspension or revocation of the registration of a dealer or broker (DB) shall carry with it all the suspension or revocation of the registration of all his salesmen (S).
Grounds for suspension of license to sell [Section 8, PD 957] (1) misleading, incorrect, inadequate, or incomplete information in registration statement (2) fraud upon prospective buyers on the sale or offering for a sale Note: suspension is confidential unless orer of suspension has been violated.
Characteristics of sale of a condominium or subdivision unit and similar contracts (1) Contracts to sell, deeds of sale, and other similar instruments must be registered with the Register of Deeds (2) Mortgages on unit or lot by owner/developer needs prior written approval by NHA for the protection of buyers (3) Advertisements by owner of developer become part of sales warranties enforceable against owner or developer (4) No forfeiture of installments already paid by buyer if buyer stops paying because of failure by owner or developer to develop subdivision or condominium (5) Failure to pay installments governed by Maceda Law [RA 6552] (6) Title is issued to the buyer upon full payment (7) Realty tax is paid by owner or developer while not fully paid; but if the buyer occupies the unit/lot, the owner/developer may recover the taxes from the buyer (8) Owner or developer cannot demand any other charges allegedly for community benefit (may be done by homeowner's association)
Grounds for revocation of registration certificate and license to sell [Section 9, PD 957] (1) Insolvency of owner/dealer (2) Violation of owner of PD 957 or its IRR or any undertaking of his/its performance bond (3) Has been or is engaged or is about to engage in fraudulent transactions (4) Misrepresentation in any prospectus, brochure, circular or other literature about the subdivision project or condominium project that has been distributed to prospective buyers (5) Bad business repute of owner/dealer (6) Does not conduct his business in accordance with law or sound business principles Requirement for Dealers, Brokers, and Salesmen (DBS) Registration Dealers, brokers, and salesmen (DBS) must be registered (Section 11, PD 957) Requisites of registration: (1) Good reputation and compliance with NHA rules
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Issuance of title [Section 25, PD 957] The owner or developer shall deliver the title of the lot or unit to the buyer upon full payment of the lot or unit. No fee, except those required for the registration of the deed of sale in the Registry of Deeds, shall be collected for the issuance of such title. In the event a mortgage over the lot or unit is outstanding at the time of the issuance of the title to the buyer, the owner or developer shall redeem the mortgage or the corresponding portion thereof within six months from such issuance in order that the title over any fully paid lot or unit may be secured and delivered to the buyer in accordance herewith.
Registration of sale, etc [Section 17, PD 957] All contracts to sell, deeds of sale and other similar instruments relative to the sale or conveyance of the subdivision lots and condominium units, whether or not the purchase price is paid in full, shall be registered by the seller in the Office of the Register of Deeds of the province or city where the property is situated. Mortgages on unit or lot by owner or developer [Section 18, PD 957] (a) Need prior written approval of the NHA (b) Must show that proceeds of mortgage will be used for development of the condominium or subdivision (c) Value of each lot or unit determined by the buyer (if there is one) and the buyer shall be notified before release of loan (d) Buyer may pay directly to mortgagee
Realty tax [Section 26, PD 957] Real estate tax and assessment on a lot or unit shall de paid by the owner or developer without recourse to the buyer for as long as the title has not passed the buyer; Provided, however, that if the buyer has actually taken possession of and occupied the lot or unit, he shall be liable to the owner or developer for such tax and assessment effective the year following such taking of possession and occupancy.
Advertisements by the owner or developer [Section 19, PD 957] (a) Must reflect real facts, must not mislead or deceive public (b) Owner or developer shall be liable for any misrepresentation as to facilities, etc. (c) Advertisements shall form part of the sales warranties enforceable against the owner or developer (d) Failure to comply with sales warranties is punishable under PD 957
No other charges [Section 27, PD 957] No owner or developer shall levy upon any lot or buyer a fee for an alleged community benefit. Fees to finance services for common comfort, security and sanitation may be collected only by a properly organized homeowners association and only with the consent of a majority of the lot or unit buyers actually residing in the subdivision or condominium project.
Non-forfeiture of payments (Section 23, PD 957) No installment payment made by a buyer in a subdivision or condominium project for the lot or unit he contracted to buy shall be forfeited in favor of the owner or developer when the buyer, after due notice to the owner or developer, desists from further payment due to the failure of the owner or developer to develop the subdivision or condominium project according to the approved plans and within the time limit for complying with the same. Such buyer may, at his option, be reimbursed the total amount paid including amortization interests but excluding delinquency interests, with interest thereon at the legal rate.
The Condominium Act (RA 4726) DEFINITION OF A CONDOMINIUM Sec. 2. A condominium is an interest in real property consisting of separate interest in a unit in a residential, industrial or commercial building and an undivided interest in common, directly or indirectly, in the land on which it is located and in other common areas of the building. A condominium may include, in addition, a separate interest in other portions of such real property. Title to the common areas, including the land, or the appurtenant interests in such areas, may be held by a corporation specially formed for the purpose (hereinafter known as the "condominium corporation") in which the holders of separate interest shall automatically be members or shareholders, to the exclusion of others, in proportion to the appurtenant interest of their respective units in the common areas.
Failure to pay installments [Section 24, PD 957] The rights of the buyer in the event of this failure to pay the installments due for reasons other than the failure of the owner or developer to develop the project shall be governed by Republic Act No. 6552 [Maceda Law].
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(2) Exclusive right to mortgage, pledge or encumber his condominium and to have the same appraised independently of the other condominiums but any obligation incurred by such condominium owner is personal to him
(a) separate interest in a unit in a residential, industrial or commercial building (b) undivided interest in the land on which the building is located and other common areas i. common areas may not be partitioned even by judicial decree [Section 7] (c) title to land and common areas held by condominium corporation - owners of separate interest are automatically members/shareholders, exclusively.
PARTITION BY SALE [SECTION 8] This is an action that may be brought by one or more persons owning condominiums in a condominium project for the partition of the project by the sale thereof. The effect is as if the owners of all the condominiums in such project were co-owners of the entire project in the same proportion as their interests as their interests in the common areas.
OTHER DEFINITIONS Sec. 3. As used in this Act, unless the context otherwise requires: (a) "Condominium" means a condominium as defined in Section 2. (b) "Unit" means a part of the condominium project intended for any type of independent use or ownership, including one or more rooms or spaces located in one or more floors (or part or parts of floors) in a building or buildings and such accessories as may be appended thereto. (c) "Project" means the entire parcel of real property divided or to be divided in condominiums, including all structures thereon, (d) "Common areas" means the entire project excepting all units separately granted or held or reserved. (e) "To divide" real property means to divide the ownership thereof or other interest therein by conveying one or more condominiums therein but less than the whole thereof.
A partition by sale can only be done upon showing any of the following: (1) That three years after damage or destruction to the project which renders material part thereof unfit for its use prior thereto, the project has not been rebuilt or repaired substantially to its state prior to its damage or destruction (2) That damage or destruction to the project has rendered one-half or more of the units therein untenantable and that condominium owners holding in aggregate more than thirty percent interest in the common areas are opposed to repair or restoration of the project (3) That the project has been in existence in excess of fifty years, that it is obsolete and uneconomic, and that condominium owners holding in aggregate more than fifty percent interest in the common areas are opposed to repair or restoration or remodeling or modernizing of the project (4) That the project or a material part thereof has been condemned or expropriated and that the project is no longer viable, or that the condominium owners holding in aggregate more than seventy percent interest in the common areas are opposed to continuation of the condominium regime after expropriation or condemnation of a material portion thereof (5) That the conditions for such partition by sale set forth in the declaration of restrictions, duly registered in accordance with the terms of the Condominium Act, have been met
TRANSFERS OR CONVEYANCES OF A UNIT OR AN APARTMENT, OFFICE OR STORE, OR OTHER SPACE THEREIN [SECTION 5, RA 4726] (a) Transfer or conveyance of a unit or a space therein includes the transfer or conveyance of the i. undivided interests in common areas ii. membership or shareholding in the condominium corporation (b) Proviso: only Filipino citizens or corporations at least 60% of the capital stock are owned by Filipino citizens may be the transferee of common areas in cases where the common areas are owned by the owners of separate units as co-owners (not by condominium corporation) (c) Exception to proviso: hereditary succession
DECLARATION OF RESTRICTIONS BY OWNER OF PROJECT - PRECONDITION TO CONVEYANCE [SECTION 9] (a) The owner must register with the Register of Deeds a declaration of restrictions before the conveyance of any condominium in the project (b) The restrictions constitute a lien upon each condominium in the project and shall insure to and bind all condominium owners in the project
RIGHTS OF A CONDOMINIUM UNIT OWNER (ASIDE FROM RIGHTS ARISING FROM OWNERSHIP) [SECTION 6] (1) Absolute right to sell or dispose of his condominium unless the master deed unless there is a right of first refusal in favor of condominium owners
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(c) The lien may be enforced by any condominium
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POWER OF ATTORNEY HELD BY CORPORATION IN CASE OF VOLUNTARY DISSOLUTION OF CONDOMINIUM CORPORATION [SECTION 15] The condominium corporation is deemed to hold a power of attorney from all members/stockholders to sell and dispose of their separate interests in the project. To liquidate, the condominium corporation will sell the entire project as if it owned the whole project itself, subject to the corporate and individual condominium creditors.
owner or by the management body of the project
ASSESSMENT IN ACCORDANCE WITH DECLARATION OF RESTRICTIONS [SECTION 20] This is the "tax imposition power" of the condominium corporation. If unpaid, the management body may cause a notice of assessment to be registered with the Register of Deeds, which may be released only upon payment of the assessed fees. This lien is superior to all other subsequent liens except real property taxes liens and other liens provided for in the declaration of restrictions.
SALE, EXCHANGE, LEASE, OR DISPOSITION BY CORPORATION OF THE COMMON AREAS [SECTION 16] Generally not allowed unless authorized by affirmative vote of all of the stockholders/members.
HOW LIEN ENFORCED AFTER NON-PAYMENT OF ASSESSED FEES [SECTION 20] Judicial or extra-judicial foreclosure of real property mortgages, where the management body may bid unless disallowed by the declaration of restrictions.
STOCKHOLDER/MEMBER DEMANDING PAYMENT FOR SHARES OR INTEREST AKA APPRAISAL RIGHT [SECTION 17] By-laws of the condominium corporation shall provide that any shareholder/member demanding payment for his share or interest must also consent to sell his separate interest in the project to the corporation or any buyer of the corporation's choice.
CONTENTS OF A DECLARATION OF RESTRICTIONS [SECTION 9] (1) Provisions for the management of the project by any of the ff bodies: (a) Condominium corporation (b) Association of condominium owners (c) Board of governors elected by condominium owners (d) Management agent elected by the owners or by the board named in the declaration (2) Provisions for voting majorities quorums, notices, meeting date, and other rules governing such body or bodies (3) Powers of the management body (4) Maintenance of insurance policies (fire, casualty, workmen's compensation, etc) (5) Maintenance, utility, gardening and other services for the common areas (6) Amendment of the restrictions (7) Reasonable assessment to meet expenditures (8) And many other provisions - the common thread is the management and maintenance of the common areas and the manner of exercise of the management body's powers
REQUIREMENTS FOR REGISTRATION OF CONVEYANCE WITH THE REGISTER OF DEEDS [SECTION 18] (1) Certificate of the management body of the project that the conveyance is in accordance with the declaration of restrictions REALTY TAX ON CONDOMINIUMS [SECTION 25] Each condominium separately owned shall be separately assessed, for purposes of real property taxation and other tax purposes to the owners thereof and the tax on each such condominium shall constitute a lien solely thereon.
INVOLUNTARY DISSOLUTION OF THE CONDOMINIUM CORPORATION [SECTION 12] In case of involuntary dissolution, the common areas held by the corporation shall be transferred proindiviso and in proportion to their interest to the members/stockholders of the corporation, subject to the rights of creditors of the corporation. The common areas remain in undivided co-ownership.
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General Provisions
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KINDS KINDS OF SUCCESSION
(1) Testamentary – that which results from the designation of an heir, made in a will executed in the form prescribed by law. [Art. 779, CC] (2) Legal or Intestate – that which takes place by operation of law in the absence of a valid will. (3) Mixed – that which is effected partly by will and partly by operation of law. [Art. 780, CC] (4) Compulsory – succession to the legitime and prevails over all other kinds of succession [Balane, 2010]
DEFINITION & TRANSMISSION Succession - a mode of acquisition by virtue of which the property, rights and obligations to the extent of the value of the inheritance, of a person are transmitted through his death to another or others either by his will or by operation of law. [Art 774, CC] Decedent - person whose property is transmitted through succession, whether or not he left a will. [Art 775, CC]
KINDS OF SUCCESSORS
Testator – a decedent who left a will [Art 775, CC]
(1) Heirs – those who are called to the whole or an aliquot portion of the inheritance either by will or by operation of law [Art 782, CC] (2) Devisees – persons to whom gifts of real property are given by virtue of a will (3) Legatees – persons to whom gifts of personal property are given by virtue of a will
Inheritance includes: (a) All the property, rights and obligations of a person which are not extinguished by his death [Art 776, CC] (b) Not only the property and the transmissible rights and obligations existing at the time of his death, but also those which have accrued thereto since the opening of the succession [Art 781, CC]
Note: The distinction is significant in case of preterition and imperfect disinheritance
What are transmitted? (a) Rights and obligations which are not strictly personal (intuit personae) [Balane, 2010] (b) Money debts of the decedent are not transmitted to the heirs nor paid by them. The estate pays them. [Balane, 2010]
KINDS OF HEIRS
(1) Compulsory Heirs – those who succeed by force of law to some portion of the inheritance, in an amount predetermined by law known as the legitime, of which they cannot be deprived by the testator, except by a valid disinheritance. They succeed regardless of a will. (2) Voluntary or Testamentary Heirs – those who are instituted by the testator in his will, to succeed to the portion of the inheritance of which the testator can freely dispose. They succeed by reason of a will. (3) Legal or Intestate Heirs – those who succeed to the estate of the decedent who dies without a valid will, or to the portion of such estate not disposed of by will, or when certain grounds are met
General Rule: All property rights which have accrued to the hereditary estate since the opening of succession are transmitted to the heirs Exception: Property acquired after the making of a will shall not pass to the heirs unless it should expressly appear in the will that such was the intention of the testator. [Art 793, CC] SUCCESSION OCCURS AT THE MOMENT OF DEATH General Rule: The rights to succession are transmitted from the moment of the death of the decedent. [Art 777, CC]
Testamentary Succession
Exception: A person may be “presumed” dead for the purpose of opening his succession. In this case, succession is only of provisional character because there is always a chance that the absentee may still be alive. [Arts. 390-391, CC].
WILLS IN GENERAL
Will - an act whereby a person is permitted, with the formalities prescribed by law to control to a certain degree the disposition of his estate to take effect after his death. [Art 783, CC]
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Kinds of Wills (5) Notarial – an ordinary or attested will, which must comply with the requirements of the law [Articles 804-808, CC] (6) Holographic – a will entirely written, dated and signed by the hand of the testator [Art. 810, CC]
(b) will disinheriting a compulsory heir (11) Statutory grant – permitted only by law, not a constitutional right [Balane (2004)] Rules of Construction and Interpretation [Art. 788-795] All rules are designed to ascertain and give effect to the intention of the testator.
Characteristics of Wills (1) Purely personal – will-making is non-delegable (a) making of a will cannot be left in whole or in part of the discretion of a third person, or accomplished through the instrumentality of an agent or attorney [Art 784, CC] (b) testator may not make a testamentary disposition in such manner that another person has to determine whether or not it is to be operative [Art 787, CC] What cannot be rd delegated to 3 persons (a) designation of heirs, devisees and legatees (b) duration/efficacy of designation (c) determination of portions, when referred to by name [Art 785, CC]
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Reason: testamentary succession is preferred to intestacy. (1) Different interpretations, in case of doubt, that which would make the will operative [Art 788, CC] (2) Words to be taken in their ordinary and grammatical sense unless there is a clear intention to use them in another sense [Art 790, CC] (3) Technical words are to be taken in their technical sense unless there is a contrary intention or when testator was unacquainted with such technical sense [Art 790, CC] (4) Words must be of an interpretation to give effect to every expression. To make it operative rather than inoperative; that which will prevent intestacy [Art 791, CC] (5) Invalidity of one of several dispositions does not result in invalidity of others unless the testator would not have made such dispositions if the first invalid disposition had not been made [Art 792, CC] (6) Every devise and legacy shall convey all the interest unless it clearly appears the intention was to convey a less interest [Art 794, CC] (7) Imperfect description, no person or property exactly answers to the description, mistakes, omissions [Art 790, CC]
What may be entrusted to rd 3 persons (a) designation of person/institution falling under a class specified by testator (b) manner of distribution of property specified by testator [Art 786, CC] Note: testator must first specify the class and the amount of property for proper delegation
(2) Free and intelligent [Art 839, CC] (3) Solemn and formal - if the form is defective, the will is void (4) Revocable and ambulatory – will can be revoked at any time before the testator’s death [Art 828, CC] (5) Mortis causa - takes effect upon the testator’s death (6) Individual – prohibition against joint wills [Art. 818, CC] (7) Executed with animus testandi – intent to dispose of the property (8) Executed with testamentary capacity (9) Unilateral act - does not involve an exchange of values or depend on simultaneous offer and acceptance (10) Dispositive – disposes of property
Kinds of Ambiguities Patent or Extrinsic Ambiguity (a) one which appears upon the face of the instrument
Latent or Intrinsic Ambiguity (a) one which cannot be seen from the reading of the will but which appears only upon consideration of extrinsic circumstances
Note: There is no distinction between patent and latent ambiguities in so far as the admissibility of parol or extrinsic evidence to aid testamentary disposition is concerned.
General Rule: Wills contain disposition of the testator’s estate mortis causa.
Resolving Ambiguities: General Rule: Intrinsic or extrinsic evidence may be used to ascertain the intention of the testator
Exceptions: (non-dispositive wills) (a) will recognizing an illegitimate child
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Exception: Oral declarations of the testator as to his intention must be excluded
FORM
Governing Law Formal Validity Rules Forms and solemnities of will are governed by the law of the country in which the will was executed [Art 17, CC]
TESTAMENTARY CAPACITY AND INTENT
(a) Testamentary capacity must exist at the time of
the execution of the will (b) Supervening incapacity does not invalidate an
effective will nor is the will of an incapable validated by a supervening of capacity [Art 801, CC]
Filipino in a foreign country can make a will according to: (1) Forms established by the law of the country in which he may be (2) Form according to Philippine law [Art 815]
Requisites - (SAP) (a) Testator is of Sound mind at the time of execution [Art. 798, CC] (b) Not under 18 years of Age [Art. 797, CC] (c) Not expressly Prohibited by law to make a will [Art. 796, CC]
Alien who is abroad may make the will according to: (1) The law of the place where he resides (2) Laws observed in his country (3) According to those which the Civil Code prescribes [Art 816]
Age Requirement Art 797, CC. Persons of either sex under the age of 18 cannot make a will.
(a) Prohibited wills executed by Filipinos in a foreign country shall not be valid in the Philippines even though authorized by the laws of the country of execution. [Art 819, CC] (b) Joint wills are prohibited even though they are valid in the foreign country where the Filipino wrote his will
“Year” shall be understood to be 12 calendar months [Sec 31, Book 1, Admin Code] Soundness of Mind of the Testator Negatively Stated (a) Not necessary that the testator be in full possession of reasoning faculties (b) Not necessary that the testator’s mind be wholly unbroken, unimpaired, unshattered by disease, injury or other cause [Art 799, CC]
Governing Law as to Place of Execution of Will Place of Testator Execution of Governing Law Will Philippines Philippine Law (Art. 16, CC) Outside of (1) Law of the country the in which it is Filipino Philippines executed (Art. 17, CC); or (2) Philippine Law (Art. 815, CC) Philippines (1) Philippine Law; or (2) Law of the country of which testator is a citizen or subject (Art. 817, CC) Outside of (1) Law of the place the where the will is Philippines executed (Art. 17, Alien CC); or (2) Law of the place where the testator resides; or (3) Law of the testator’s country; or (4) Philippine Law (Art. 816, CC)
Positively Stated: It is sufficient that the testator – (NPC) (a) Knew the Nature of the estate to be disposed of; (b) The Proper objects of his bounty; (c) Character of the testamentary act [Art. 799, CC] General Rule: Soundness of mind is presumed [Art. 800, CC] Exception: When the testator, one month or less, before the execution of the will was publicly known to be insane Aspect of the Will Formal Validity Intrinsic Validity
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Governing Law Law in force at the time the will was executed [Art. 795, CC] Law of decedent’s nationality at the time of his death [Art. 16 and 2263, CC]
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physical condition and position with relation to each other at the moment of inscription of each signature. [Jaboneta vs. Gustilo (1906)]
Aspects of the Will Governed by the National Law of the Decedent (1) Order of succession; (2) Amount of successional rights; (3) Intrinsic validity of testamentary provisions; and (4) Capacity to succeed
(3) MARGINAL SIGNATURES General Rule: Testator or his representative shall write his name, and the witnesses shall sign each and every page except the last page [Art. 805, CC]
Common Requirements [Art 804, CC] (1) In writing (2) In a language or dialect known to the testator
Exceptions: (a) When the will consists of only one page (b) When the will consists of only two pages, the first of which contains all dispositions and is signed at the bottom by the testator and the witnesses, and the second page contains only the attestation clause duly signed at the bottom by the witnesses. [Abangan vs. Abangan (1919)]
Notarial Wills Special Requirements for Notarial Wills. – (1) SUBSCRIPTION: Subscribed to, at the end [Art. 805, CC] (a) By the testator himself; or (b) By the testator’s name written by a representative in his presence and under his express direction.
Matias vs. Salud (1957): the use of thumbprint was allowed Icasiano vs. Icasiano (1964): The inadvertent failure of one witness to affix his signature to one page of a testament, due to the simultaneous lifting of two pages in the course of signing, is not per se sufficient to justify denial of probate.
(2) ATTESTATION: Attested and subscribed by 3 or more credible witnesses in the presence of the testator and of one another [Art. 805, CC] Attestation
Subscription
Mental act (act of the senses) Purpose is to render available proof during probate of will, not only of the authenticity of the will but also of its due execution
Mechanical (act of the hand) Purpose of identification
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(4) PAGE NUMBERINGS - Numbered correlatively in letters placed on the upper part of each page. [Art. 805, CC] (a) i.e., Page One of Five pages (b) Mandatory part: pagination by means of a conventional system (c) Directory part: pagination in letters on the upper part of each page [Balane (2010)] (5) ACKNOWLEDGED before a notary public by the testator and the witnesses [Art. 806, CC] (a) Notary public cannot be considered a third witness. He cannot acknowledge before himself his having signed the will. To allow such would have the effect of having only two attesting witnesses to the will [Cruz v Villasor(1973)] (b) The certification of acknowledgement need not be signed by the notary in the presence of the testator and the witnesses. [Javellana v Ledesma 1955)]
The attestation clause shall state the following: (a) Number of pages; (b) The fact that the testator or his representative under his express direction signed the will and every page in the presence of instrumental witnesses (c) That the witnesses signed the will and all its pages in the presence of the testator and of one another. Cagro v Cagro (1953): The signatures of the witnesses must be at the bottom of the attestation clause
Special Rules for Handicapped Deaf Mute [Art. 807, CC] (a) Testator must personally read the will; or (b) Testator shall personally designate two persons to read the contents and communicate it to him in some practicable manner.
Cruz v Villasor (1973): The notary public cannot be counted as an attesting witness Test of presence Not whether they actually saw each other sign, but whether they might have seen each other sign had they chosen to do so considering their mental and
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Blind [Art. 808, CC] (a) The will shall be read to the testator twice - By one of the subscribing witnesses and by the notary public acknowledging the will. (b) A testator suffering from glaucoma is considered as legally blind [Garcia vs. Vasquez (1970)]
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Holographic Wills Requisites (1) In writing [Art. 804, CC] (2) In a language known to the testator [Art. 804, CC] (3) Entirely written, dated and signed in the hand of the testator himself [Art. 810, CC]
Substantial Compliance Art. 809, CC. In the absence of bad faith, forgery, or fraud, or undue and improper pressure and influence, defects and imperfections in the form of attestation or in the language used therein shall not render the will invalid if it is proved that the will was in fact executed and attested in substantial compliance with all the requirements of Article 805. Substantial compliance rule applies only in cases when such defects and imperfections can be supplied by an examination of the will itself Examples: (a) Whether all pages are consecutively numbered (b) Whether the signatures appear in each and every page (c) Whether the subscribing witnesses are three (d) Whether the will was notarized [Caneda v CA]
Advantages
Disadvantages
(a) Simple and easy to make (b) Induces foreigners in this jurisdiction to set down their last wishes (c) Guarantees the absolute secrecy of the testamentary dispositions
(a) No guarantee as to the capacity of the testator (b) No protection against violence, intimidation or undue influence (c) May not faithfully express the will of the testator due to faulty expressions (d) Can be easily falsified and concealed
Witnesses Required for Probate – [Art. 811] (a) At least one witness who knows the handwriting and signature of the testator; explicitly declare that it is the testator’s (b) If contested – at least 3 of such witnesses (c) In the absence of a competent witness, expert testimony may be resorted to
WITNESSES
Qualifications [Art. 820, CC] (1) Of sound mind (2) Aged 18 years or over (3) Not blind, deaf or dumb (4) Able to read and write
General Rule: The holographic will itself must be presented for probate [Gan v Yap (1958)]
Disqualifications [Art. 821, CC] (1) Person not domiciled in the Philippines (2) Those who have been convicted of falsification, perjury, or false testimony.
Exception: If there is a photostatic copy or xerox copy of the holographic will, it may be presented for probate [Rodelas v Aranza (1982)]
Interested witness [Art. 823, CC]
Notarial Will v. Holographic Will
General Rule Devises or legacies in favor of a spouse, parent or child who also attests to the will as a witness shall be void
Notarial Will NOTARIAL codicil ONLY
Exception If there are three other competent witnesses, the device or legacy shall be valid and the interested witness shall be treated as a mere surplusage
Holographic Will Notarial Codicil; or Holographic Codicil; or Additional dispositions below the signature, dated and signed in the hand of the testator.
Insertion, Cancellation, Erasure or Alteration – (a) Testator must authenticate by his FULL SIGNATURE (b) Full signature does not necessarily mean the testator’s full name; it rather means his usual and customary signature. [Balane (2010)]
(a) Creditors are not incompetent to be witnesses [Art. 824, CC] (b) Supervening incompetency shall not prevent the allowance of the will [Art. 822, CC]
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Effect of insertion written by another person on the validity of a holographic will When made
Effect
After the execution, without consent of testator
Insertion considered not written. Validity cannot be defeated by the malice or caprice of a third person Will is valid, insertion is void. Insertion becomes part of the will. Entire will becomes void because it is not wholly written by the testator. Will is void because it is not written entirely by the testator
After execution, with consent After execution, validated by testator’s signature Contemporaneous to the execution of the will
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Prohibition is applicable only to joint wills executed by Filipinos. CODICILS
Codicil [Arts. 825-826, CC] (1) It is a supplement or addition to a will, (2) made after the execution of a will, (3) and annexed to be taken as a part of the will, (4) by which any disposition made in the original will is explained, added to, or altered. (5) in order that it may be effective, it shall be executed as in the case of a will. INCORPORATION BY REFERENCE
Requisites [Art 827, CC] (1) The document or paper referred to in the will must be in existence at the time of the execution of the will. (2) The will must clearly describe and identify the same, stating among other things the number of pages thereof. (3) It must be identified by clear and satisfactory proof as the document or paper referred to therein; and (4) It must be signed by the testator and the witnesses on each and every page, except in case of voluminous books of account or inventories.
Joint Wills Art. 818, CC. Two or more persons cannot make a will jointly, or in the same instrument, either for their reciprocal benefit or for the benefit of a third person. Art. 819, CC Wills, prohibited by the preceding article, executed by Filipinos in a foreign country shall not be valid in the Philippines, even though authorized by the laws of the country where they may have been executed.
REVOCATION
Modes of Revocation [Art. 830, CC] (1) By implication of law; or (2) By the execution of a will, codicil or other writing executed as provided in the case of wills; or (3) By burning, tearing, canceling, or obliterating the will with the intention of revoking it, by the testator himself, or by some other person in his presence, and by his express direction.
Joint Will (1) A single testamentary instrument, (2) Which contains the wills of two or more persons, (3) Jointly executed by them, (4) Either for their reciprocal benefit or for the benefit of a third person.
Note: The act contemplating revocation must be done at any time before the death of the testator. The right of revocation cannot be waived or restricted. (Art. 828, CC)
Mutual Wills (1) Executed pursuant to an agreement between two or more persons, (2) Jointly executed by them, (3) Either for their reciprocal benefit or for the benefit of a third person.
Law Governing Revocation (Art. 829, CC) Place of Testator’s Governing Law Revocation Domicile Philippines, or Philippine Law Philippines some other country Philippines Philippine Law
Reciprocal Wills (1) Testators name each other as beneficiaries in their own wills, (2) under similar testamentary plans Note: A will that is both joint and mutual is one executed jointly by two or more persons, the provisions of which are reciprocal and which shows on its face the devises are made in consideration of each other. Such is prohibited under Art. 819, CC.
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Place of Revocation
Testator’s Domicile
Governing Law
Foreign Country Outside the Philippines
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contained in a previous one which is void as to its form [Art. 835, CC]. (1) Tolentino: Reproduction in the codicil is required only when the original will is void as to it form; in all other cases, reference to the original will suffices to republish it through the codicil. (c) If after making a will, the testator makes a second will expressly revoking the first, the revocation of the second will does not revive the first will, which can be revived only by another will or codicil. (1) PRINCIPLE OF INSTANTER: Revoking clause nd in the 2 will is NOT TESTAMENTARY in character but operates to revoke the prior will INSTANTER upon the execution of the will nd containing it. The revocation of the 2 will st does not revive the 1 will which has already become a NULLITY.
(1) Law of the place where the will was made; or (2) Law of the place in which the testator had his domicile at the time of revocation
Doctrine of Dependent Relative Revocation— The rule that where the act of destruction is connected with the making of another will so as to fairly raise the inference that the testator meant the revocation of the old to depend upon the efficacy of the new disposition intended to be substituted, the revocation will be conditional and dependent upon the efficacy of the new disposition; and if for any reason, the new will intended to be made as a substitute is inoperative, the revocation fails and the original will remain in full force. [Molo vs. Molo, 1951]
Republication vs. Revival Republication (a) Takes place by an act of the testator (b) Corrects extrinsic and intrinsic defects
The failure of the new testamentary disposition upon whose validity the revocation depends is equivalent to the non-fulfillment of a suspensive condition and hence prevents the revocation of the original will.
Revival (a) Takes place by operation of law (b) Restores a revoked will
ALLOWANCE AND DISALLOWANCE OF WILLS
Revocation vs. Nullity Revocation
Nullity
(a) By the act of the testator (b) Presupposes a valid act (c) Takes place during the lifetime of the testator (d) Testator cannot renounce the right to revoke
(a) Proceeds from law (b) Inherent in the testament, be it an intrinsic or an extrinsic defect (c) Invoked after the testator’s death by his heirs (d) Nullity of a will can be disregarded by the heirs through voluntary compliance therewith
Probate Requirement Probate –a Special Proceeding required to establish the validity of a will and in order to pass real or personal property [Art. 838, CC] Matters to be proved in probate (1) Whether the instrument which is offered for probate is the last will and testament of the decedent (2) Whether the will has been executed in accordance with the formalities prescribed by law (3) Whether the testator had testamentary capacity at the time of execution of the will Issues to be resolved in probate proceedings – [Art. 839] General Rule: the probate court cannot inquire into the intrinsic validity of testamentary provisions. Only the extrinsic validity of such wills may be examined. Exceptions: when practical considerations demand the intrinsic validity of the will be resolved (a) Acain vs Diongson (1987): When the will is intrinsically void on its face such that to rule on its formal validity would be a futile exercise
REPUBLICATION AND REVIVAL
(a) The execution of a codicil referring to a previous will has the effect of republishing the will as modified by the codicil [Art. 836, CC]. (b) The testator cannot republish without reproducing in a subsequent will, the dispositions
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(b) Valera vs. Inserto (1987): Claimants are all heirs and they consent either, expressly or impliedly, to the submission of the question of intrinsic validity to the court. (c) Pastor vs. CA (1983): Probate court may pass upon the title thereto, but such determination is provisional and not conclusive, and is subject to the final decision in a separate action to resolve title.
who are to succeed him in his property and transmissible rights and obligation [Art 840, CC] A will shall be VALID even though it (1) should not contain an institution of an heir or (2) such institution should not comprise the entire estate or (3) the person so instituted should not accept the inheritance or be incapacitated to succeed. In such cases, the testamentary dispositions made in accordance with law shall be complied with and the remainder of the estate shall pass to the legal heirs [Art. 841, CC].
Revocation v. Disallowance Revocation
Disallowance
Voluntary Act of the Testator With or Without Cause
Given by Judicial Decree
May be partial or total
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EXTENT OF GRANT [ART. 842, CC]:
Freedom of disposition depends upon the existence, kind and number of compulosry heirs. (1) No compulsory heirs Full power of disposition (2) One with compulsory heirs cannot disregard the rights of the latter (i.e. legitime)
Must always be for a legal cause Always total, except when the ground of fraud of influence for example affects only certain portions of the will
EFFECT OF PREDECEASE OF HEIR (ART. 856, CC):
Any heir who dies before the testator or is incapacitated to succeed or renounces the inheritance transmits no rights of the testator to his own heirs. This is without prejudice to the rights of representation. [Tolentino]
Effect of Final Decree of Probate, Res Judicata on Formal Validity The probate of a will by the probate court having jurisdiction thereof is usually considered as conclusive as to its due execution and validity, and is also conclusive that the testator was of sound and disposing mind at the time when he executed the will, and was not acting under duress, menace, fraud, or undue influence, and that the will is genuine and not a forgery. [Mercado vs. Santos, 1938]
IDENTIFICATION OF HEIRS, MANNER OF INSTITUTION [ART.
843-849; 851-853]
FALSE CAUSE [ART. 850]:
The statement of a false cause for the institution of an heir shall be considered as not written unless it appears from the will that the testator would not have made such institution if he had known the falsity of such cause.
Grounds for Denying Probate (SUM IFF) (1) If the Signature of the testator was procured by fraud; (2) If it was procured by Undue and improper pressure and influence, on the part of the beneficiary or some other person; (3) If the testator acted by Mistake or did not intend that the instrument he signed should be his will at the time affixing his signature thereto; (4) If the testator was Insane or otherwise mentally incapable of making a will at the time of its execution; (5) If the Formalities required by law have not been complied with; or (6) If it was executed through Force or under duress, or the influence of fear, or threats.
PRETERITION
The preterition or omission of one, some, or all of the compulsory heirs in the direct line, whether living at the time of the execution of the will or born after the death of the testator, shall annul the institution of heir; but the devises and legacies shall be valid insofar as they are not inofficious. If the omitted compulsory heirs should die before the testator, the institution shall be effectual, without prejudice to the right of representation. [Art. 854, CC] Concept [Art. 854, CC] (a) There must be a total omission of one, some or all of the heir/s from the inheritance. [Balane citing Seangio vs Reyes (2006)] (b) The omission must be that of a compulsory heir. (c) The compulsory heir omitted must be of the direct line.
INSTITUTION OF HEIRS Institution of Heirs – an act by virtue of which the testator designates in his will the person or persons
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(d) The omitted compulsory heir must be living at the time of the testator’s death or must at least have been conceived before the testator’s death.
(1) Neri vs. Akutin (1941): When there are no devises and legacies, preterition will result in the annulment of the will and give rise to intestate succession.
COMPULSORY HEIRS IN THE DIRECT LINE
SUBSTITUTION OF HEIRS
A direct line is that constituted by the series of degrees among ascendants and descendants (ascending and descending). [Art 964 par.2]
DEFINITION
Substitution - is the appointment of another heir, so that he may enter into the inheritance in default of the heir originally instituted. [Art 857, CC]
PRETERITION V. DISPOSITION LESS THAN LEGITIME
BALANE: (a) If the heir in question is instituted in the will but the portion given to him by the will is less than his legitime – there is no preterition. [Reyes vs Barretto-Datu (1967)] (b) If the heir is given a legacy or devise – there is no preterition. [Aznar vs Duncan (1966)] (c) If the heir had received a donation inter vivos from the testator – the better view is that there is no preterition. The donation inter vivos is treated as an advance on the legitime under Articles 906, 909, 910 and 1062 (d) The remedy, if the value of inheritance, legacy or devise, or donation inter vivos is only for completion of his legitime under Articles 906 and 907
KINDS
Brief or Compendious [Art. 860, CC] (a) Brief – Two or more persons were designated by the testator to substitute for only one heir (b) Compendious – One person is designated to take the place of two or more heirs Reciprocal If the heirs instituted in unequal shares should be reciprocally substituted, the substitute shall acquire the share of the heir who dies, renounces, or is incapacitated, unless it clearly appears that the intention of the testator was otherwise. If there is more than one substitute, they shall have the same share in the substitution as the institution. Example (only 1 substitute): If two heirs are reciprocally substituted, then if one of them dies before the testator dies, renounces, or turns out to be incapacitated, the other will get his share, regardless of whether or not their shares are equal.
DISTINGUISHED FROM DISINHERITANCE
Preterition
Disinheritance
(a) Tacit deprivation of a compulsory heir of his legitime (b) May be voluntary but the presumption of law is that it is involuntary (c) Law presumes there has been merely oversight or mistake on the part of the testator (d) Omitted heir gets not only his legitime but also his share in the free portion not disposed of by way of legacies and devises
(a) Express deprivation of a compulsory heir of his legitime (b) Always voluntary (c) For some legal cause (d) If the disinheritance is valid, the compulsory heir disinheritied is totally excluded from the inheritance. In case of unlawful disinheritance, the compulsory heir is merely restored to his legitime
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Example (more than 1 substitute): A is instituted to 1/3, B to 1/6, and C to ½. If C dies before the testator, renounces or turns out to be incapacitated, then the other two will get his shares in the same proportion as in the institution. A will get twice as much as B (because his share of 1/3 in the institution is twice the size of B’s share of 1/6) Simple Substitution [Art. 859, CC]. – The testator may designate one or more persons to substitute the heir/s instituted in case the heirs should: (1) die before him (predecease), (2) should not wish to accept the inheritance (repudiation), or (3) should be incapacitated to accept the inheritance (incapacitated). [Art. 859, CC] Fideicommisary Substitution. – The testator institutes an heir with an obligation to preserve and to deliver to another the property so inherited. The heir instituted to such condition is called the First Heir or the Fiduciary Heir; the one to receive the property is the fideicommissary or the second heir. [Art 863, CC]
EFFECTS OF PRETERITION [ART. 854, CC]
(a) The institution of the heir is annulled. (b) Devises and legacies shall remain valid as long as they are not inofficious. (c) If the omitted compulsory heir should die before the testator, the institution shall be effective, without prejudice to the right of representation.
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Requisites of a Fideicommisary Substitution [Arts. 863865, CC] (1) A Fiduciary or First Heir instituted is entrusted with the obligation to preserve and to transmit to a Fideicommissary Substitute or Second Heir the whole or part of the inheritance. (2) The substitution must not go beyond one degree from the heir originally instituted. (3) The Fiduciary Heir and the Fideicommissary are living at the time of the death of the testator. (4) The fideicommissary substitution must be expressly made. (5) The fideicommissary substitution is imposed on the free portion of the estate and never on the legitime
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CONDITIONS
Basis of testator’s right to impose conditions, terms or modes: Testamentary freedom Prohibited conditions: (considered as not imposed) (1) Any charge, condition or substitution whatsoever upon the legitimes. [Art. 872] (2) Impossible and illegal conditions. [Art 873] (3) Absolute condition not to contract a first or subsequent marriage unless imposed on the widow or widower by the deceased spouse, or by the latter’s ascendants or descendants. [Art. 874] (4) Scriptura captatoria or legacy-hunting dispositions* [Art. 875] Scriptura captatoria/ Legacy-Hunting Dispositions (a) Reasons for prohibition (1) The captatoria converts the testamentary grants into contractual transactions; (2) It deprives the heirs of testamentary freedom; (3) It gives the testator the power to dispose mortis causa not only of his property but also of his heir’s. (b) Effect : Entire disposition is void
Note: (a) Palacios vs. Ramirez (1982): “Degree” refers to degree of relationship. (b) PCIB vs. Escolin (1974): In the absence of an obligation on the part of the first heir to preserve the property for the second heir, there is no fideicommissary substitution. Effects of predecease of the first heir/fiduciary or the second heir/fideicommisary (a) Legend: (1) T – Testator (2) FH – First Heir / Fiduciary (3) SH – Second Heir / Fideicommissary Substitute (b) Situation 1: If the following is the sequence of death of the three parties: FH – SH – T, who will inherit? The legal heirs. There is no fideicommissary substitution because FH and SH are not living at the time of the testator’s death. (Art 863, CC) (c) Situation 2: T – SH – FH, who will inherit? The SH and his heirs under Art. 866, CC. This is because the SH passes his rights to his own heirs when he dies before FH. (d) Situation 3: FH – T – SH, who will inherit? No specific provision in law, but SH inherits because the T intended him to inherit.
Potestative, Casual and Mixed Conditions (a) Potestative Conditions General Rule: Must be fulfilled as soon as the heir learns of the testator’s death Exception: If the condition was already complied with at the time the heir learns of the testator’s death; or if the condition is of such a nature that it cannot be fulfilled again. Constructive Compliance: deemed fulfilled (b) Casual or mixed General Rule: May be fulfilled at any time (before or after testator’s death), unless testator provides otherwise. Exception: If already fulfilled at the time of execution of will: (1) if testator unaware of the fact of fulfillment – deemed fulfilled (2) if testator aware: (a) can no longer be fulfilled again: deemed fulfilled (b) can be fulfilled again: must be fulfilled again. Constructive Compliance: (a) if casual – not applicable (b) if mixed – applicable only if dependent partly on the will of a third party not interested.
TESTAMENTARY DISPOSITIONS WITH A CONDITION, A TERM, AND A MODE 3 KINDS OF TESTAMENTARY DISPOSITIONS (1) Conditional (obliquely defined in Article 1179, par. 1) (2) Dispositions with a term (obliquely defined in Article 1193, pars. 1 and 3) (3) Dispositions with a mode/modal dispositions (obliquely defined in Article 882)
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Mode [Art. 882, CC] Definition – an obligation imposed upon the heir, without suspending, as a condition does, the effectivity of the institution (a) Must be clearly imposed as an obligation in order to be considered as one. Mere preferences or wishes expressed by the testator are not modes. (b) A mode functions similarly to a resolutory condition.
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(a) Widow or Widower / Surviving Spouse (Legitimate) (b) Illegitimate Children and Illegitimate Descendants If the testator is a LEGITIMATE CHILD: (1) LC and descendants (2) In default of No. 1, LP and ascendants (3) SS
Caución Muciana DEFINITION: A security to guarantee the return of the value of property, fruits, and interests, in case of contravention of condition, term or mode
(4) IC and descendants
If the testator is an ILLEGITIMATE CHILD: (1) LC and descendants (2) ILC and descendants (3) In default of Nos. 1-2. ILP only (4) SS
Specific Rules on Legitimes Direct Descending Line (a) Rule of Preference between lines [Art 978 and 985, CC] (1) Those in the direct descending line shall exclude those in the direct ascending and collateral lines; and (2) Those in the direct ascending line shall, in turn, exclude those in the collateral line. (3) Rule of Proximity [Art 926, CC] The relative nearest in degree excludes the farther one (b) Right or representation ad infinitum in case of predecease, incapacity, or disinheritance [Art 972 and 992, CC] (1) For decedents who are Legitimate Children, only the Legitimate Descendants are entitled to right of representation. (2) For decedents who are Illegitimate Children, both the Legitimate and the Illegitimate Descendants can represent, only with respect to the decedent’s illegitimate parents. (c) If all the Legitimate Children repudiate their legitime, the next generation of Legitimate Descendants may succeed in their own right.
Instances when it is needed: (1) Suspensive term [Art. 885] (2) Negative potestative condition - when the condition imposed upon the heir is negative, or consists in not doing or not giving something [Art 879] (3) Mode [Art 882, par 2] LEGITIME DEFINITION [ART. 886]
(a) It is that part of the testator’s property which he cannot dispose of, (b) Because the law has reserved it for his compulsory heirs. COMPULSORY HEIRS AND VARIOUS COMBINATIONS
Classes of Compulsory Heirs [Art. 887, CC] (1) Primary: Those who have precedence over and exclude other compulsory heirs: Legitimate Children and Legitimate Descendants with respect to their Legitimate Parents and Ascendants (2) Secondary: Those who succeed only in the absence of the Primary compulsory heirs: (a) Legitimate Parents and Legitimate Ascendants, with respect to their Legitimate Children and Descendants. (They will inherit only in default of legitimate children and their descendants) (b) Illegitimate Parents with respect to their Illegitimate Children. (They will inherit only in default of the illegitimate and legitimate children and their respective descendants). Note that other illegitimate ascendants are not included.
Direct Ascending Line (a) Rule of division between lines (1) The father and the mother shall inherit equally if both living. One succeeds to the entire estate of the child if the other is dead. [Art. 986, CC] (2) In default of the mother and the father, the ascendants nearest in degree will inherit. [Art. 987] (3) If there is more than one relative of the same degree but of different lines, one half will go to the paternal ascendants and the other half to the maternal ascendants. [Art. 987] (b) Rule of equal division (1) The relatives who are in the same degree shall inherit in equal shares. [Art 987]
(3) Concurring: Those who succeed together with the primary or the secondary compulsory heirs:
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Summary of Legitimes of Compulsory Heirs Surviving Relatives
Legitimate Children [LC] & Descendants
1
LC alone
2
1 LC, SS
1/2 of the estate in equal portions ½
3
LC, SS
1/2 in equal portions
4
LC, ILC
½ in equal portions
5
1 LC, SS, ILC
½
1/2 in equal portions
Surviving Spouse [SS]
Illegitimate Children [ILC]
Legitimat e Parents [LP] & Ascendant s
¼ Same portion as 1 LC
1/4 (preferred)
6
2 or more LC, SS, ILC
Same as share of 1 LC
7
LP alone
8
LP, ILC
9
LP, SS
¼
1 0 11
LP, SS, ILC
1/8
12
ILC, SS
1/3
13
SS alone
1/2
1/2 share of 1 LC (for reach ILC) 1/2 share of 1 LC (for each child) N.B. The share of the ILC may suffer reduction pro rata because spouse is given preference 1/2 share of 1 LC (for each child) 1/2 ¼ in equal portions
ILC alone
*SS alone where marriage is in articulo mortis and testator dies within 3 months from marriage – 1/3 But if they have been living together as husband and wife for more than 5 years – 1/2
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1/2 1/2
¼ 1/2 in equal portions 1/3 in equal portions
1/2
Illegitimate Parents [ILP]
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Legitimate Children [LC] & Descendants
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Surviving Spouse [SS]
14
ILP alone
15
ILP, SS
¼
16
Adopter, ILC, SS
1/3
Partial impairment Impairment by inofficious donations
Legitimat e Parents [LP] & Ascendant s
Illegitimate Parents [ILP] 1/2
Steps in Determining the Legitime of Compulsory Heirs (1) Determine the gross value of the estate at the time of the death of the testator. (2) Determine all debts and charges which are chargeable against the estate. (3) Determine the net value of the estate by deducting all the debts and charges from the gross value of the estate. (4) Collate or add the value of all donations inter vivos to the net value of the estate. (5) Determine the amount of the legitime from the total thus found. (6) Impute the value of all donations inter vivos made to strangers against the disposable free portion and restore it to the estate if the donation is inofficious. (7) Distribute the residue of the estate in accordance with the will of the testator. Remedy of a Compulsory of Legitime Extent and Nature of Impairment Total omission of a compulsory heir who is a direct descendant or ascendant (preterition) Testamentary dispositions impairing or diminishing the legitime
Illegitimate Children [ILC]
1/4 1/3
1/3 (adopter)
or a brother or sister, is obliged to reserve such property as he may have acquired by operation of law for the benefit of relatives who are within the third degree and who belong to the line from which said property came. Concept of Reserva Troncal [Art. 891, CC] (1) A descendant (prepositus) inherits or acquires property from an ascendant (origin or mediate source) by gratuitous title or from a brother or sister (2) The same property is inherited by another ascendant (reservista) or is otherwise acquired by him by operation of law from the said descendant (prepositus) (3) The said ascendant (reservista) must reserve the property for the benefit of the relatives of the deceased descendant within the third civil degree and who belong to the line from which the said property came (reservatarios).
Heir in case of Impairment
Parties: [Balane (2010)] (1) Origin or Mediate Source – either an ascendant of any degree of ascent or a brother or sister of the st Prepositus; responsible for the 1 transfer (2) Prepositus – the first transferee of the reserved property (3) Reservista – an ascendant of the Prepositus other than the Origin or Mediate Source; the one obligated to reserve the property rd (4) Reservatarios – within the 3 degree of consanguinity from the Prepositus [Cabardo v. Villanueva (1922)] belonging to the line from which the property came
Remedy Annulment of institution and reduction of legacies and devises [Art. 854, CC] Reduction of the disposition insofar as they may be inofficious or excessive [Art. 907, CC] Completion of the legitime [Art. 906, CC] Collation – reduction of donations [Arts. 771 and 911, CC]
Requisites for Reserva Troncal [Chua vs. CFI(1977)] (1) That the property was acquired by a descendant (Prepositus) from an ascendant or from a brother or sister (Origin or Mediate Source) by gratuitous title, (2) That the Prepositus died without (legitimate*) issue, (3) That the property is inherited by another ascendant (Reservista) by operation of law, and
RESERVA TRONCAL
Art. 891. The ascendant who inherits from his descendant any property which the latter may have acquired by gratuitous title from another ascendant,
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rd
(4) That there are relatives within the 3 degree (Reservatarios) belonging to the line from which said property came.
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Two Views (1) Reserva Maxima: The entire property will be considered acquired as legitime and therefore wholly reservable (2) Reserva Minima: One half is reservable, the other half is not subject to reserva troncal [Tolentino, p. 284]
Note: Only legitimate descendants will prevent the property from being inherited by the legitimate ascending line by operation of law [Balane] 3 transmissions involved: [Balane (2010)] st (a) 1 transfer – by gratuitous title, from a person to his descent, brother or sister nd (b) 2 transfer – by operation of law, from the st transferee in the 1 transfer to another ascendant. This creates the reserve. rd (c) 3 transfer – from the transferee in the second transfer to the relatives
Extinguishment of the Reserva) (LDD-RRP) (1) Loss of the reservable property (2) Death of the reservista (3) Death of all the relatives within the third degree belonging to the line from which the property came (4) Renunciation by the reservatarios (5) Registration of the reservable property under the Torrens system as free (6) Prescription, when the reservista holds the property adversely against the reservatarios, as free from reservation
Juridical Nature of Rights Nature of the reservista’s right: [Balane citing Edroso v Sablan] (a) The reservista’s right over the reserved property is one of ownership (b) The right of ownership is subject to a resolutory condition, i.e. the existence of reservatarios at the time (c) The right of ownership is alienable, but subject to the same resolutory condition. (d) The reservista’s right of ownership is registrable.
DISINHERITANCE
Definition of Disinheritance [Art. 915, CC] (1) It is the act by which the testator (2) For just cause (3) Deprives a compulsory heir of his right to the legitime. Requisites of a Valid Disinheritance (1) Heir disinherited must be designated by name or in such a manner as to leave no room for doubt as to who is intended to be disinherited. (2) It must be for a cause designated by law. (3) It must be made in a valid will. (4) It must be made expressly, stating the cause in the will itself. (5) The cause must be certain and true, and must be proved by the interested heir if the person should deny it. (6) It must be unconditional. (7) It must be total.
Nature of reservatarios’ right: [Balane citing Sienes v Esparcia] (a) The reservatarios have a right of expectancy over the property. (b) The right is subject to a suspensive condition, i.e. the expectancy ripens into ownership if the reservatarios survive the reservistas. (c) The right is alienable but subject to the same suspensive condition. (d) The right is registrable. Reserva Minima v. Reserva Maxima (1) The prepositus acquired property gratuitously from an ascendant, a brother or sister (2) In his will, he institutes as his heir his ascendant (who is also a compulsory heir) such that the ascendant receives half of the estate by operation of law as legitime and the other half by testamentary disposition
Disinheritance for cause Disinheritance of children and descendants Article 919. The following shall be sufficient causes for the disinheritance of children and descendants, legitimate as well as illegitimate: (1) When a child or descendant has been found guilty of an attempt against the life of the testator, his or her spouse, descendants, or ascendants; (2) When a child or descendant has been convicted of adultery or concubinage with the spouse of the testator; (3) When a child or descendant by fraud, violence, intimidation, or undue influence causes the
Problem: Will the property acquired gratuitiously by the prepositus from the source be treated as acquired by the ascendant-heir by operation of law (legitime) and therefore reservable or by testamentary disposition?
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testator to make a will or to change one already made; (4) A refusal without justifiable cause to support the parent or ascendant who disinherits such child or descendant; (5) Maltreatment of the testator by word or deed, by the child or descendant; (6) When a child or descendant leads a dishonorable or disgraceful life; (7) Conviction of a crime which carries with it the penalty of civil interdiction.
testator to make a will or to change one already made; (6) The loss of parental authority for causes specified in this Code; (7) The refusal to support the children or descendants without justifiable cause; (8) An attempt by one of the parents against the life of the other, unless there has been a reconciliation between them. Disinheritance of a spouse – [Article 921, CC] Article 921. The following shall be sufficient causes for disinheriting a spouse: (1) When the spouse has been convicted of an attempt against the life of the testator, his or her descendants, or ascendants; (2) When the spouse has accused the testator of a crime for which the law prescribes imprisonment of six years or more, and the accusation has been found to be false; (3) When the spouse by fraud, violence, intimidation, or undue influence cause the testator to make a will or to change one already made; (4) When the spouse has given cause for legal separation; (5) When the spouse has given grounds for the loss of parental authority; (6) Unjustifiable refusal to support the children or the other spouse.
Disinheritance of parents and ascendants Article 920. The following shall be sufficient causes for the disinheritance of parents or ascendants, whether legitimate or illegitimate: (1) When the parents have abandoned their children or induced their daughters to live a corrupt or immoral life, or attempted against their virtue; (2) When the parent or ascendant has been convicted of an attempt against the life of the testator, his or her spouse, descendants, or ascendants; (3) When the parent or ascendant has accused the testator of a crime for which the law prescribes imprisonment for six years or more, if the accusation has been found to be false; (4) When the parent or ascendant has been convicted of adultery or concubinage with the spouse of the testator; (5) When the parent or ascendant by fraud, violence, intimidation, or undue influence causes the
1
Summary of Causes of Disinheritance [CC 919] [CC 920] Grounds for Disinheritance Children & Parents & Descendants Ascendants Guilty or Convicted of Attempt Against the Life of the Testator, Spouse, Ascendant or * * Descendant
2
Accused Testator or Decedent of Crime Punishable by Imprisonment of 6 years or more, and Found Groundless or False
3
Causes testator or decedent to Make a Will or Change one by Fraud, Violence, Intimidation, or Undue Influence Unjustified Refusal to Support Testator Convicted of Adultery or Concubinage with Spouse of Testator or Decedent
4 5
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[CC 1032] Unworthiness
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
6
Maltreatment of testator by Word and Deed
*
7
Leading a Dishonorable or Disgraceful Life
*
8
Conviction of Crime which carries the penalty of Civil Interdiction
*
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[CC 921] Spouse
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Grounds for Disinheritance 9
10 11
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[CC 919] Children & Descendants
Abandonment of Children or Inducing Children to Live Corrupt and Immoral Life or Against Attempted Virtue Loss of Parental Authority Attempt by One Parent Against the Life of the Other UNLESS there is Reconciliation Between Parents
[CC 920] Parents & Ascendants *
[CC 921] Spouse
*
* *
[CC 1032] Unworthiness *
12
Spouse Has Given Cause for Legal Separation
*
13
Failure to Report Violent Death of Decedent Within One Month UNLESS Authorities Have Already Taken Action Force, Violence, Intimidation, or Undue Influence to Prevent Another from Making a Will or Revoking One Already Made or Who Supplants or Alters the Latter’s Will Falsifies or Forges Supposed Will of Decedent
*
14
15
*
*
Reconciliation – [Art. 922] Art. 922. A subsequent reconciliation between the offender and the offended person deprives the latter of the right to disinherit, and renders ineffectual any disinheritance that may have been made.
Disinheritance without cause – [Art. 918] Art. 918. Disinheritance without a specification of the cause, or for a cause the truth of which, if contradicted, is not proved, or which is not one of those set forth in this Code, shall annul the institution of heirs insofar as it may prejudice the person disinherited; but the devises and legacies and other testamentary dispositions shall be valid to such extent as will not impair the legitime.
Rights of descendants of person disinherited – [Art. 923] Art. 923. The children and descendants of the person disinherited shall take his or her place and shall preserve the rights of compulsory heirs with respect to the legitime; but the disinherited parent shall not have the usufruct or administration of the property which constitutes the legitime.
Ineffective Disinheritance – if the disinheritance lacks one or other of the requisites mentioned in this article, the heir in question gets his legitime. [Balane (2010)]
Balane: This is inconsistent with Art. 1033. In disinheritance, reconciliation is sufficient. It need not be in writing. In unworthiness, however, it needs to be in writing.
Ineffective Disinheritance
Preterition
Person disinherited may be any compulsory heir
Person omitted must be a compulsory heir in the direct line Annuls the entire institution of heirs
Revocation Modes of Revocation. – (1) Reconciliation [Art 922, CC] (2) Subsequent institution of the disinherited heir (3) Nullity of the will which contains the disinheritance.
Only annuls the institution in so far as it prejudices the person disinherited
Note: The moment that testator uses one of the acts of unworthiness as a cause for disinheritance; he thereby submits it to the rules on disinheritance. Thus, reconciliation renders the disinheritance ineffective.
Legacy
Legacies and Devisees
A gift of personal property given in a will It is bequeathed
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Devise A gift of real property given in a will It is devised
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Persons Charged With the Duty to Give Legacies and Devises in a Will (1) Compulsory heir, provided, their legitimes are not impaired (Art. 925, CC) (2) Voluntary heir (3) Legatee or devisee can be charged with the duty of giving a sub-legacy or sub-devisee but only to the extent of the value of the legacy or devise given him (Art. 925, CC) (4) The estate represented by the executor or administrator, if no one is charged with this duty to pay or deliver the legacy or devise in the will (a) If there is an administration proceeding, it constitutes a charge upon the estate. (b) If there is no administration proceeding, it is a charge upon the heirs.
Status of property given by legacy/devise
Validity and Effect of Legacy or Devise Legacy or devise of a thing belonging to another [Art. 930, CC] Status of property given by legacy/devise Testator erroneously believed that the property belonged to him The thing bequeathed afterwards becomes his by whatever title
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encumbrance or interest of another person (Art. 932, CC) Legatee or devisee subsequently alienates the thing (Art. 933,CC) After alienating the thing, the legatee or devisee subsequently reacquires it gratuitously (Art. 933, CC)
the interest or encumbrance Ineffective
Status of property given by legacy/devise After alienating the thing, the legatee or devisee acquires it by onerous title (Art. 933, CC)
Effect on the legacy/devise Legatee or devisee can demand reimbursement from the heir or estate
Effect on the legacy/devise Void
Legacy or devise of thing already belonging to the legatee or devisee Effect on the legacy/devise
The thing already belongs to the legatee or devisee at the time of the execution of the will (Art. 932, CC) The thing is subject to an
Ineffective
Different Objects of Legacies and Devises (Art. 934944, CC) (1) Legacy of a thing pledged or mortgaged to secure a debt [Art 934, CC] (2) Legacy of credit, or remission or release of a debt [Art 935 CC] (3) Legacy to the debtor of thing pledged by him [Art 936, CC] (4) Legacy or devise to a creditor if the testator orders the payment of a debt [Art 939, CC] (5) Alternative legacies and devises [Art 940, CC] (6) Legacy of generic personal property or indeterminate real property [Art 941, CC] (7) Legacy of education [Art 944, CC] (8) Legacy of support [Art 944, CC]
Effective
Status of property given by legacy/devise
Effect on the legacy/devise
Ineffective
Valid only as to
Objects of Legacy or Devise
Effect
Thing pledged or mortgaged to secure a debt Credit or remission or release of a debt
(a) Estate is obliged to pay the debt (b) Other charges pass to the legatee or devisee (a) Effective only as regards the credit or debt existing at the time of the testator’s death (b) Legacy lapses if the testator later brings action against the debtor (c) If generic, comprises all credits/debts existing at time of execution of will
Thing pledged by debtor To a creditor
Only the pledge is extinguished; the debt remains Shall not be applied to his credit unless the testator so declares
Order of payment of a debt
(a) If testator does not really owe the debt, the disposition is void
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Objects of Legacy or Devise
Alternative legacies and devises Legacy of generic personal property or indeterminate real property Legacy of education
Legacy of support
Effect (b) If the order is to pay more that the debt, the excess is not due (c) This is without prejudice to the payment of natural obligations (a) The choice is with the heir, or the executor or administrator (b) If the heir, legatee or devisee dies the right passes to their heirs (c) Once made, the choice is irrevocable (a) Legacy is valid even if there are no things of the same kind in the estate (b) Devise of indeterminate real property valid only if there are immovable property of the same kind in the estate (c) The choice belongs to the heir, legatee or devisee or the executor or administrator (a) Lasts until the legatee is of age or beyond the age of majority in order that he may finish some professional, vocational or general course provided he pursues his course diligently (b) If testator did not fix the amount, it is fixed in accordance with the social standing and circumstances of the legatee and the value of the estate (a) Lasts during lifetime of legatee (b) If the testator used to give the legatee a sum of money for support, give the same amount unless it is markedly disproportionate to the estate (c) If testator did not fix the amount, it is fixed in accordance with the social standing and circumstances of the legatee and the value of the estate
Order of Payment in Case the Estate Is Not Sufficient to Cover All the Legacies and Devises ART. 911
ART. 950 Order of Preference
LIPO (a) Legitime of compulsory heirs (b) Donations Inter vivos (c) Preferential legacies or devises (d) All Other legacies or devises pro rata
RPSESO (a) Remuneratory legacy/devise (b) Preferential legacy/devise (c) Legacy for Support (d) Legacy for Education (e) Legacy/devise of Specific, determinate thing which forms a part of the estate (f) All Others pro rata Application (a) When the reduction is necessary to preserve the (a) When there are no compulsory heirs and the entire estate legitime of compulsory heirs from impairment whether is distributed by the testator as legacies or devises; or there are donations inter vivos or not; or (b) When there are compulsory heirs but their legitime has (b) When, although, the legitime has been preserved by already been provided for by the testator and there are the testator himself there are donations inter vivos. no donations inter vivos. NOTE: Art. 911, CC governs when there is a conflict between compulsory heirs and the devisees and legatees.
Note: Art. 950, CC governs when the question of reduction is exclusively among legatees and devisees themselves.
How Legacy or Devise Delivered [Art. 951, CC] (1) The very thing bequeathed shall be delivered and not its value (2) With all its accessions and accessories (3) In the condition in which it may be upon the death of the testator (4) Legacies of money must be paid in cash
Effect of ineffective legacies or devises [Art. 956, CC] In case of repudiation, revocation or incapacity of the legatee or devisee, the legacy or devise shall bemerged with the mass of the hereditary estate, except in cases of substitution or accretion. Ground for Revocation of Legacies and Devises [Art. 957, CC] - (TALO) (1) Testator Transforms the thing such that it does not retain its original form or denomination
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(2) Testator Alienates the thing by any title or for any cause. Reacquisition of the thing by the testator does not make the legacy or devise valid, unless it is effected by right of repurchase. (3) Thing is totally Lost during the lifetime or after the death of the testator (4) Other causes: nullity of will, non-compliance with suspensive condition, sale of the thing to pay the debts of the deceased during the settlement of his estate.
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(c) The right of Accretion applies to the free portion when the requisites in Art. 1016 are present. (d) If there is no substitute, and the right of Representation or Accretion are not proper, the rules on Intestate succession shall apply. THE INTESTATE OR LEGAL HEIRS
(1) Relatives (a) Legitimate ascendants (b) Illegitimate parents (c) Legitimate children (d) Illegitimate children (e) Surviving Spouse (f) Brothers, sisters, nephews and nieces (BSNN) (g) Other collateral relatives (2) Surviving spouse (3) State (through escheat proceedings)
Legal or Intestate Succession GENERAL PROVISIONS Intestacy – that which takes place by operation of law in default of compulsory and testamentary succession. Not defined in the Civil Code.
Intestate succession is based on the presumed will of the decedent. That is, to distribute the estate in accordance with the love and affection he has for his family, and in default of these persons, the presumed desire to promote charitable and humanitarian activities [Balane].
INSTANCES WHEN LEGAL OR INTESTATE SUCCESSION OPERATES: [ART. 960, CC]
(1) If a person dies without a will, or with a void will, or one which has subsequently lost its validity (2) When the will does not institute an heir (3) Upon the expiration of term, or period of institution of heir [Balane, 426] (4) Upon fulfillment of a resolutory condition attached to the institution of heir, rendering the will ineffective [Balane, 426] (5) When the will does not dispose of all the property belonging to the testator. Legal succession shall take place only with respect to the property which the testator has not disposed (mixed succession) (6) If the suspensive condition attached to the institution of the heir does not happen or is not fulfilled (7) If the heir dies before the testator (8) If the heir repudiates the inheritance, there being no substitution, and no right of accretion takes place (9) When the heir instituted is incapable of succeeding, except in cases provided in the Civil Code (10) Preterition – Intestacy may be total or partial depending on whether or not there are legacies or devises [Balane, 426]
FUNDAMENTAL PRINCIPLES IN INTESTATE SUCCESSION:
Rule of Preference between Lines (a) Those in the direct descending line shall exclude those in the direct ascending and collateral lines; (b) Those in the direct ascending line shall, in turn, exclude those in the collateral line. Rule of Proximity The relative nearest in degree excludes the farther one. [Art. 962[1], CC], saving the right of representation when it properly takes place. Rule of Equal Division The relatives who are in the same degree shall inherit in equal shares. [Arts. 962[2], 987 and 1006, CC] Exceptions: [Balane, 427-428] (a) Rule of preference between Lines (b) Distinction between legitimate and illegitimate filiation. The ratio under present law is 2:1. [Art 983, in relation to Article 895 as amended by Article. 176, FC] (c) Rule of division by line in the ascending line [Art. 987 [2], CC] (d) Distinction between full-blood and half-blood relationship among brothers and sisters, as well as nephews and nieces. [Art. 1006 and 1008, CC] (e) Right of representation.
Note: In all cases where there has been an institution of heirs, follow the ISRAI order: (a) If the Institution fails, Substitution occurs. (b) If there is no substitute, the right of Representation applies in the direct descending line to the legitime if the vacancy is caused by predecease, incapacity, or disinheritance.
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Rule of Barrier between the legitimate family and the illegitimate family (the iron-curtain rule) The illegitimate family cannot inherit by intestate succession from the legitimate family and vice-versa. [Art. 992, CC]
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Blood relationship is either full or half-blood. [Art. 967, CC] Note: As among brothers and sisters and nephews and nieces, there is a 2:1 ratio for full-blood and halfblood relatives. Direct relatives are preferred. But this distinction does not apply with respect to other collateral relatives.
Rule of Double Share for full blood collaterals When full and half-blood brothers or sisters, nephews or nieces, survive, the full blood shall take a portion in the inheritance double that of the halfblood. [Arts. 895 and 983, CC]
INCAPACITY [ART. 968, CC]
General Rule: If there are several relatives of the same degree, and one or some of them are unwilling or incapacitated to succeed, his portion shall accrue to the others of the same degree.
Note: (1) If one of the legitimate ascendants, illegitimate parents, legitimate children or illegitimate children survives, the brother, sisters, nephews, and nieces (BSNN) are excluded. (2) If one of the legitimate ascendants, illegitimate parents, legitimate children, illegitimate children or surviving spouse survives, the other collateral relatives and the state are excluded. (3) If any of the heirs concur in legitimes, then they also concur in intestacy.
Exception: When the right of representation should take place. Note: This accretion in intestacy takes place in case of predecease, incapacity, or renunciation among heirs of the same degree. The relatives must be in the same relationship because of the Rule of Preference of Lines. REPUDIATION [ARTS. 968-969, CC]
RELATIONSHIP
(a) There is no right of representation in repudiation. If the nearest relative/s repudiates the inheritance, those of the following degree shall inherit in their own right. (b) In case of repudiation by all in the same degree, the right of succession passes on the heirs in succeeding degrees: descending line first, ascending line next, and collateral line next. [Balane]
BASIC CONCEPTS IN RELATIONSHIP
The number of generations determines the proximity of the relationship. Each generation forms one degree. [Art 963, CC] A series of degrees forms a line. This line may either by direct or collateral. [Art. 964, CC] (a) A direct line is that constituted by the series of degrees among ascendants and descendants. (b) The direct line is either ascending (brings a person with those from whom he descends) and descending (connecting the head of the family with those who descend from him). [Art. 965, CC] (c) A collateral line is that constituted by the series of degrees among persons who are not ascendants or descendants, but who come from a common ancestor.
ADOPTION [ART. 189, FC]
In adoption, the legal filiation is personal and exists only between the adopter and the adopted. The adopted is deemed a legitimate child of the adopter, but still remains as an intestate heir of his natural parents and other blood relatives. RIGHT OF REPRESENTATION Representation – right created by fiction of law, by virtue of which the representative is raised to the place and the degree of the person represented, and acquires the rights which the latter would have if he were living or if he could have inherited (Art. 970, CC)
Note: It is important to distinguish between direct and collateral as the direct has preference over the collateral. In a line, as many degrees are counted as there are generations. [Art. 966, CC] (a) In the direct line, ascent is made up to the common ancestor or progenitor. (b) In the collateral line, ascent is made to the common ancestor. Then descent to the person with whom the computation is to be made.
EFFECT OF REPRESENTATION
The representative heir acquires the rights which the represented would have if he were living or if he could have inherited.
Note: Descending line is preferred over ascending.
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A renouncer can represent, but cannot be represented. Rationale is found in Art. 971 which states that “The representative does not succeed the person represented but the one whom the person represented would have succeeded.”
must be a legal heir of both the person he is representing and the decedent. [Art. 973, CC] (b) BUT the representative need not be qualified to succeed the person represented. [Art. 971, CC] In the same manner, the person represented need not be qualified to succeed the decedent, as it is his disqualification which gives rise for representation to apply. (c) Implication: Illegitimate children can represent illegitimate parents in inheritance from illegitimate grandparents. (Rationale: Iron-curtain rule under Art. 992, CC) (d) On the other hand, a legitimate child may represent either a legitimate or illegitimate parent in the inheritance of either a legitimate or illegitimate grandparents. [Arts. 902, 989 and 990, CC]
REPRESENTATION IN THE DIRECT DESCENDING LINE
REPRESENTATION IN ADOPTION
Representation takes place ad infinitum in the direct descending line but never in the direct ascending line. [Art. 972, CC]
If the adopting parent should die before the adopted child, the latter cannot represent the former in the inheritance of the parents or ascendants of the adopter. The adopted child is not related to the deceased in that case, because filiation created by fiction of law is exclusively between the adopter and the adopted. [Tolentino, 448-449]
WHEN IT OCCURS
(a) Representation is allowed with respect to inheritance conferred by law (legitime and intestate based on Art. 923) (b) It occurs only in the following instances: (1) predecease of an heir (2) incapacity or unworthiness (3) disinheritance [Art. 923, CC] (c) There is no representation in testamentary succession. [Art 856, CC] (d) There is no representation in repudiation.
General Rule: Grandchildren inherit from the grandparents by right of representation, if proper. Exception: Whenever all the children repudiate, the grandchildren inherit in their own right because representation is not proper. [Art. 969, CC]
ORDER OF CONCURRENCE IN THE CASE OF AN ADOPTED CHILD (ART. 190, FC)
Survivors
REPRESENTATION IN COLLATERAL LINE
(a) In the collateral line, representation takes place only in favor of the children of the brothers or sisters (i.e., nephews and nieces) whether of the full or half-blood [Art. 972, CC] and only if they concur with at least one uncle or aunt. In this case, they share in the inheritance per stirpes. (b) If the children survive alone, they inherit in their own right and share in equal proportions or per capita. [Art. 975, CC] (c) Right of representation in the collateral line is only possible in INTESTATE succession. It cannot take place in testamentary succession.
LC, ILC, SS LP/ILP, or legitimate ascendants Adopter SS/ILC Adopters LP or ascendants Adopter ILC or descendants Adopters SS ILC Adopter alone Collateral blood relatives alone
PER STIRPES
(a) Inheritance per stirpes means that the representative/s shall receive only what the person represented would have received, if he were living or could inherit. [Art.975, CC] (b) If there are more than one representative in the same degree, then it shall be divided equally, without prejudice to the distinction between legitimate and illegitimate, if applicable. THE DOUBLE HEIRSHIP TEST
(a) In determining whether or not representation is proper, it is necessary that the representative
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Share As in the case of ordinary intestate succession ½ ½ ½ ½ ½ ½ 1/3 1/3 1/3 Entire estate As in the case of ordinary intestate succession
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ORDER OF INTESTATE SUCCESSION Decedent is a Legitimate Child Legitimate children or descendants (LCD) Legitimate parents or ascendants (LPA) Illegitimate children or descendants (ICD)
Decedent is an Illegitimate Child Legitimate children or descendants (LCD) Illegitimate children or descendants (LPA) Illegitimate parents (IP)
4 5
Surviving spouse (SS) Brothers and sisters, nephews, nieces (BS/NN)
Surviving spouse (SS) Illegitimate brothers and sisters, nephews, nieces (IBS/NN)
Decedent is an Adopted Child Legitimate children or descendants (LCD) Illegitimate children or descendants (ICD) Legitimate or illegitimate parents, or legitimate ascendants, adoptive parents Surviving spouse (SS) Brothers and sisters, nephews, nieces (BS/NN)
6
Legitimate collateral relatives th within the 5 degree (C5) State
State
State
1 2 3
7
RULES OF EXCLUSION AND CONCURRENCE IN INTESTATE SHARES
Intestate Heirs
Excludes
Excluded By
Concurs With
LC + LD
Ascendants, Collaterals and State ILP, Collaterals and State Collaterals and State Collaterals and State Collaterals other than siblings, nephews and nieces, State
No one
SS + ILC
No one
SS, LC, LP
LC
ILC + SS
LC and ILC
SS
No one
ILC + D LP + LA ILP SS
Siblings, Nephews Nieces th Other collaterals within 5 degree State
All other collaterals and State
LC, ILC, LP, ILP
LC, ILC, LP, ILP Siblings Nephews Nieces SS
Collateral more remote in degree and State No one
LC, ILC, LP, ILP and SS
Collaterals in the same degree
Everyone
No one
Legitimate children and surviving spouse (a) Divide entire estate equally between the legitimate children and the surviving spouse, the latter deemed as one child. The same rule holds where there is only one child. (b) “Children” as used in Art. 996 is interpreted to include a situation where there is only one child.
OUTLINE OF INTESTATE SHARES
Legitimate children only (a) Divide entire estate equally among all legitimate children [Art. 979, CC] (b) Legitimate children include an adopted child. Legitimate children and Illegitimate children Divide entire estate such that each illegitimate child gets ½ of what a legitimate child gets [Art. 983, CC and Art. 176, FC]
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Legitimate children. Surviving spouse, and Illegitimate children Divide the entire estate such that the surviving spouse is deemed one legitimate child and each illegitimate child getting ½ of what the legitimate child gets. [Art. 996, CC and Art. 176, FC]
the other relatives should be “illegitimate” because of the iron-curtain rule. [Art. 994, CC]
Legitimate parents only Divide the entire estate equally. [Art. 985, CC]
Illegitimate parents and children of any kind (whether legitimate or illegitimate child) Illegitimate parents are excluded and do not inherit; For the rule on the respective shares of the children, see numbers 1, 2 or 10, whichever is applicable.
Illegitimate parents only Entire estate goes to the illegitimate parents. [Art 993, CC]
Legitimate ascendants only (excluding parents) Divide the entire estate equally but with the observance of the rule of division by line. [Art. 987, CC]
Legitimate brothers and sisters only Divide the entire estate such that full-blood brothers/sisters gets a share double the amount of a half-blood brother or sister. [Art. 1004 and 1006, CC]
Legitimate parents and illegitimate children Legitimate parents get ½ of the estate, illegitimate children get the other ½. [Art. 991, CC]
Legitimate brothers and sisters, nephews and nieces Divide the entire estate observing the 2 is to 1 ratio for full and half-blood relationships with respect to the brothers and sisters, with the nephews and nieces inheriting by representation, if proper. [Art. 1005 & 1008, CC]
Legitimate parents and surviving spouse Legitimate parents get ½ of the estate; The surviving spouse gets the other ½. [Art. 997,CC] Legitimate parents, surviving spouse and illegitimate children Legitimate parents get ½ of the estate; surviving spouse and the illegitimate child each get ¼ each, the latter to share among themselves if more than one. [Art. 1000, CC]
Nephews and nieces only Divide the entire estate per capita, observing the 2 is to 1 ratio. [Arts. 975 and 1008, CC] Other collaterals (Arts. 1009 and 1010) (a) Divide entire estate per capita. th (b) Collateral relatives must be with the 5 degree of consanguinity.
Illegitimate children only Divide the entire estate equally. [Art. 988, CC] Illegitimate children and surviving spouse Illegitimate children get ½ of the estate; the surviving spouse gets the other ½. [Art. 998, CC]
Note: the nearer relative excludes the more remote relatives.
Surviving spouse only Entire estate goes to the surviving spouse. [Art. 994/995, CC]
State If there are no other intestate heirs, the State inherits the entire estate through escheat proceedings. [Art. 1011, CC]
Surviving spouse and illegitimate parents Illegitimate parents get ½ and the spouse gets the other ½. [by analogy with Art. 997, CC]
Provisions Common to estate and Intestate Succession
Surviving spouse and legitimate brothers and sisters, nephews and nieces Surviving spouse gets ½ of the estate, while the rest gets the other ½ with the nephews and nieces inheriting by representation if proper. [Art. 1001, CC]
RIGHT OF ACCRETION
Surviving spouse and illegitimate brothers and sisters, nephews and nieces Surviving spouse gets ½ of the estate while the rest gets the other ½ with the nephews and nieces inheriting by representation, if proper; Note that all
DEFINITION AND REQUISITES – [ARTS. 1015-1016]
Definition of Accretion [Art. 1015, CC] It is a right by virtue of which, when two or more persons are called to the same inheritance, devise or legacy, the part assigned to one who renounces or cannot receive his share or who died before the
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testator is added or incorporated to that of his coheirs, co-devisees, or co-legatees. Requisites [Tolentino p. 497-499]: (1) Unity of object and plurality of subjects (two or more persons are called to the same inheritance or same portion thereof) (2) Vacancy of share (one of the heirs dies before the testator, or renounces the inheritance, or is incapacitated) (a) Accretion happens when there is repudiation, incapacity, or predecease of an heir. (b) It is the mechanism where the share of an heir is increased by vacant shares vacated by heirs who cannot inherit for various reasons. (RATIONALE: the decedent intended to give the property to nobody but the co-heirs.) (c) There can only be accretion if there is an institution of heirs with respect to specific properties. [Art 1016, CC] (d) Among compulsory heirs, there can only be accretion with respect to the free portion. There can be no accretion with respect to the legitimes. [Arts. 1021 and 1018, CC] (e) The heirs to whom the portion goes by the right of accretion take it in the same proportion that they inherit. [Art. 1019, CC]
Testamentary Succession Legitime Free Portion Successio n n
Intestate Succession Succession
Incapacity
Represent -ation Intestate Successio n
Accretion Intestate Succession
Representa tion Intestate Succession
Disinheritan ce
Represent -ation Intestate Successio n Intestate Successio n
-
-
Accretion
Accretion
CAPACITY TO SUCCEED BY WILL OR INTESTACY PERSONS INCAPABLE OF SUCEEDING
Requisites for Capacity to Succeed by Will or by Intestacy [Art. 1024 – 1025, CC] (a) The heir, legatee or devisee must be living or in existence at the moment the succession opens; (Art 1025) and (b) He must not be incapacitated or disqualified by law to succeed. (Art 1024, par.1) PERSONS INCAPABLE OF SUCCEEDING – ARTS. 1027, 739,
1032
Based on Undue Influence or Interest [Art. 1027, CC] (PIGRAP) (a) Priest who heard the last confession of the testator during his last illness, or the minister of the gospel who extended spiritual aid to him during the same period; (b) Individuals, associations and corporations not permitted by law to inherit; (c) Guardian with respect to testamentary dispositions given by a ward in his favor before the final accounts of the guardianship have been approved, even if the testator should die after the approval thereof; except if the guardian is his ascendant, descendant, brother, sister, or spouse; (d) Relatives of the priest or minister of the gospel within the fourth degree, the church, order, chapter, community, organization, or institution to which such priest or minister may belong; (e) Attesting witness to the execution of a will, the spouse, parents, or children, or any one claiming under such witness, spouse, parents, or children; (f) Physician, surgeon, nurse, health officer or druggist who took care of the testator during his last illness.
(a) The heirs to whom the inheritance accrues shall succeed to all the rights and obligations which the heir who renounced or could not receive it would have had. [Art. 1020, CC] (b) In testamentary succession, when the right of accretion does not take place, the vacant portion of the instituted heirs, if no substitute has been designated, shall pass to the legal heirs of the testator, who shall receive it with the same charges and obligations. [Art 1022, CC] (c) Accretion shall also take place among devisees, legatees and usufructuaries under the same conditions established for heirs. [Art 1023, CC] EFFECT OF PREDECEASE, INCAPACITY, DISINHERITANCE OR REPUDIATION IN TESTAMENTARY AND INTESTATE SUCCESSION
Testamentary Succession Legitime Free Portion Represent Accretion -ation Intestate Intestate Successio
Cause Of Vacancy
Repudiation
Exceptions [Balane]: (1) In testamentary succession, if the testator provides otherwise (2) If the obligation is purely personal, and hence intransmissible
Cause Of Vacancy Predecease
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Intestate Succession Representation Intestate
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testator revokes the will or the institution Unworthiness vs. Disinheritance Unworthiness renders a Disinheritance is the act person incapable of by which a testator, for succeeding to the just cause, deprives a succession, whether compulsory heir of his testate or intestate right to the legitime [Art. 815, CC]
Based on Morality or Public Policy [Arts. 739 and 1028, CC] (CAP) (1) Those made in favor of a person with whom the testator was guilty of adultery or concubinage at the time of the making of the will. (2) Those made in consideration of a crime of which both the testator and the beneficiary have been found guilty. (3) Those made in favor of a public officer or his spouse, descendants and ascendants, by reason of his public office.
Determination of Capacity [Tolentino p. 539] General Rule: At the death of the decedent [Art. 1034, CC]
Based on Acts of Unworthiness (Art. 1032, Cc)
(A3F3P2)
Exceptions: (1) Those falling under 2, 3, and 5 of Art. 1032 – when the final judgment is rendered (2) Those falling under 4 of Art. 1032 – when the month allowed for the report expired (3) If the institution is conditional – when the condition is complied with
The following are incapable of succeeding by reason of unworthiness: (1) Parents who have abandoned their children or induced their daughters to lead a corrupt or immoral life, or attempted against their virtue; (2) Any person who has been convicted of an attempt against the life of the testator, his or her spouse, descendants, or ascendants; (3) Any person who has accused the testator of a crime for which the law prescribes imprisonment for six years or more, if the accusation has been found groundless; (4) Any heir of full age who, having knowledge of the violent death of the testator, should fail to report it to an officer of the law within a month, unless the authorities have already taken action; this prohibition shall not apply to cases wherein, according to law, there is no obligation to make an accusation; (5) Any person convicted of adultery or concubinage with the spouse of the testator; (6) Any person who by fraud, violence, intimidation, or undue influence should cause the testator to make a will or to change one already made; (7) Any person who by the same means prevents another from making a will, or from revoking one already made, or who supplants, conceals, or alters the latter's will; (8) Any person who falsifies or forges a supposed will of the decedent.
ACCEPTANCE AND REPUDIATION OF THE INHERITANCE CHARACTERISTICS (VIR) (ARTS. 1041 – 1042, 1056, CC) (1) Voluntary and free [Art 1041, CC] (2) Irrevocable except if there is vitiation of consent or an unknown will appears [Art 1056, CC] (3) Retroactive [Art 1042, CC] REQUISITES (ART. 1043, CC)
(1) Certainty of death of the decedent (2) Certainty of the right to the inheritance ACCEPTANCE VS. REPUDIATION
Pardon of Acts of Unworthiness Express
Implied
Made by the execution of a document or any writing in which the decedent condones the cause of incapacity Cannot be revoked
Effected when the testator makes a will instituting the unworthy heir with knowledge of the cause of incapacity Revoked when the
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Acceptance
Repudiation
Involves the confirmation of transmission of successional rights
(a) Renders the transmission of successional rights ineffective (b) Equivalent to an act of disposition or alienation (c) Publicity requirement is necessary for the protection of other heirs and creditors
Forms of Acceptance [Arts. 1049 – 1050, CC] (1) Express Acceptance – one made in a public or private document. [Art. 1049 par. 1] (2) Tacit Acceptance – one resulting from acts by which the intention to accept is necessarily
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implied or from acts which one would have no right to do except in the capacity of an heir. (3) Implied acceptance - Within thirty days after the court has issued an order for the distribution of the estate in accordance with the Rules of Court, the heirs, devisees and legatees shall signify to the court having jurisdiction whether they accept or repudiate the inheritance; if they do not do so within that time, they are deemed to have accepted the inheritance. [Art 1057, CC]
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(b) Imputing or Charging – crediting the donation as an advance on the legitime (if the donee is a compulsory heir) or on the free portion (if the donee is a stranger). [Balane p 522] (c) Reduction – determining to what extent the donation will remain and to what extent it is excessive or inofficious. (d) Restitution – returning or the act of payment of the excess to the mass of hereditary estate. PERSONS OBLIGED TO COLLATE
Forms of Repudiation [Art. 1051, CC] (1) in a public instrument acknowledged before a notary public; or (2) in an authentic document – equivalent of an indubitable writing or a writing whose authenticity is admitted or proved; or (3) by petition presented to the court having jurisdiction over the testamentary or intestate proceeding
General Rule: Compulsory heirs Exceptions: (a) when the testator should have so expressly provided [Art. 1062, CC] (b) when the compulsory heir should have repudiated his inheritance [Art 1062, CC] Grandchildren who survive with their uncles, aunts, or first cousins and inherit by right of representation [Art 1064, CC]
Heirs in Two Capacities [Art. 1055, CC] (1) If a person is called to the same inheritance as an heir by will and by law and he repudiates the inheritance in his capacity as a testamentary heir, he will be considered to have also repudiated the inheritance as a legal heir. (2) If he repudiates it as a legal heir, without his being a testamentary heir, he may still accept it in the latter capacity.
Note: Grandchildren may inherit from their grandparents in their own right, i.e., as heirs next in degree, and not by right of representation if their parent repudiates the inheritance of the grandparent, as no living person can be represented except in cases of disinheritance and incapacity. In this case, the grandchildren are not obliged to bring to collation what their parent has received gratuitously from their grandparent.
COLLATION
Surviving spouse NOT obliged to collate.
CONCEPT OF COLLATION
(a) To collate is to bring back or to return to the hereditary mass in fact or by fiction property which came from the estate of the decedent, during his lifetime by donation or other gratuitous title but which the law considers as an advance from the inheritance. (Art 1061, CC) (b) It is the act by virtue of which, the compulsory heir who concurs with other compulsory heirs in the inheritance bring back to the common hereditary mass the property which they may have received from the testator so that a division may be effected according to law and the will of the testator. (c) In reducing inofficious donations, the last to be donated should be the first to be reduced. (d) Rationale for collation: If donations inter vivos will not be collated, then the rule on legitimes shall be circumvented or disregarded.
WHAT TO COLLATE
(a) Any property or right received by gratuitous title during the testator’s lifetime [Art 1061, CC] (b) All that they may have received from the decedent during his lifetime. [Art 1061, CC] (c) Expenses incurred by the parents in giving their children a professional, vocational or other career shall not be brought to collation unless the parents so provide, or unless they impair the legitime; but when their collation is required, the sum which the child would have spent if he had lived in the house and company of his parents shall be deducted therefrom. [Art 1068, CC] (d) Any sums paid by a parent in satisfaction of the debts of his children, election expenses, fines, and similar expenses shall be brought to collation. [Art 1069, CC] Note: Only the value of the thing donated shall be brought to collation.
OPERATIONS RELATED TO COLLATION
(a) Collation – adding to the mass of the hereditary estate the value of the donation or gratuitous disposition.
PROPERTIES NOT SUBJECT TO COLLATION
Absolutely no collation
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Expenses for support, education (only elementary and secondary), medical attendance, even in extraordinary illness, apprenticeship, ordinary equipment, or customary gifts [Art. 1067, CC]
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(a) Judicial – Partition done by Court pursuant to an Order of Distribution which may or may not be based on a project of partition. (b) Extra-judicial – partition made by the decedent himself by an act inter vivos or by will or by a third person entrusted by the decedent or by the heirs themselves. [Paras]
Generally not imputable to legitime/ cannot be collected, subject to exceptions (a) Expenses incurred by parents in giving their children professional, vocational or other career unless the parents so provide, or unless they impair the legitime. [Art. 1067, CC] (b) Wedding gifts by parents and ascendants, consisting jewelry, clothing and outfit, except when they exceed 1/10 of the sum disposable by will. [Art. 1070, CC] (c) Neither shall donations to the spouse of the child be brought to collation; but if they have been given by the parent to the spouses jointly, the child shall be obliged to bring to collation onehalf of the thing donated. [Art. 1066, CC]
PARTITION INTER VIVOS (ASKED IN ‘85)
It is one that merely allocates specific items or pieces of property on the basis of the pro-indiviso shares fixed by law or given under the will to heirs or successors. (Art. 1080, cc) Who may effect partition (1) The Decedent, during his lifetime by an act inter vivos or by will [Art.1080, CC] (2) The decedent’s heirs [Art.1083, CC] (3) A competent court [Art. 1083,CC] (4) A third person not an heir designated by the decedent [Art.1081, CC]
Note: Parents are not obliged to bring to collation in the inheritance of their ascendants any property which may have been donated by the latter to their children. [Art 1065, CC]
Who Can Demand Partition (1) Compulsory heir (2) Voluntary heir upon fulfillment of condition if any [Art 1084, CC] (3) Legatee or devisee (4) Any person who has acquired interest in the estate
PARTITION AND DISTRIBUTION OF ESTATE PARTITION
Concept (a) Separate, Divide, Assign. Partition is the separation, division and assignment of a thing held in common among those to whom it may belong. The thing itself or its value may be divided. [Art. 1079, CC] (b) Owned in common. Before partition, the whole estate of the decedent is owned in common by the heirs. [Art 1078, CC] (c) Thing or value may be divided. [Art 1079] (d) Acts deemed partition. Every act which is intended to put an end to indivision among heirs and legatees or devisees is deemed a parition, although it should purport to be a sale, an exchange, a compromise, or any other transaction. [Art 1082, CC]
When Partition Cannot Be Demanded (1) When expressly Prohibited by the testator for a period not exceeding 20 years [Art 1083, CC] (2) When the co-heirs Agreed that the estate shall not be divided for a period not exceeding 10 years, renewable for another 10 years (3) When Prohibited by law (4) When to partition the estate would render it unserviceable for the use for which it is intended Prohibition To Partition (1) The prohibition to partition for a period not exceeding 20 years can be imposed on the legitime. (2) If the prohibition to the partition is for more than 20 years, the excess is void. (3) Even if a prohibition is imposed, the heirs by mutual agreement can still make the partition.
A void partition may be valid if: (1) the will was in fact a partition (2) the beneficiaries of the void will were legal heirs The titles of acquisition or ownership of each property shall be delivered to the co-heir to whom said property has been adjudicated. [Art. 1089 CC]
Effects of Inclusion of Intruder in Partition [Art 1108, CC] (1) Between a true heir and several mistaken heirs – partition is void. (2) Between several true heirs and a mistaken heir – transmission to mistaken heir is void (3) Through error or mistake, share of true heir is allotted to mistaken heir – partition shall not be
PARTITION INTER VIVOS
Judicial v. Extrajudicial Partition
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rescinded unless there is bad faith or fraud on the part of the other persons interested, but the latter shall be proportionately obliged to pay the true heir of his share. The partition with respect to the mistaken heir is void. [Sempio-Dy]
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proportionately among the heirs. [Art. 1095 CC] End of Warranty The obligation of warranty among co-heirs shall cease in the ff. cases: (a) The testator himself has made the partition (1) Unless it appears, or it may be reasonably presumed, that his intention was otherwise, but the legitime shall always remain unimpaired. (b) When it has been so expressly stipulated in the agreement of partition (1) Unless there has been bad faith (c) When the eviction is due to a cause subsequent to the partition, or has been caused by the fault of the distributee of the property. (Art. 1096, CC)
Right of Redemption in Partition (a) Should any of the heirs sell his hereditary rights to a stranger before the partition, any or all of the co-heirs may be subrogated to the rights of the purchaser by reimbursing him for the price of the sale, provided they do so within the period of one month from the time they were notified in writing of the sale by the vendor [Art. 1088, CC] (b) Strangers – those who are not heirs on the succession. EFFECTS OF PARTITION
Effect A partition legally made confers upon each heir the exclusive ownership of the property adjudicated to him [Art 1091, CC]
NULLIFICATION OF PARTITION
Causes for Rescission or Annulment (a) A partition may be rescinded or annulled for the same causes as contracts. [Art 1097, CC] (b) A partition, judicial or extra-judicial, may also be rescinded on account of lesion, when any one of the co-heirs received things whose value is less by at least one-fourth, than the share to which he is entitled, considering the value of the things at the time they were adjudicated [Art. 1098, CC] (1) This article applies only to cases of partition among-coheirs (2) Lesion is the injury suffered in consequence of inequality of situation by one party who does not receive the full equivalent for what she gives in a sale or any commutative contract (c) The partition made by the testator cannot be impugned on the ground of lesion, except when the legitime of the compulsory heirs is thereby prejudiced, or when it appears or may be reasonably be presumed, that the intention of the testator was otherwise. [Art. 1099, CC] (d) Preterition of a compulsory heir in the partition [Art 1104, CC]: (1) Partition shall not be rescinded unless bad faith or fraud on the part of other heirs is proved. (2) The culpable heirs shall share in the damages of the prejudiced compulsory heir proportionately. (e) A partition which includes a person believed to be an heir, but who is not, shall be void only with respect to such person. [Art. 1105 CC]
Warranty (a) After the partition has been made, the co-heirs shall be reciprocally bound to warrant the title to, and the quality of, each property adjudicated [Art. 1092 CC] (b) The reciprocal obligation of warranty referred to in the preceding article shall be proportionate to the respective hereditary shares of the co-heirs; (1) But if any one of them should be insolvent, the other co-heirs shall be liable for his part in the same proportion, deducting the part corresponding to the one who should be indemnified. (2) Those who pay for the insolvent heir shall have a right of action against him for reimbursement, should his financial condition improve [Art. 1093 CC] (c) An action to enforce the warranty among the coheirs must be brought within ten years from the date the right of action accrues. [Art. 1094 CC] (d) If a credit should be assigned as collectible, the co-heirs shall not be liable for the subsequent insolvency of the debtor of the estate, but only for his insolvency at the time the partition is made. [Art 1095, CC] (e) The warranty of the solvency of the debtor can only be enforced during the five years following the partition. (f) Co-heirs do not warrant bad debts, if so known to, and accepted by the distributee. (1) But if such debts are not assigned to a co-heir, and should be collected, in whole or in part, the amount collected shall be distributed
(a) The action for rescission on account of lesion shall prescribe after four years from the time the partition was made. [Art. 1100, CC]
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(b) The heir who is sued shall have the option of indemnifying the plaintiff for the loss, or consenting to a new partition (c) Indemnity may be made: (1) By payment in cash or (2) By the delivery of a thing of the same kind and quality as that awarded to the plaintiff. (d) If a new partition is made, it shall affect neither those who have not been prejudiced nor those who have not received more than their just share [Art. 1101, CC] (e) An heir who has alienated the whole or a considerable part of the real property adjudicated to him cannot maintain an action for rescission on the ground of lesion, but he shall have a right to be indemnified in cash [Art. 1102, CC] (f) The omission of one or more objects or securities of the inheritance shall not cause the rescission of the partition on the ground of lesion, but the partition shall be completed by the distribution of the objects or securities which have been omitted. [Art. 1103, CC] Difference of Nullity from Rescission Nullity is not the same as Rescission: (1) Nullity - the act is supposed to never have existed (2) Rescission - the act is valid at the origin though it afterwards became ineffective Important Periods in Partition 1 month or less Testator, if publicly known to be before making a insane, burden of proof is on the will one claiming validity of the will 20 years Maximum period testator can prohibit alienation of dispositions 5 years from To claim property escheated to delivery to the the State State 1 month To report knowledge of violent death of decedent lest he be considered unworthy 5 years from the Action for declaration of time disqualified incapacity & for recovery of the person took inheritance, devise or legacy possession 30 days from Must signify issuance of order acceptance/repudiation of distribution otherwise, deemed accepted 1 month form Right to repurchase hereditary written notice of rights sold to a stranger by a cosale heir 10 years To enforce warranty of title/quality of property adjudicated to co-heir from the time right of action accrues
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5 years partition
from
4 years partition
form
To enforce warranty of solvency of debtor of the estate at the time partition is made Action for rescission of partition on account of lesion
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AGENCY & PARTNERSHIP
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Contract of Partnership
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Note: A partnership is dissolved by operation of law (even without judicial decree) when the business becomes unlawful.
DEFINITION By the contract of partnership two or more persons bind themselves to contribute money, property, or industry to a common fund, with the intention of dividing the profits among themselves. Two or more persons may also form a partnership for the exercise of a profession. [Article 1767]
ASSOCIATIONS WITHOUT LEGAL PERSONALITY
Associations and societies with the following characteristics has no legal personality and is governed by the provisions of co-ownership: (1) The articles are kept secret among the members; and (2) Any one of the members may contract in his own name with third persons. [Article 1775] It may, however, be sued by third persons under the common name it uses. [Section 15, Rule 3, Rules of Court]
Article 1767 defines partnership from the viewpoint of a contract. From the contract arises the partnership relation. As a form of business organization, partnership falls between two extremes – single proprietorship and corporation. [De Leon, Comments and Cases on Partnership, Agency and Trusts (2010), hereinafter referred to as "De Leon (2010)"]
CHARACTERISTICS The contract of partnership is: (1) Consensual, because it is perfected by mere consent. (2) Nominate, because it has a specific name. (3) Bilateral or multilateral, because it is entered into between two or more persons. (4) Principal, because its existence does not depend on another contract. (5) Onerous, because money, property or industry are contributed by the parties. (6) Preparatory, because it is entered into to carry out a business or specific venture. (7) Commutative, because the undertaking of each is considered as equivalent of that of the others.
ELEMENTS There is a contract of partnership when: (1) There is a meeting of the minds; (2) To form a common fund; (3) With intention that profits and losses will be divided among the contracting parties. ESSENTIAL FEATURES A partnership contract has the following essential features: (1) There must be a valid contract. (2) The parties must have legal capacity. (3) There must be a mutual contribution of money, property, or industry to a common fund. (4) The object must be lawful. (5) The primary purpose must be to obtain profits and to divide the same among the parties. (6) The partnership has a juridical personality separate from individual partners [Article 1768]. As such, "Any immovable property or an interest therein may be acquired in the partnership name. Title so acquired can be conveyed only in the partnership name." [Article 1774]
PARTIES TO THE CONTRACT General rule: Any person capacitated to contract may enter into a contract of partnership. As such, the following persons cannot enter into a contract of partnership: (1) Those suffering from civil interdiction; (2) Minors; (3) Insane or demented persons; (4) Deaf-mutes who do not know how to write; (5) Incompetents who are under guardianship. Exceptions: The capacity of the following persons to enter into a contract of partnership, though capacitated to contract generally, are limited: (1) Those who are prohibited from giving each other any donation or advantage cannot enter into a universal partnership. [Article 1782] (2) A corporation cannot enter into a partnership in the absence of express authorization by statute or charter.
EFFECT OF UNLAWFUL OBJECT
If the partnership has an unlawful object or purpose: (1) The contract is void ab initio. [Article 1409(1)] (2) Once dissolved by judicial decree: (a) The profits shall be confiscated by favor of the State; (b) The instruments or tools and proceeds of the crime shall also be forfeited in favor of the State. [Article 1770] (c) The contributions of partners shall not be confiscated unless they are instruments or tools of the crime. [De Leon (2010)]
Ratio: Otherwise, as a result of the mutual agency between partners, a corporation would be bound by the acts of persons other than its duly appointed or authorized officers or agents. This is inconsistent
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with the policy of the law that a corporation should manage its own affairs.
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Exceptions: (1) Where immovable property or real rights are contributed: (a) The contract must appear in a public instrument; and (b) Attached to such instrument must be an inventory, signed by the parties, of the property contributed. [Articles 1771 and 1773]
Also, the arrangement would allow corporate property to be subject to risks not contemplated by the stockholders when they originally invested. [Mendiola v. CA (2006)] Although a corporation cannot enter into a partnership contract, it may, however, engage in a joint venture with others [Auerbach vs. Sanitary Wares Manufacturing Corp. (1989)].
(2) Where the capital is at least P3,000, in money or property: (a) The contract must appear in a public instrument; and (b) It must be recorded in the SEC. Failure to comply with these requirements, however, does not affect the liability of the partnership and the partners to third persons. [Articles 1768 and 1772]
There is no prohibition against a partnership being a partner in another partnership. [De Leon (2010)] OBJECT OF THE CONTRACT OBJECT OF UNIVERSAL PARTNERSHIP
DURATION OF THE CONTRACT
A universal partnership may refer to: (1) All present property: (a) The partners contribute all the property which belongs to them to a common fund, with the intention of dividing the same among themselves, as well as the profits they may acquire therewith. [Article 1778] (b) The property contributed includes all those belonging to the partners at the time of the constitution of the partnership. (c) A stipulation for the common enjoyment of any other profits may also be made. However, the property which the partners may acquire subsequently by inheritance, legacy or donation cannot be included in such stipulation, except the fruits thereof. [Article 1779] (2) All the profits: (a) It comprises all that the partners may acquire by their industry or work during the existence of the partnership. (b) Only the usufruct over the property of the partners passes to the partnership. [Article 1780] When the articles of universal partnership does not specify its nature (all present property or all the profits), the partnership will be considered as one only of all the profits. [Article 1781]
COMMENCEMENT
A partnership begins from the moment of the execution of the contract, unless it is otherwise stipulated. [Article 1784] TERM
As to period, a partnership may either be: (1) For a fixed term or particular undertaking; or (2) At will, the formation and dissolution of which depend on the mutual desire and consent of the parties. Any one of the partners may, at his sole pleasure, dictate the dissolution of the partnership, even in bad faith, subject to liability for damages. [Ortega v. CA (1995)] EXTENSION
A partnership term may be extended by: (1) Express renewal of the agreement; or (2) Implied renewal, when the requisites concur: (a) The partnership is for a fixed term or particular undertaking; (b) It is continued after the termination of the fixed term or particular undertaking without any express agreement. A continuation of the business by the partners or such of them as habitually acted therein during the term, without any settlement or liquidation of the partnership affairs, is prima facie evidence of a continuation of the partnership. The effect of such continuation is that the right and duties of the partners remain the same as they were at such termination of the period, but this time, the partnership is considered to be at will. [Article 1785]
OBJECT OF PARTICULAR PARTNERSHIP
A particular partnership has for its object determinate things, their use or fruits, or a specific undertaking, or the exercise of a profession or vocation. [Article 1783] FORM OF THE CONTRACT General rule: The contract may be constituted in any form. [Article 1771]
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RULES TO DETERMINE EXISTENCE When the intent of the parties is clear, it shall govern. When it does not clearly appear, the following rules apply: (1) Persons who are not partners to each other are not partners as to third persons. Exception: A person not a partner may be considered a partner by estoppel. (2) Co-ownership or co-possession does not of itself establish a partnership, even when there is sharing of profits in the use of the property. (3) Sharing of gross returns does not of itself establish a partnership, even when the parties have joint or common interest in any property from which the returns are derived. (4) The receipt by a person of a share in the profits of a business is prima facie evidence that he is a partner.
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AS TO LIABILITY OF PARTNERS
(1) General partnership, consisting of general partners only, who are liable pro rata for partnership obligations with all their after exhaustion of partnership assets; (2) Limited partnership, includes, aside from general partner/s, limited partners, who are not personally liable for partnership obligations. AS TO PUBLICITY
(1) Secret partnership, where the existence of certain persons as partners is not made known by the partners; (2) Open or notorious partnership, the existence of which is made known to the public by the partners. AS TO PURPOSE
(1) Commercial or trading partnership, for transaction of business; (2) Professional or non-trading, for exercise of a profession.
Exceptions: No such inference is drawn if the profits are received in payment: (a) As a debt by installments or otherwise; (b) As wages of an employee of rent to a landlord; (c) As an annuity to a widow or representative of a deceased partner; (d) As interest on a loan, though the amount of payment vary with the profits of the business; (e) As the consideration for the sale of a goodwill of a business or other property by installments or otherwise. [Article 1769]
A profession has been defined as "a group of men pursuing a learned art as a common calling in the spirit of public service — no less a public service because it may incidentally be a means of livelihood." [In the Matter of the Petition for Authority to Continue Use of Firm name "Sycip, Salazar, etc."/"Ozaeta, Romulo, etc." (1979)]
RELATIONS CREATED (1) Among the partners themselves. (2) Between the partners and the partnership. (3) Between the partnership and third persons with whom it contracts. (4) Between the partners and such third persons.
A professional partnership partnership. [Article 1783]
is
a
particular
KINDS OF PARTNERS (1) Capitalist, whose contribution is money or property; (2) Industrial, whose contribution is only his industry; (3) General, whose liability to third persons extends to his separate property; (4) Limited, whose liability to third persons is limited to his capital contribution; (5) Managing, designated to manage the affairs or business of the partnership; (6) Liquidating, takes charge of the winding up of partnership affairs; (7) By estoppel, who is not really a partner but is liable as such for the protection of innocent third persons; (8) Continuing, who continues the business after dissolution of the partnership by admission of a new partner, or retirement, death or expulsion of existing partners. (9) Surviving, who remains a partner after dissolution by death of any partner; (10)Subpartner, who is not a member of the partnership but contracts with a partner with
KINDS OF PARTNERSHIP AS TO LEGALITY OF EXISTENCE
(1) Partnership de jure is one which has complied with all the requisites for its lawful establishment. (2) Partnership de facto is one which failed to so comply. AS TO OBJECT
(1) Universal partnership: (a) Of all present property; (b) Of profits; (2) Particular partnership. AS TO DURATION
(1) For a fixed term or particular undertaking; (2) At will.
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regard to the share of the latter in the DISTINGUISHED FROM OTHER CONTRACTS partnership; Partnership Joint Venture (11) Ostensible, who takes active part in the business of the partnership and is known by the public; Operates with firm name Operates with no firm (12)Secret, who takes active part in the business, but and legal personality name and legal is unknown to the third persons as a partner; personality (13) Silent, who does not take active part in the business, but may be known to be a partner by third persons; Generally relates to a Usually limited to a single (14)Dormant, who does not take active part in the continuing business of transaction business and is not known or held out as a various transactions of a partner; certain king (15)Original, who has been a partner since the constitution of the partnership; Corporations may not Corporations may enter (16)Incoming, who is about to be taken as a member enter into a partnership into joint ventures into an existing partnership; (17) Retiring, who is withdrawing from the It would seem therefore that under Philippine law, a partnership. joint venture is a form of partnership and should thus be governed by the laws of partnership. [Auerbach vs. Industrial Partner Capitalist Partner Sanitary Wares Manufacturing Corp. (1989)] Form of contribution Partnership Co-Ownership Industry Money or property Generally created by Generally created by law, either express or implied and may exist even Share in profits contract without a contract Just and equitable share According to agreement; Has a separate juridical Has no separate juridical if none, in proportion to personality personality contribution Generally, the purpose is The purpose is common to obtain profits enjoyment of a thing or right
Share in losses Exempted as to losses as between partners, but liable to third persons, without prejudice to reimbursement from capitalist partners
According to agreement; if none, in proportion to agreed share in the profits; if none, in proportion to contribution
Duration has no limitation An agreement to keep a thing undivided for more than 10 years is not allowed
Engaging in business Cannot engage in Cannot engage, for his business for himself, own account, in the same unless the partnership kind of business as that of expressly permits him to the partnership, unless do so; should he do so there is a stipulation to without permission, the the contrary; should he do capitalist partners (as well so, he shall bring to the as industrial partners [De common fund any profits Leon (2010)]) may (a) accruing to him from his exclude him from the firm, transactions and shall or (b) avail themselves of personally bear all the the benefits obtained in losses [Article 1808] violation of the prohibition, with right to damages in either case [Article 1789]
There is mutual agency between partners
There is no mutual representation among coowners
Death or incapacity of a partner dissolves the partnership
Death or incapacity of a co-owner does not dissolve the co-ownership
Partner cannot dispose of Co-owner can dispose of his interest so as to make his share without consent the assignee a partner, of others without consent of others
Partnership
Corporation
Has juridical personality separate and distinct from its individual members Can only act through agents
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Partnership
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Corporation
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Partnership
Composed of an aggregate of individuals Distributes its profits to those who contributed capital to the business Can only be organized where there is a law authorizing its organization
Has juridical personality
Has no juridical personality
Commencement date may be stipulated
Commencement is on the date of the celebration of the marriage, and any stipulation to the contrary is void
Taxable as a corporation Created by agreement
Created by law (with SEC approval)
Share in profits may be Share in profits is equal stipulated; otherwise, in proportion to contribution
Involves at least 2 persons Except for a corporation sole, requires at least 5 incorporators Personality commences Personality commences from the moment of from the issuance of execution of the contract certificate of incorporation Can exercise any power authorized by partners
Can exercise only powers granted by law or those incidental to its existence
When management is not Management is vested in agreed upon, every the board of directors of partner may act for the trustees partnership Partners are generally liable for partnership debts
Stockholders are liable only to the extent of their shares
Duration has no limitation The term is 50 years, but may be extended
Partnership
May only be dissolved with the consent of the state
Arises in case the spouses, of opposite sex, agree before marriage
Governed by agreement
Governed by law
Administration belongs to the spouses jointly, but decision of husband prevails in disagreement
Partner can dispose of Interest even without consent of others
Spouse cannot dispose of interest during marriage, even with consent
Voluntary Association
Has juridical personality
Has no juridical personality
Organized for profit
Not always organized for profit
Capital is contributed
Capital is not contributed, although fees are collected from members
Partnership is primarily liable; the partners are liable only subsidiarily
The members are liable individually for debts which they authorized or ratified
Share in profits may be Share in profits is equal stipulated; otherwise, in proportion to contribution
Conjugal Partnership of Gains
Created by voluntary agreement of 2 or more partners of either sex
Management shared by all partners, unless otherwise agreed upon
Partnership
Partner cannot dispose of Stockholder has the right his interest so as to make to transfer his shares the assignee a partner, without consent of others without consent of others
May be dissolved at any time by one or all of the partners
Conjugal Partnership of Gains
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Management shared by all partners, unless otherwise agreed upon
Administration belongs to the spouses jointly, but decision of husband prevails in disagreement
Partner can dispose of Interest even without consent of others
Spouse cannot dispose of interest during marriage, even with consent
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Exception: When there is an agreement to the contrary, the contribution shall follow such agreement [Article 1790].
Rights and obligations of the partnership
DETERMINING VALUE OF CONTRIBUTION IN GOODS
To determine the value when the contribution consists, in whole or in part, of goods, their appraisal must be made: (1) In the manner prescribed in the partnership contract; (2) In the absence thereof, by experts chosen by the partners and according to current prices.
RIGHT TO CONTRIBUTION, IN GENERAL The mutual contribution to a common fund is the essence of the contract of partnership [De Leon (2010)]. As such, the partnership has a right to the contribution (or partners are obliged to contribute). The money or property thus contributed, or their use or fruits, becomes a property of the partnership.
Subsequent changes in the price will be for the benefit or will be suffered by the partnership [Article 1787].
To complement this right of the partnership and as an incident of its separate and distinct juridical personality, it is allowed by law to acquire any immovable property or an interest therein. Title so acquired can be conveyed only in the partnership name [Article 1774].
ADDITIONAL CAPITAL CONTRIBUTION
In case of an imminent loss of the business of the partnership, any partner who refuses to contribute an additional share to the capital, except an industrial partner, to save the venture, shall be obliged to sell his interest to the other partners, unless there is an agreement to the contrary [Article 1791].
OBLIGATION OF PARTNERS TO THE PARTNERSHIP WITH RESPECT TO CONTRIBUTION OF MONEY OR PROPERTY With respect to contribution of property, a partner is obliged to: (1) To contribute, at the beginning of the partnership or at the stipulated time, the money, property or industry which he undertook to contribute; (2) In case a specific and determinate thing is to be contributed: (a) To warrant against eviction in the same manner as a vendor; and (b) To deliver to the partnership the fruits of the property promised to be contributed, from the time they should have been delivered, without need of demand [Article 1786]; (3) In case a sum of money is to be contributed, or in case he took any amount from the partnership coffers, to indemnify the partnership for: (a) Interest; and (b) Damages, from the time he should have complied with his obligation, or from the time he converted the amount to his own use, respectively [Article 1788].
Requisites: (1) There is an imminent loss of the business of the partnership; (2) The majority of the capitalist partners are of the opinion that an additional contribution to the common fund would save the business; (3) The capitalist partner refuses deliberately (not because of financial inability) to contribute an additional share to the capital; and (4) There is no agreement that even in case of imminent loss of the business, the partners are not obliged to contribute. PROHIBITION AGAINST ENGAGING IN BUSINESS
General rule: A capitalist partner cannot engage for his own account in any operation which is of the kind of business in which the partnership is engaged. Should he do so, he shall bring to the common fund any profit accruing to him from his transactions, while personally bearing all the losses. Exception: The rule does not apply when there is a stipulation to the contrary [Article 1808].
Article 1788 is an exception to the general rule that in obligations consisting in the payment of a sum of money, the indemnity for damages consists only in the payment of interest [Article 2209].
RISK OF LOSS OF THINGS CONTRIBUTED
In case the contribution consists in the use and fruits of specific and determinate things, which are not fungible, the risk of loss shall be borne by the partner who owns them. The partnership bears the risk if the things: (1) Are fungible; (2) Cannot be kept without deterioration;
AMOUNT OF CONTRIBUTION
General rule: The partners are obliged to contribute equal shares to the capital of the partnership.
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(3) Were contributed to be sold; or (4) Were brought and appraised in the inventory. In the last case, the claim is limited to the appraised value of the things [Article 1795].
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Exceptions: (1) In case the receipt was issued for the account of the partnership credit only, however, the sum shall be applied to the partnership credit alone. (2) When the debtor declares, pursuant to Article 1252, at the time of making the payment, to which debt the sum must be applied, it shall be so applied [Article 1792].
REMEDY IN CASE OF NON-COMPLIANCE
A partner is guilty of estafa if he misappropriates partnership money or property received by him for a specific purpose of the partnership [Liwanag v. CA (1997)].
The law, through this rule, safeguards the interests of the partnership by preventing the possibility of their being subordinated by the managing partner to his own interest, by intentionally failing to collect partnership credits to collect his own, to the prejudice of the other partners. This possibility does not exist in case the partner is not authorized to manage [De Leon (2010)].
However, mere failure on the part of an industrial partner to return to the capitalist partner the capital brought by him into the partnership is not an act constituting estafa. The action that may be brought to recover the money is a civil one [US v. Clarin (1910)]. OBLIGATION OF PARTNERS TO THE PARTNERSHIP WITH RESPECT TO CONTRIBUTION OF INDUSTRY With respect to contribution of industry, a partner is also obliged to contribute it at the stipulated time.
RIGHT TO RETURN OF CREDIT RECEIVED A partner, who is authorized to manage or not, is obliged to bring to the partnership capital what he received when: (1) He has received, in whole or in part, his share of the partnership credit; (2) The other partners have not collected their shares; and (3) The partnership debtor has become insolvent. This obligation exists even when he issued a receipt for his share only. [Article 1793]
PROHIBITION AGAINST ENGAGING IN BUSINESS
General rule: An industrial partner cannot engage in business for himself. Should he do so, the capitalist partners, as well as industrial partners [De Leon (2010)], may either: (1) Exclude him from the firm; or (2) Avail themselves of the benefit which he may have obtained.
Ratio: In this case, the debt becomes a bad debt. It would be unfair for the partner who already collected not to share in the loss of the other partners.
Exception: He may engage in business for himself when the partnership expressly permits him to do so. [Article 1789]
RIGHT TO INDEMNITY FOR DAMAGES Every partner is responsible to the partnership for damages suffered by it through his fault.
RIGHT TO APPLY PAYMENT TO PARTNERSHIP CREDIT General rule: A partner authorized to manage, who collects a demandable sum owed to him in his own name from a person who also owes the partnership a demandable sum, is obliged to apply the sum collected to both credits pro rata, even if he issued a receipt for his own credit only.
COMPENSATION OF LIABILITY
General rule: The liability for damages cannot be setoff or compensated by profits or benefits which the partner may have earned for the partnership by his industry. Ratio: The partner has the obligation to secure the benefits for the partnership. As such, the requirement for compensation, that the partner be both a creditor and a debtor of the partnership at the same time, is not complied with [Article 1278; De Leon (2010)].
Requisites: (1) There exist at least two debts, one where the collecting partner is creditor, and the other, where the partnership is the creditor; (2) Both debts are demandable; and (3) The partner who collects is authorized to manage and actually manages the partnership.
Exception: The court may equitably lessen the liability if, through his extraordinary efforts in other activities of the partnership, unusual profits were realized [Article 1794]. Note, however, that there is still no compensation.
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Without such agreement, they shall be kept at the principal place of business of the partnership.
SUIT FOR DAMAGES
Before a partner may sue another for alleged fraudulent management and resultant damages, liquidation must first be effected to determine the extent of the damage. Without liquidation of partnership affairs, a partner cannot claim damages [Soncuya v. De Luna (1939)].
Every partner shall, at any reasonable hour, have access to and may inspect and copy any of them. [Article 1805] BASIS OF RIGHT
RESPONSIBILITY OF THE PARTNERSHIP TO PARTNERS In the absence of any stipulation to the contrary, every partner is an agent of the partnership for the purpose of its business. As such, it is responsible to every partner: (1) For amounts, and the corresponding interest from the time the expenses were made, which he may have disbursed on behalf of the partnership; (2) For obligations he may have contracted in good faith in the interest of the partnership business; and (3) For risks in consequence of the management of the partnership. [Article 1796]
Since a partner is a co-owner of partnership properties, which include the books, and has a right to participate in the management of its affairs, the books should not be in the exclusive custody or control of any one partner [De Leon (2010)]. REASONABLE HOUR
"Any reasonable hour" has been interpreted to mean reasonable hours on business days throughout the year, not merely during some arbitrary period of a few days chosen by the managing partner [Pardo v. Lumber Co., (1925)]. RIGHT TO A FORMAL ACCOUNT Any partner shall have the right to a formal account as to partnership affairs: (1) If he is wrongfully excluded from the partnership business or possession of its property by his copartners; (2) If the right exists under the terms of any agreement; (3) If, without his consent, a partner has derived profits from any transaction connected with the formation, conduct, or liquidation of the partnership or from any use of partnership property; (4) Whenever other circumstances render it just and reasonable [Article 1809].
Rights and obligations of partners inter se RIGHT TO ASSOCIATE ANOTHER IN SHARE Every partner may associate another person with him in his share. The admission of the associate to the partnership, however, requires the consent of all the other partners, even if the partner having an associate is a managing partner [Article 1804].
ACCRUAL OF RIGHT
General rule: The right to a formal account of partnership affairs accrues only when the partnership is dissolved. Ample protection is already provided.
SUBPARTNERSHIP
The arrangement refers to a contract of subpartnership, which is a partnership within a partnership, distinct and separate from the main partnership [De Leon (2010)]. The associate is sometimes referred to as a subpartner.
Exceptions: In special and unusual cases under Article 1809, formal accounting may be demanded even before dissolution.
Since admission of the subpartner as a new partner in the main partnership amounts to a modification of the original contract, it requires the unanimous consent of the partners.
PERSON OBLIGED
RIGHT TO ACCESS PARTNERSHIP BOOKS The partnership books shall be kept at the place agreed upon by the partners.
PRESCRIPTION OF ACTION
The obligation to account rests on the managing or active partner (or, after dissolution, in the liquidating or surviving partner). The right, on the part of the other partners, to demand an accounting exists while the partnership exists. The prescriptive period begins to run only
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upon the dissolution when the final accounting is done [Fue Leung v. IAC (1989)].
(b) Dissolution by judicial decree [Article 1831]. (2) A partner's right in such property is not assignable, except when all the partners assign their rights in the same property. (3) The right is not subject to attachment or execution, except on claim against the partnership. Also, in case of such attachment, the partners, or any of them, or the representatives of a deceased partner, cannot claim any right under the homestead or exemption laws; (4) The right is also not subject to legal support under Article 291 [Article 1811].
NATURE OF ACTION
The action for accounting is an action in personam, regardless of the incidental fact that some of the assets of the partnership are real property [Emnace v. CA (2001)]. PROPERTY RIGHTS OF PARTNERS IN GENERAL
The property rights of a partner are: (1) Rights in specific partnership property; (2) Interest in the partnership; and (3) Right to participate in the management [Article 1810].
A partner's right in specific property cannot be separately assigned, since it is impossible to determine the extent of his beneficial interest in the property until after the liquidation of partnership affairs.
PARTNERSHIP PROPERTY AND PARTNERSHIP CAPITAL
Capital With constant value
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Property
It is also not subject to support precisely because it is a property of the partnership and not of the individual partners.
Value varies with market conditions
Includes only actually Includes the contributions contributed and promised and property acquired by capital the partnership
INTEREST IN THE PARTNERSHIP
OWNERSHIP OF CERTAIN PROPERTY
RIGHTS OF ASSIGNEE
A partner's interest in the partnership is his share of the profits and surplus [Article 1812]. This interest is subject to support and may be assigned. Assignment by a partner of his whole interest in the partnership does not, of itself: (1) Dissolve the partnership; or (2) Entitle the assignee to: (a) Interfere in the management or administration of the partnership business or affairs; (b) Require information or account of partnership; or (c) Inspect the partnership books.
(1) The ownership of property used by the partnership depends on the intention of the parties, which may be drawn from an express agreement or their conduct. (a) A partner may allow the property to be used by the partnership without transfer of ownership, contributing only the use or enjoyment thereof. (b) He may also hold title to partnership property, without acquiring ownership thereof [Article 1819]. (2) Property acquired by a partner with partnership funds is presumed to be partnership property. (3) The same presumption also arises when the property is indicated in the partnership books as partnership asset. (4) Other factors may be considered to determine ownership of the property.
It merely entitles the assignee to: (1) Receive the profits to which the assigning partner was entitled; (2) In case of fraud in management, avail himself of the usual remedies; (3) In case of dissolution: (a) Receive his assignor's interest; and (b) Require an accounting from the date only of the last account agreed to by all the partners [Article 1813].
RIGHTS IN SPECIFIC PROPERTY
The partners are co-owners of specific partnership property. As such: (1) A partner has an equal right with his partners to possess such property for partnership purposes. For other purposes, the consent of his partners is necessary. If the partner is excluded, he may ask for: (a) Formal accounting [Article 1809]; or
CHARGING OF PARTNERSHIP INTEREST BY PERSONAL CREDITOR OF PARTNERS
Partnership creditors are preferred over the personal creditors of the partners as regards partnership property [Article 1827].
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(d) The industrial partner, who did not contribute capital, is not liable for losses [Article 1797].
However, on due application by any judgment creditor of a partner, a competent court may: (1) Charge the interest of the partner for the satisfaction of the judgment debt; (2) Appoint a receiver of the share of the profits and of any other money due or to fall due to the partner; and (3) Make all other orders, directions, accounts and inquiries, which the debtor partner might have made, or which the circumstances may require.
DESIGNATION OF SHARE BY THIRD PERSONS
The designation of the share of each one in the profits and losses can be delegated to a third person, in which case, it cannot be impugned: (a) Unless it is manifestly inequitable; (b) The partner impugning it has begun to execute the designation; or (c) The partner has not impugned it within 3 months from the time he had knowledge thereof.
The interest charged may be redeemed before foreclosure or, in case of sale directed by the court, may be purchased without causing dissolution: (1) With separate property, by one or more of the partners; or (2) With partnership property, by one or more of the partners, will consent of all, except the debtor partner.
The designation cannot be delegated to one of the partners [Article 1798]. EXCLUSION OF PARTNER FROM SHARE
A stipulation excluding one or more partners from any share in the profits or losses is void [Article 1799]. With reference to the industrial partner, since the law itself excludes him from losses, a stipulation exempting him from the losses is naturally valid since if the partnership fails to realize profits, he can no longer withdraw his work or labor. He cannot but share in the loss.
The partner debtor is not deprived of his right under exemption laws. [Article 1814] CHARGING ORDER
A charging order subjects the interest in the partnership of the debtor partner with the payment of an unsatisfied amount of a judgment debt against him, with the least interference with the partnership business and the rights of the partners. By virtue of the order, any amount or portion thereof which the partnership would otherwise pay to the debtor partner is instead given to the judgment creditor [De Leon (2010)].
OBLIGATION TO RENDER INFORMATION Partners shall render on demand true and full information of all things affecting the partnership to any partner or the legal representative of any deceased partner or of any partner under legal disability [Article 1806]. BASIS OF OBLIGATION
This obligation arises from the mutual trust and confidence among partners. Thus, there must be no concealment between them in all matters affecting the partnership [De Leon (2010].
RIGHT TO PROFITS AND OBLIGATION FOR LOSSES RULES FOR DISTRIBUTION OF PROFITS AND LOSSES
The distribution of profits and losses shall be in accordance with the following rules (1) They shall be distributed in conformity with the agreement. (2) If only the share in profits has been stipulated, the share in the losses shall be in the same proportion. (3) In the absence of any stipulation: (a) The share in the profits of the capitalist partners shall be in proportion to their contributions. (b) The losses shall be borne by the capitalist partners, also in proportion to the contributions; (c) The share of the industrial partners in the profits is that share as may be just and equitable. If he also contributed capital, he will receive a share of the profits in proportion to his contribution; and
OBLIGATION TO ACCOUNT AND ACT AS TRUSTEE Every partner must account to the partnership for any benefit, and hold as a trustee for it any profits derived by him without the consent of the other partners from any transaction connected with the formation, conduct, or liquidation of the partnership or from any use by him of its property [Article 1807]. BASIS OF OBLIGATION
This obligation also arises from the fiduciary nature of the partnership relation, and operates to prevent a partner from making a secret profit out of the partnership. Note that the obligation extends from the formation to the liquidation of the partnership.
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Operation of the Partnership MANAGEMENT BY TWO OR MORE PARTNERS
FIRM NAME Every partnership shall operate under a firm name, which may or may not include the name of one or more of the partners.
When there are two or more managing partners appointed, without specification of their duties or without a stipulation on how each one will act: (1) Each one may separately execute all acts of administration. (2) If any of them opposes the acts of the others, the decision of the majority prevails. (3) In case of a tie, the partners owning the controlling interest will decide [Article 1801].
Those who, not being members of the partnership, include their names in the firm name, shall be subject to the liability of a partner [Article 1815]. RIGHT TO CHOOSE FIRM NAME
General rule: The partners may adopt any firm name desired. Exceptions: (1) They cannot use a name that is "identical or deceptively or confusingly similar to an existing [partnership] or corporation or to any other name already protected by law or is patently deceptive, confusing or contrary to existing laws" [Section 18, Corporation Code]. (2) Use of names of deceased partner in law firms is "permissible provided that the firm indicates in all its communications that said partner is deceased" [Rule 3.02, Code of Professional Responsibility].
Requisites: (1) Two or more partners have been appointed as managers; (2) There is no specification of their respective duties; and (3) There is no stipulation that one of them shall not act without the consent of all the others. STIPULATION ON UNANIMITY OF MANAGING PARTNERS
In case there is a stipulation that none of the managing partners shall act without the consent of others, the concurrence of all is necessary for the validity of the acts. The absence or disability of one cannot be alleged, unless there is imminent danger of grave or irreparable injury to the partnership. [Article 1802]
MANAGEMENT OF THE PARTNERSHIP Management of the partnership is primarily governed by the agreement of the partners in the articles of partnership. It may be managed by: (1) All the partners; or (2) A number of partners appointed as managers, which may be appointed: (a) In the articles of partnership; or (b) After constitution of the partnership.
MANAGEMENT WHEN MANNER NOT AGREED UPON
When there is no agreement as to the manner of management, the following rules apply: (1) All the partners are considered agents (mutual agency). Whatever any one does alone binds the partnership, unless there is a timely opposition to the act, under Article 1801. (2) Any important alteration in the immovable property of the partnership, even if useful to the partnership, requires unanimity. If the alteration is necessary for the preservation of the property, however, consent of the others is not required [De Leon (2010)].
POWERS OF A MANAGING PARTNER
General rule: The partner designated as manager in the articles may execute all acts of administration despite opposition by the other partners. Exception: He cannot do so when he acts in bad faith. REVOCATION OF POWER OF MANAGING PARTNER
If the refusal is manifestly prejudicial to the partnership, court intervention may be sought [Article 1803].
The powers of the managing partner may be revoked: (1) If appointed in the articles of partnership, when: (a) There is just or lawful cause for revocation; and (b) The partners representing the controlling interest revoke such power. (2) If appointed after the constitution of the partnership, at any time and for any cause [Article 1800].
INSTANCES OF MUTUAL AGENCY
(1) Partners can dispose of partnership property even when in partnership name [Article 1819]. (2) An admission or representation made by any partner concerning partnership affairs is evidence against the partnership [Article 1820]. (3) Notice to any partner of any matter relating to partnership affairs is notice to the partnership [Article 1821].
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(4) Wrongful act or omission of any partner acting for partnership affairs makes the partnership liable [Article 1822]. (5) Partnership is bound to make good losses for wrongful acts or misapplications of partners [Article 1823].
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(2) A person admitted as a partner into an existing partnership is liable for all the obligations of the partnership arising before his admission, except that his liability shall be satisfied only out of partnership property, unless there is a stipulation to the contrary. LIABILITY OF INDUSTRIAL PARTNER
An industrial partner, who is not liable for losses, is not exempt from this liability. However, he can recover the amount he has paid from the capitalist partners, unless there is a stipulation to the contrary.
Obligations of partnership/ partners to third persons
[Cia. Maritima v. Muñoz (1907)].
LIABILITY OF PARTNERS FOR PARTNERSHIP CONTRACTS The partnership is primarily liable for contracts entered into in its name and for its account, under its signature and by a person authorized to act for it.
STIPULATION AGAINST INDIVIDUAL LIABILITY
Any stipulation against this liability is void and does not affect third persons. The stipulation, however, is valid only as among the partners [Article 1817]. LIABILITY OF PARTNERS FOR PARTNERSHIP CONTRACTS
Upon exhaustion of its assets, all partners are liable pro rata with all their property.
ACTS APPARENTLY FOR THE CARRYING ON OF USUAL BUSINESS
Any partner may enter into a separate obligation to perform a partnership contract [Article 1816].
General rule: Every partner is an agent of the partnership for the purpose of its business and any act of a partner which is apparently for the carrying on of the usual business of the partnership binds the latter, including the execution of any instrument in the partnership name [1st par., Article 1818].
NATURE OF INDIVIDUAL LIABILITY
The pro-rating should be understood to mean equally or jointly, not proportionally [De Leon (2010), citing Article 1839(4); note, however, that this conclusion does not find textual support in Article 1816].
Exception: The partnership is not bound when: (1) The partner has in fact no authority to act; AND (2) The person with whom he deals has knowledge of such fact.
The fact that a partner has left the country and the payment of his share of the liability cannot be enforced [Co-Pitco v. Yulo (1907)] or his liability is condoned by the creditor [Island Sales v. United Pioneers (1975)] cannot increase the liability of the other partners.
ACTS NOT APPARENTLY FOR CARRYING ON OF THE USUAL BUSINESS
General rule: Acts of a partner which is not apparently for carrying on of the usual business does not bind the partnership.
The liability is subsidiary or secondary. It only arises upon exhaustion of partnership assets. However, they may be joined as party defendants in the action against the partnership, subject to their right to prior exhaustion of partnership assets [Cia. Maritima v.
Exception: The partnership is bound if the other partners authorized him to do the act. ACTS OF STRICT DOMINION
Muñoz (1907)].
General rule: One or some of the partners have no authority to do the following acts of strict dominion: (a) Assign the partnership property in trust for creditors or on the assignee's promise to pay the debts of the partnership; (b) Dispose of the goodwill of the business; (c) Do any other act which makes it impossible to carry on the ordinary business of the partnership; (d) Confess a judgment; (e) Enter into a compromise concerning a partnership claim or liability;
General rule: The partners are liable pro-rata and subsidiarily, with all their property. Exceptions: (1) A third person who transacted with the partnership can hold the partners solidarily liable for the whole obligation if the case falls under Articles 1822 or 1823 [Muñasque v. CA (1985)].
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(f) Submit a partnership claim or liability to arbitration; (g) Renounce a claim of the partnership.
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LIABILITY OF PARTNERSHIP FOR ADMISSION BY PARTNER An admission or representation by any partner concerning partnership affairs within the scope of his authority may be used as evidence against the partnership [Article 1820].
Exception: They may do so if: (1) Authorized by all the partners; OR (2) The other partners have abandoned the business.
LIABILITY OF PARTNERSHIP FOR WRONGFUL ACTS OF PARTNER The partnership is solidarily liable with the partner who causes loss or injury, or incurs any penalty through any wrongful act or omission: (1) In the ordinary course of the business of the partnership; or (2) Not in such ordinary course of business, but with the authority of his co-partners [Article 1822].
ACTS IN CONTRAVENTION OF RESTRICTION
Any act of a partner in contravention of a restriction on authority does not bind the partnership to persons having knowledge of the restriction [Article 1818]. CONVEYANCE OF REAL PROPERTY OF PARTNERSHIP TITLE IN THE PARTNERSHIP NAME
Any partner may convey the property in the name of the partnership.
LIABILITY OF THE PARTNERSHIP FOR MISAPPLICATION OF MONEY OR PROPERTY RECEIVED The partnership is liable for losses suffered by a third person whose money or property was: (1) Received by a partner, acting within the scope of his apparent authority, who also misapplied it; or (2) Received by the partnership, in the course of its business, but is misapplied by any partner while it is in the custody of the partnership [Article 1823].
The partnership can recover it, except when: (1) The act of the partner binds the partnership under 1st par., Article 1818 (i.e., for the carrying on of the usual business of the partnership); or (2) If not so authorized, the property has been conveyed by the grantee, or a person claiming under him, to a holder for value and without knowledge that the partner exceeded his authority.
LIABILITY OF OTHER PARTNERS FOR WRONGFUL ACTS OR MISAPPLICATION All partners are solidarily liable with the partnership for its liabilities under Articles 1822 and 1823 [Article 1824].
TITLE IN THE PARTNERSHIP NAME
A partner, authorized to act under 1st par., Article 1818, may convey, in his own name, the equitable interest of the partnership. TITLE IN THE NAME OF ONE OR MORE (NOT ALL) OF THE PARTNERS AND THE RECORD DOES NOT DISCLOSE THE RIGHT OF THE PARTNERSHIP
This is without prejudice to the guilty partner being liable to the other partners. However, as far as third persons are concerned, the partnership is answerable.
The partners having title may convey title. The partnership may recover it if the act does not bind it under 1st par., Article 1818, unless the purchaser or his assignee is: (1) A holder for value; AND (2) Without knowledge that the act exceeded authority.
LIABILITY IN CASE OF PARTNERSHIP BY ESTOPPEL PARTNER BY ESTOPPEL
A person, not a partner, may become a partner by estoppel, and be liable as a partner, when, by words, spoken or written, or conduct, he: (1) Directly represents himself to anyone as a partner in an existing or non-existing partnership; or (2) Indirectly represents himself by consenting to another representing him as such partner. [Article 1825]
TITLE IN THE NAME OF ONE OR MORE OR ALL THE PARTNERS, OR IN A THIRD PERSON IN TRUST FOR THE PARTNERSHIP
A partner may convey equitable title in the partnership name or in his own name, when the act is authorized under 1st par., Article 1818.
LIABILITY OF PARTNER BY ESTOPPEL
A partner by estoppel is liable: (1) To any person who extended credit to the partnership, actual or apparent, relying on his representation; and
TITLE IN THE NAMES OF ALL THE PARTNERS
The conveyance must be executed by all of them to pass all their rights in the property [Article 1819].
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(2) In case the representation was made publicly, to any person, who extended such credit, whether or not the communication to said creditor was made with the knowledge of the partner.
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the plaintiff might have learned of the truth or untruth of the representations. Persons who knowingly assume to act as a corporation without authority to do so are liable as general partners for all debts, liabilities and damages incurred. [Section 21, Corporation Code] A partnership de facto is created.
NATURE OF LIABILITY
He is liable in the following manner: (1) When there is an existing partnership and all the partners consented to the representation, a partnership liability results, and the partner by estoppel is liable as though he were a partner; (2) When there is an existing partnership and not all the partners consented, or when there is no existing partnership and all those represented as partners consented to the representation, he is liable jointly and pro rata with those who consented to the representation; (3) When there is an existing partnership but none of the partners consented, or when there is no existing partnership and not all of those represented as partners consented to the representation, he is liable separately.
LIABILITY OF INCOMING PARTNER A person admitted as a partner is liable as the other partners for obligations subsequent to his admission. He is also liable for obligations incurred before his admission, but will be satisfied only out of the partnership property, unless otherwise stipulated. (Article 1826) Ratio: (1) The new partner partakes of the benefits of the partnership property and an already established business. (2) He has every means of obtaining full knowledge of the debts of the partnership and remedies that amply protect his interest [De Leon (2010)].
EFFECTS OF ACTS OF PARTNER BY ESTOPPEL
The acts of a partner by estoppel have the following effects: (1) A person, thus representing himself as a partner of other persons, becomes an agent of the latter, in the same manner as though he were a partner in fact, with respect to persons who rely upon the representation. (2) When all the members of the existing partnership consent to the representation, a partnership act or obligation results. (3) In all other cases, only a joint act or obligation results. [Article 1825]
However, an incoming partner may fully assume the obligations of a retiring partner. NOTICE TO OR KNOWLEDGE OF THE PARTNERSHIP The following operate as notice to or knowledge of the partnership: (1) Notice to any partner of any matter relating to partnership affairs; (2) Knowledge of the partner acting in the particular matter acquired while a partner; (3) Knowledge of the partner acting in the particular matter then present to his mind; and (4) Knowledge of any other partner who reasonably could and should have communicated it to the acting partner.
No real partnership is created by estoppel. It is only with respect to third persons that partnership by estoppel is recognized. ESTABLISHING LIABILITY
The basic elements in connection with establishment of liability as a partner if based on the doctrine of estoppel must encompass: (1) Proof by plaintiff that he was individually aware of the defendant's representations as to his being a partner or that such representations were made by others and not denied or refuted by the defendant; (2) Reliance on such representations by the plaintiff; and (3) Lack of any denial or refutation of the statements by the defendant; such denial need not precede plaintiff's acting therein if the denial was forthcoming promptly upon hearing of the representations, and if, by prudence and diligence
These do not apply in case of fraud on the partnership committed by or with the consent of the partner [Article 1821]. PREFERENCE OF PARTNERSHIP CREDITORS Partnership creditors are preferred over personal creditors of the partners with respect to partnership property. However, personal creditors may ask the attachment and public sale of the share of the partner debtor in the partnership assets. [Article 1827]
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Ratio: The partnership, as a legal entity distinct from its members, should apply its property to the payment of its debts in preference to the claim of any partner or his individual creditors.
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or after the termination of any specified term or particular undertaking; (4) By the expulsion of any partner from the business bona fide in accordance with such a power conferred by the agreement between the partners. If, after the expiration of the definite term or particular undertaking, the partners continue the partnership without making a new agreement, the firm becomes a partnership at will. [Article 1785]
Dissolution and winding up CONCEPTS Dissolution is the change in the relation of the partners caused by any partner ceasing to be associated in the carrying on of the business. It is different from the winding-up of the business [Article 1828].
Verily, any one of the partners may, at his sole pleasure, dictate a 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. [Ortega v. CA (1995)]
Winding up is the actual process of settling the partnership business or affairs after dissolution. It involves collection and distribution of partnership assets, payment of debts, and determination of the value of the interest of the partners in the partnership.
Bad faith, in the context here used, is no different from its normal concept of a conscious and intentional design to do a wrongful act for a dishonest purpose or moral obliquity. [Ortega v. CA (1995)]
Termination is the point in time when all partnership affairs are completely wound up and finally settled. It signifies the end of the partnership life.
IN CONTRAVENTION OF THE AGREEMENT
In contravention of the agreement between the partners, where the circumstances do not permit a dissolution under any other provision of this article, by the express will of any partner at any time.
EFFECT OF DISSOLUTION ON EXISTENCE OF PARTNERSHIP Dissolution does not terminate the existence of the partnership, which continues until the winding up of partnership affairs is completed. [Article 1829].
[E]ven if there is a specified term, one partner can cause its dissolution by expressly withdrawing even before the expiration of the period, with or without justifiable cause. Of course, if the cause is not justified or no cause was given, the withdrawing partner is liable for damages but in no case can he be compelled to remain in the firm. With his withdrawal, the number of members is decreased, hence, the dissolution. [Rojas v. Maglana (1990)]
The dissolution of a partnership must not be understood in the absolute and strict sense so that at the termination of the object for which it was created the partnership is extinguished, pending the winding up of some incidents and obligations of the partnership, but in such case, the partnership will be reputed as existing until the juridical relations arising out of the contract are dissolved [Testate Estate of Mota v. Serra (1926)].
BY OPERATION OF LAW
(1) By any event which makes it unlawful for the business of the partnership to be carried on or for the members to carry it on in partnership; (2) When a specific thing which a partner had promised to contribute to the partnership, perishes before the delivery; in any case by the loss of the thing, when the partner who contributed it having reserved the ownership thereof, has only transferred to the partnership the use or enjoyment of the same; but the partnership shall not be dissolved by the loss of the thing when it occurs after the partnership has acquired the ownership thereof; (3) By the death of any partner;
CAUSES OF DISSOLUTION WITHOUT VIOLATION OF THE AGREEMENT
Without violation of the partnership agreement between the partners: (1) By the termination of the definite term or particular undertaking specified in the agreement; (2) By the express will of any partner, who must act in good faith, when no definite term or particular is specified; (3) By the express will of all the partners who have not assigned their interests or suffered them to be charged for their separate debts, either before
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(4) By the insolvency of any partner or of the partnership; (5) By the civil interdiction of any partner;
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WITH RESPECT TO PARTNERS
The authority of partners to act for the partnership is terminated, with respect to partners: (1) When the dissolution is not by the act, insolvency or death of a partner; or (2) When the dissolution is by such act, insolvency or death, when the partner acting for the partnership has knowledge or notice of the cause. Otherwise, each co-partner is still liable for his share in the liability created by the partner acting for the partnership, as if there was no dissolution. [Article 1832]
BY DECREE OF COURT
(1) A partner may apply in court for dissolution when: (a) A partner has been declared insane in any judicial proceeding or is shown to be of unsound mind; (b) A partner becomes in any other way incapable of performing his part of the partnership contract; (c) A partner has been guilty of such conduct as tends to affect prejudicially the carrying on of the business; (d) A partner willfully or persistently commits a breach of the partnership agreement, or otherwise so conducts himself in matters relating to the partnership business that it is not reasonably practicable to carry on the business in partnership with him; (e) The business of the partnership can only be carried on at a loss; (f) Other circumstances render a dissolution equitable. (2) A person who acquires the interest of a partner may likewise apply: (a) After the termination of the specified term or particular undertaking; (b) At any time if the partnership was a partnership at will when the interest was assigned or when the charging order was issued. [Articles 1830 and 1831]
WITH RESPECT TO THIRD PERSONS
With respect to persons not partners: (1) After dissolution, a partner can bind the partnership by any act appropriate for winding up partnership affairs or completing transactions unfinished at dissolution. (2) He can also bind it by any transaction which would bind the partnership as if dissolution had not taken place, provided the other party to the transaction: (a) Had extended credit to the partnership prior to dissolution and had no knowledge or notice thereof; or (b) Had not so extended credit, but had known of the partnership prior to dissolution, and, having no knowledge or notice of dissolution, the fact had not been advertised in a newspaper of general circulation in the place (or in each place if more than one) at which the partnership business was regularly carried on.
Judicial determination as to dissolution may be resorted to when the facts which may cause such dissolution are open to dispute.
Note the character of notice required. As to persons who extended credit to the partnership prior to dissolution, notice must be actual. As to persons who merely knew of the existence of the partnership, publication in a newspaper of general circulation in the place of business of the partnership is sufficient.
OTHER CAUSES
(1) When a new partner is admitted into an existing partnership; (2) When any partner retires; (3) When the other partners assign their rights to the sole remaining partner; (4) When all the partners assign their rights in the partnership property to third persons. [Article 1840]
LIABILITY OF DISSOLUTION
PARTNERS
IN
TRANSACTIONS
AFTER
General rule: The liability of a partner, in general, is the same as in ordinary contracts (pro rata and subsidiary). Exceptions: In the following cases, however, the liability shall be satisfied out of the partnership assets alone: (1) When the partner had been, prior to the dissolution, unknown as a partner to the person with whom the contract is made; (2) When the partner had been, prior to the dissolution, so far unknown or inactive in partnership affairs that the business reputation of the partnership could not be said to have been in
The statutory enumeration of the causes of dissolution is exclusive. [De Leon (2010)] EFFECT OF DISSOLUTION ON AUTHORITY OF PARTNERS Upon dissolution, the authority of the partners to represent the partnership is confined only to acts necessary to wind up partnership affairs or to complete transactions begun but not then finished.
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any degree due to his connection with it. [Article 1834]
(3) The person or partnership continuing the business.
CASES WHERE PARTNERSHIP IS NOT BOUND Any act of a partner after dissolution in no case binds the partnership in the following cases: (1) Where the partnership is dissolved because it is unlawful to carry on the business, unless the act is appropriate for winding up partnership affairs; (2) Where the partner has become insolvent; or (3) Where the partner has no authority to wind up partnership affairs, except by a transaction with one who: (a) Had extended credit to the partnership prior to dissolution and had no knowledge or notice of his want of authority; or (b) Had not extended credit to the partnership prior to dissolution, and, having no knowledge or notice of his want of authority, the fact of his want of authority has not been advertised.
Such agreement may be inferred from the course of dealing between the creditor having knowledge of the dissolution and the person or partnership continuing the business. In case of dissolution by death, the individual property of a deceased partner is liable for obligations of the partnership incurred while he was a partner, after payment of his separate debts. [Article 1835] WINDING UP PARTNERS WHO MAY WIND UP
The following partners have the right to wind up the partnership affairs: (1) Those designated in an agreement; (2) Those who have not wrongfully dissolved the partnership; or (3) The legal representative of the last surviving partner, who was not insolvent.
PARTNERSHIP BY ESTOPPEL AFTER DISSOLUTION
Article 1834 does not affect the liability under Article 1825 of any person who, after dissolution, represents himself or consents to another representing him as a partner in a partnership engaged in carrying on business [Article 1834].
However, any partner or his legal representative or assignee may obtain winding up by the court, upon cause shown. [Article 1836]
CONTRACTS AFTER DISSOLUTION BY SPECIFIC CAUSES General rule: A contract entered into by a partner acting for the partnership after dissolution by act, death or insolvency of a partner binds the other partners.
MANNER OF WINDING UP
Thus, winding up of partnership affairs may be done: (1) Extrajudicially, by the partners themselves; or (2) Judicially, under the control and direction of the proper court. NATURE OF JUDICIAL LIQUIDATION
Exceptions: (1) The dissolution being by act of any partner, the partner acting for the partnership had knowledge of the dissolution; or (2) The dissolution being by death or insolvency of a partner, the partner acting for the partnership had knowledge or notice of the death or insolvency. [Article 1833]
The action for liquidation of the partnership is personal. The fact that sale of assets, including real property, is involved does not change its character, such sale being merely a necessary incident of the liquidation of the partnership, which should precede and/or is part of its process of dissolution. [Claridades v. Mercader (1966)] POWERS OF WINDING UP PARTNER
The general rule assumes that the partner acting for the partnership has no knowledge or notice of the specific cause of dissolution.
In general, the liquidating partner may perform acts appropriate for the winding up of partnership affairs.
EFFECT OF DISSOLUTION ON EXISTING LIABILITY OF PARTNERS General rule: Dissolution does not of itself discharge the existing liability of any partner.
DISSOLUTION WITHOUT VIOLATION OF THE AGREEMENT
RIGHTS OF PARTNERS IN CASE OF DISSOLUTION Unless otherwise agreed, when dissolution is caused in any way, except in contravention of the partnership agreement, each partner, as against his co-partners and all partners claiming through them in respect of their interests in the partnership, may have the partnership property applied to discharge the partnership liabilities, and the surplus applied in cash to the net amount owing to the respective
Exception: A partner may be so relieved when there is an agreement to that effect between: (1) Himself; (2) The partnership creditor; and
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partners [referred to as the right under 1st par., Article 1837].
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Where a partnership contract is rescinded on such grounds, the party entitled to rescind, without prejudice to any other right, is entitled: (1) After satisfying partnership liabilities to third persons, to a lien on, or right of retention of, to the surplus of the partnership property: (a) For any sum of money paid by him for the purchase of an interest in the partnership; and (b) For any capital or advances contributed by him. (2) After satisfying partnership liabilities to third persons, to stand in the place of partnership creditors for any payments made by him in respect of the partnership liabilities; and (3) To be indemnified by the person guilty of the fraud or making the representation against all debts and liabilities of the partnership. [Article 1838]
In case of dissolution by bona fide expulsion of a partner, and the expelled partner is discharged from all partnership liabilities, either by payment or agreement to that effect (Article 1835), he shall receive only the net amount due him from the partnership. DISSOLUTION IN CONTRAVENTION OF THE AGREEMENT
Rights of partner who has not caused the dissolution wrongfully: (a) To demand the right under 1st par., Article 1837; (b) To be indemnified for damages for breach of the agreement against the partner who caused the dissolution wrongfully; (c) To continue the business in the same name, by themselves or jointly with others, during the agreed term for the partnership and for that purpose may possess the partnership property provided they: (i) Secure the payment by bond approved by the court; or (ii) Pay any partner who has caused the dissolution wrongfully the value of his interest in the partnership, less any damages recoverable, and indemnity against all present or future partnership liabilities.
SETTLING OF ACCOUNTS BETWEEN PARTNERS Subject to any agreement to the contrary, the following rules shall be observed in settling accounts between partners after dissolution. COMPOSITION OF PARTNERSHIP ASSETS
The assets of the partnership are: (1) The partnership property; and (2) The contributions of the partners necessary for the payment of all the liabilities.
Rights of partner who has caused the dissolution wrongfully: (a) If the business is not continued, all the rights 1st par., Article 1837, subject to liability for damages; (b) If the business is continued, the right, as against his co-partners and all claiming through them, to: (i) Ascertainment, without considering the value of the goodwill of the business, and payment to him in cash the value of his partnership interest, less any damage, or have the payment secured by a bond approved by the court; and (ii) Be released from all existing liabilities of the partnership. [Article 1837]
In accordance with the subsidiary liability of the partners, the partnership property shall be applied first to satisfy any liability of the partnership. AMOUNT OF CONTRIBUTION FOR LIABILITIES
The rules on distribution of losses [Article 1979] shall determine the contributions of the partners. As such: (1) The contribution shall be in conformity with the agreement. (2) If only the share in profits has been stipulated, the contribution shall be in the same proportion. (3) In the absence of any stipulation, the contribution shall be in proportion to the capital contribution. ENFORCEMENT OF CONTRIBUTION
The goodwill of a business may be defined to be the advantage which it has from its establishment or from the patronage of its customers, over and above the mere value of its property and capital. The goodwill (which includes the firm name) is part of the partnership assets and may be subject of sale. [De Leon (2010)]
The following persons have the right to enforce the contributions: (1) An assignee for the benefit of creditors; (2) Any person appointed by the court; or (3) To the extent of the amount which he has paid in excess of his share of the partnership liability, any partner or his legal representative.
RIGHTS OF PARTNERS IN CASE OF RESCISSION A partner, induced by fraud or misrepresentation to become a partner, may rescind the contract.
The individual property of a deceased partner shall be liable for the contributions.
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with the consent of the retired partner or the representative of the deceased partner, without assignment of their rights to partnership property. (3) When the cause of dissolution is the assignment by all the partners or their representatives of their rights in partnership property to one or more third persons who promise to pay the debts and who continue the business of the partnership.
ORDER OF APPLICATION OF ASSETS
The partnership liabilities shall rank, in order of payment, as follows: (a) Those owing to creditors other than partners; (b) Those owing to partners other than for capital and profits; (c) Those owing to partners in respect of capital; (d) Those owing to partners in respect of profits. DOCTRINE OF MARSHALING OF ASSETS
When partnership property and the individual properties of the partners are in possession of a court for distribution: (1) Partnership creditors shall have priority on partnership property; and (2) Separate creditors on individual property, saving the rights of lien of secured creditors. (3) Anything left from either shall be applied to satisfy the other.
LIABILITY OF A NEW PARTNER
The liability to the creditors of the dissolved partnership of a new partner in the partnership continuing the business shall be satisfied out of the partnership property alone. However, he may, through agreement, assume individual liability. PRIORITY OF CREDITORS OF DISSOLVED PARTNERSHIP
The creditors of dissolved partnership have prior right to any claim of the retired partner or the representative of the deceased partner against the person or partnership continuing the business.
DISTRIBUTION OF PROPERTY OF INSOLVENT PARTNER
Where a partner has become insolvent or his estate is insolvent, the claims against his separate property shall rank in the following order: (1) Those owing to separate creditors; (2) Those owing to partnership creditors; (3) Those owing to partners by way of contribution. [Article 1839]
Nothing in this article shall be held to modify any right of creditors to set aside any assignment on the ground of fraud. EFFECT OF CONTINUING USE OF PARTNERSHIP NAME
The use by the person or partnership continuing the business of the partnership name, or the name of a deceased partner as part thereof, shall not of itself make the individual property of the deceased partner liable for any debts contracted by such person or partnership. [Article 1840]
RIGHTS OF CREDITORS OF DISSOLVED PARTNERSHIP CREDITORS OF DISSOLVED PARTNERSHIP AS CREDITORS OF NEW PARTNERSHIP
In the following cases, creditors of the dissolved partnership are also creditors of the person or partnership continuing the business: (1) When the business is continued without liquidation, and the cause of dissolution is: (a) Admission of a new partner into the existing partnership; (b) Retirement or death of any partner, and his rights to partnership property are assigned to: (i) Two or more of the partners; or (ii) One or more of the partners and one or more third persons. (c) Retirement of all but one partner, and their rights to partnership property are assigned to the remaining partner, who continues the business, either alone or with others; (d) Wrongful dissolution by any partner, and the remaining partners continue the business, either alone or with others; (e) Expulsion of a partner, and the remaining partners continue the business, either alone or with others. (2) When the cause of dissolution is the retirement or death of any partner, and business is continued
RETIRED OR REPRESENTATIVE OF DECEASED PARTNER Unless otherwise agreed upon, when any partner retires or dies, and the business is continued without any settlement of accounts as between him or his estate and the person or partnership continuing the business, he or his legal representative as against such person or partnership, subject to the prior rights of creditors of the dissolved partnership: (1) May have the value of his interest at the date of dissolution ascertained; and (2) Shall receive as an ordinary creditor: (a) An amount equal to the value of his interest in the dissolved partnership with interest; or (b) At his option or at the option of his legal representative, in lieu of interest, the profits attributable to the use of his right in the property of the dissolved partnership. [Article 1841] RIGHT TO AN ACCOUNT The right to an account of his interest shall accrue to any partner, or his legal representative, at the date of
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dissolution, in the absence of any agreement to the contrary, as against: (1) The winding up partners; (2) The surviving partners; or (3) The person or partnership continuing the business [Article 1842].
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ADVANTAGES OF LIMITED PARTNERSHIP (1) For general partners, to secure capital from others while retaining control and supervision for the business; (2) For limited partners, to have a share in the profits without risk of personal liability.
EXISTENCE OF RIGHT
[T]he right to demand an accounting exists as long as the partnership exists. Prescription begins to run only upon the dissolution of the partnership when the final accounting is done. [Fue Leung v. IAC (1989)]
GENERAL AND LIMITED PARTNER DISTINGUISHED
NEED FOR LIQUIDATION
Personally, but subsidiarily, liable for obligations of the partnership
General Partner
Limited Partner
Extent of liability
The profits of the business cannot be determined by taking into account the result of one particular transaction instead of all the transactions had. Hence, the need for a general liquidation before a member of a partnership may claim a specific sum as his share of the profits. [Sison v. McQuaid (1953)]
Only to the extent of his capital contributions
Right to participate in management Unless otherwise agreed No right to participate in upon, all general partners management have an equal right to manage the partnership
However, no liquidation is necessary when there is already a settlement or an agreement as to what he shall receive [De Leon (2010)].
Nature of contribution Cash, property or industry Cash or property only, not industry
Limited partnership
Property party in proceedings by or against partnership
DEFINITION A limited partnership is one formed by two or more persons under the provisions of the following article, having as members one or more general partners and one or more limited partners. The limited partners as such shall not be bound by the obligations of the partnership. [Article 1843]
Proper party
CHARACTERISTICS (1) A limited partnership is formed by compliance with the statutory requirements [Article 1844]. (2) The business is controlled or managed by one or more general partners, who are personally liable to creditors [Articles 1848 and 1850]. (3) One or more limited partners contribute to the capital and share in the profits but do not manage the business and are not personally liable for partnership obligations beyond their capital contributions [Articles 1845, 1848 and 1856]. (4) Obligations or debts are paid out of the partnership assets and the individual property of the general partners. (5) The limited partners may have their contributions back subject to conditions prescribed by law [Articles 1844 and 1957].
Not proper party, unless: (1) He is also a general partner; or (2) Where the object of the proceedings is to enforce his right against or liability to the partnership Name in firm name
Name may appear in the Name must not appear in firm name the firm name Prohibition to engage in other business Prohibited (qualified)
Not prohibited
Effect of retirement, death, insanity or insolvency Dissolves partnership
Does not dissolve; rights transferred to executor or administrator for selling his estate
Assignability of interest
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General Partner
A limited partnership is formed if there has been substantial compliance in good faith with the requirements.
Limited Partner
Not assignable
Assignable
A partnership cannot become a limited partner. A general partnership may be changed into a limited one. A partner in the former general partnership may become a limited partner in the limited partnership formed [De Leon (2010)].
GENERAL AND LIMITED PARTNERSHIP DISTINGUISHED General Partnership
Limited Partnership
Creation
PURPOSE OF FILING
The purpose of the requirement of filing the certificate is to give actual or constructive notice to potential creditors or persons dealing with the partnership to acquaint them with its essential features, including the limited liability of limited partners.
May be constituted in any Partners must: form, with exceptions (1) Sign and swear to a certificate in compliance with Article 1844; and (2) File the certificate for record in the SEC
NO SUBSTANTIAL COMPLIANCE
Composition Only general partners
When there is failure to substantially comply with the requirements: (1) In relation to third persons, the partnership is general, unless they recognized that the firm as a limited partnership; (2) As between the partners, the partnership remains limited, since they are bound by their agreement [De Leon (2010)].
One or more general, and one or more limited partners
Firm name Must contain the word Must include the word "Company" (SEC Memo "Limited" (SEC Memo Circ Circ No. 14-00), except for No. 14-00) professional partnerships
FIRM NAME
The surname of a limited partner shall not appear in the partnership name unless: (1) It is also the surname of a general partner; or (2) Prior to the time when the limited partner became such, the business had been carried on under a name in which his surname appeared.
May or may not include Must not include name of the name of one or more limited partners, unless: of the partners (1) It is also the surname of a general partner; or (2) Prior to the time when the limited partner became such, the business has been carried on under a name in which his surname appeared.
A limited partner whose surname appears in a partnership name contrary to this prohibition is liable as a general partner to partnership creditors who extend credit without actual knowledge that he is not a general partner.
Rules governing dissolution and winding up Articles 1828-1842
BAR OPERATIONS COMMISSION
FALSE STATEMENT IN THE CERTIFICATE
If the certificate contains a false statement, one who suffers loss by reliance thereon may hold liable any party to the certificate who knew the statement to be false: (1) At the time he signed the certificate; or (2) Subsequently, but within a sufficient time before the statement was relied upon to enable him to cancel or amend the certificate, or to file a petition for its cancellation or amendment.
Articles 1860-1863
FORMATION OF LIMITED PARTNERSHIP Two or more persons desiring to form a limited partnership shall: (1) Sign and swear to a certificate stating the items in Article 1844; and (2) File for record the certificate in the Office of the Securities and Exchange Commission.
Requisites: (1) The partner knew the statement to be false at the time he signed the certificate, or subsequently, but having sufficient time to cancel or amend it,
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or file a petition for its cancellation or amendment, and he failed to do so; (2) The person seeking to enforce liability has relied upon the false statement in transacting business with the partnership; and (3) The person suffered loss as a result of reliance upon such false statement.
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Thus, a general partner is vested with the entire control of the business. It is in consideration of his unlimited personal liability for the obligation of the partnership that he is granted the general authority to manage. Qualification: Written consent or ratification of the specific act by all the limited partners is necessary to authorize the general partners to: (1) Do any act in contravention of the certificate; (2) Do any act which would make it impossible to carry on the ordinary business of the partnership; (3) Confess a judgment against the partnership; (4) Possess partnership property, or assign their rights in specific property, for other than a partnership purpose; (5) Admit a person as a general partner; (6) Admit a person as a limited partner, unless the right to do so is given in the certificate; (7) Continue the business with partnership property on the death, retirement, insanity, civil interdiction or insolvency of a general partner, unless the right so to do is given in the certificate. [Article 1851]
ADMISSION OF ADDITIONAL LIMITED PARTNERS
After the formation of a limited partnership, additional limited partners may be admitted upon filing an amendment to the original certificate. GENERAL AND LIMITED PARTNER AT THE SAME TIME
A person may be a general and a limited partner in the same partnership at the same time, provided that this fact shall be stated in the certificate. A person who is a general, and also at the same time a limited partner, shall have all the rights and powers and be subject to all the restrictions of a general partner; except that, in respect to his contribution, he shall have the rights against the other members which he would have had if he were not also a general partner. [Article 1853] MANAGEMENT OF LIMITED PARTNERSHIP A limited partner shall not become liable as a general partner unless, in addition to the exercise of his rights and powers as a limited partner, he takes part in the control of the business [Article 1848].
The acts enumerated are acts of strict dominion. OBLIGATIONS OF A LIMITED PARTNER OBLIGATIONS RELATED TO CONTRIBUTION
The contributions of a limited partner may be cash or property, but not services [Article 1845].
MANAGEMENT BY GENERAL PARTNERS
Only the general partners have the right to manage the partnership. The limited partners are not so entitled.
A limited partner is liable for partnership obligations when he contributes services instead of only money or property to the partnership [De Leon (2010)].
LIABILITY OF LIMITED PARTNER FOR PARTICIPATING IN CONTROL
A limited partner is liable to the partnership: (1) For the difference between his actual contribution and that stated in the certificate as having been made; (2) For any unpaid contribution which he agreed in the certificate to make in the future at the time and on the conditions stated in the certificate. [1st par., Article 1858]
A limited partner is liable as a general partner (i.e., subsidiarily liable) for the obligations of the partnership if he takes part in the control of the business. The control contemplated is active participation in the management of the business. It does not contemplate mere giving of advice to general partners which may be followed or not.
He holds as trustee for the partnership: (1) Specific property stated in the certificate as contributed by him, but which was not contributed or which has been wrongfully returned; and (2) Money or other property wrongfully paid or conveyed to him on account of his contribution. [2nd par., Article 1858]
The abstinence of the limited partner from participation in the transaction of the business of the firm is essential to his exemption from personal liability. [De Leon (2010)]. POWERS OF GENERAL PARTNER
General rule: A general partner shall have the rights and powers and be subject to all restrictions and liabilities of a partner in a partnership without limited partners.
The liabilities under Article 1858 can be waived or compromised only by the consent of all members.
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Such waiver or compromise, however, shall not affect the right to enforce said liabilities of a creditor: (1) Who extended credit, or (2) Whose claim arose, after the filing or before a cancellation or amendment of the certificate, to enforce such liabilities.
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Note: In a general partnership, the interest may be redeemed with partnership property with the consent of all the partners whose interests are not charged [Article 1814]. RIGHTS OF A LIMITED PARTNER RIGHTS OF LIMITED PARTNER, IN GENERAL A limited partner shall have the same rights as a general partner to: (1) Require that the partnership books be kept at the principal place of business of the partnership; (2) To inspect and copy any of them at a reasonable hour; (3) To demand true and full information of all things affecting the partnership; (4) To demand a formal account of partnership affairs whenever circumstances render it just and reasonable; and (5) To ask for dissolution and winding up by decree of court; (6) To receive a share of the profits or other compensation by way of income; and (7) To receive the return of his contribution provided the partnership assets are in excess of all its liabilities.
Even after a limited partner has rightfully received the return in whole or in part of his capital contribution, he is still liable to the partnership for any sum, not in excess of such return with interest, necessary to discharge its liabilities to all creditors: (1) Who extended credit, or (2) Whose claims arose, before such return. [Article 1858] A person who has contributed capital to a partnership, erroneously believing that he has become a limited partner, but his name appears in the certificate as a general partner or he is not designated as a limited partner, is not personally liable as a general partner by reason of his exercise of the rights of a limited partner, provided: (1) On ascertaining the mistake, he promptly renounces his interest in the profits of the business or other compensation by way of income [Article 1852]; (2) He does not participate in the management of the business [Article 1848]; and (3) His surname does not appear in the partnership name [Article 1846].
RIGHT TO TRANSACT BUSINESS WITH PARTNERSHIP
A limited partner may: (1) Loan money to the partnership; (2) Transact other business with the partnership; and (3) Receive a pro rata share of the partnership assets with general creditors if he is not also a general partner.
LIABILITY TO PARTNERSHIP CREDITORS
General rule: A limited partner is not liable as a general partner. His liability is limited to the extent of his contributions.
Limitations: A limited partner, with respect to his transactions with the partnership, cannot: (1) Receive or hold as collateral security any partnership property; or (2) Receive any payment, conveyance, or release from liability if it will prejudice the right of third persons.
Exceptions: The limited partner is liable as a general partner when: (1) His surname appears in the partnership name, with certain exceptions. (2) He takes part in the control of the business.
Violation of the prohibition is considered a fraud on the creditors of the partnership. [Article 1854]
LIABILITY TO SEPARATE CREDITORS
On due application to a court of competent jurisdiction by any separate creditor of a limited partner, the court may: (1) Charge his interest with payment of the unsatisfied amount of such claim; (2) Appoint a receiver; and (3) Make all other orders, directions and inquiries which the circumstances of the case may require.
RIGHT TO SHARE IN PROFITS
A limited partner may receive from the partnership the share of the profits or the compensation by way of income stipulated for in the certificate. This right is subject to the condition that partnership assets will still be in excess of partnership liabilities after such payment.
The interest so charged may be redeemed with the separate property of any general partner, but may not be redeemed with partnership property. [Article 1862]
Ratio: Otherwise, he will receive a share to the prejudice of third-party creditors.
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RIGHT TO ASSIGN INTEREST
In determining the partnership liabilities, the liabilities to the limited partners (for their contributions) and to general partners (whether for contributions or not) are not included.
The interest of a limited partner is assignable. The assignee may become: (1) A substituted limited partner; or (2) A mere assignee.
RIGHT TO RETURN OF CONTRIBUTION
A substituted limited partner is a person admitted to all the rights of a limited partner who has died or has assigned his interest in a partnership. He has all the rights and powers, and is subject to all the restrictions and liabilities of his assignor, except those liabilities which: (1) The assignee was ignorant of; and (2) Cannot be ascertained from the certificate.
A limited partner may have his contributions withdrawn or reduced when: (1) All the liabilities of the partnership, except liabilities to general partners and to limited partners on account of their contributions, have been paid or there remains property of the partnership sufficient to pay them; (2) The consent of all members is had, unless the return may be demanded as a matter of right; and (3) The certificate is cancelled or so amended as to set forth the withdrawal or reduction.
An assignee is only entitled to receive the share of the profits or other compensation by way of income, or the return of contribution, to which the assignor would otherwise be entitled. He has no right: (1) To require any information or account of the partnership transactions; (2) To inspect the partnership books.
The return of his contributions may be demanded, as a matter of right (even when not all the other partners consent), the return of his contribution when (1) and (2) above are complied with: (1) On the dissolution of the partnership; (2) Upon the arrival of the date specified in the certificate for the return; or (3) After the expiration of a 6-month notice in writing given by him to the other partners, if no time is fixed in the certificate for: (a) the return of the contribution; or (b) the dissolution of the partnership.
An assignee has the right to become a substituted limited partner if: (1) All the partners consent thereto; (2) The assignor, being empowered to do so by the certificate, gives him that right. An assignee becomes a substituted limited partner when the certificate is appropriately amended. [Article 1859]
General rule: A limited partner, irrespective of the nature of his contribution has only the right to demand and receive cash in return for his contribution.
RIGHT TO ASK FOR DISSOLUTION
A limited partner may have the partnership dissolved and its affairs wound up: (1) When his demand for the return of his contribution is denied although he has a right to such return; (2) When he has such right, but his contribution is not paid because the partnership property is insufficient to pay its liabilities. [Article 1857]
Exceptions: He may receive his contribution in a form other than cash when: (1) There is a statement in the certificate to the contrary; or (2) All the members of the partnership consent.
CAUSES OF DISSOLUTION OF LIMITED PARTNERSHIP A limited partnership is dissolved in much the same way and causes as an ordinary partnership [De Leon (2010)].
PREFERENCE OF LIMITED PARTNERS
General rule: The limited partners stand on equal footing as to their: (1) Compensation by way of income; (2) Return of contribution; or (3) Any other matter.
General rule: The retirement, death, insolvency, insanity or civil interdiction of a general partner dissolves the partnership.
Exception: By an agreement of all the partners (general and limited) in the certificate, priority or preference may be given to some limited partners over others with respect to the matters enumerated. [Article 1855]
Exception: It is not so dissolved when the business is continued by the remaining general partners: (1) Under a right to do so stated in the certificate; or (2) With the consent of all members. [Article 1860]
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On the death of a limited partner, his executor or administrator shall have: (1) All the rights of a limited partner for the purpose of settling his estate; and (2) The power to constitute an assignee as a substituted limited partner, if the deceased was so empowered in the certificate.
BAR OPERATIONS COMMISSION
(3) An additional limited partner is admitted; (4) A person is admitted as a general partner; (5) A general partner retires, dies, becomes insolvent or insane, or is sentenced to civil interdiction and the business is continued; (6) There is a change in the character of the business of the partnership; (7) There is a false or erroneous statement in the certificate; (8) There is a change in the time as stated in the certificate for the dissolution of the partnership or for the return of a contribution; (9) A time is fixed for the dissolution of the partnership, or the return of a contribution, no time having been specified in the certificate; or (10) The members desire to make a change in any other statement in the certificate in order that it shall accurately represent the agreement among them.
The estate of a deceased limited partner shall be liable for all his liabilities as a limited partner. [Article 1861] SETTLEMENT OF ACCOUNTS ORDER OF PAYMENT
In settling accounts after dissolution, the liabilities of the partnership shall be entitled to payment in the following order: (1) Those to creditors, including limited partners except those on account of their contributions, in the order of priority as provided by law; (2) Those to limited partners in respect to their share of the profits and other compensation by way of income in their contributions; (3) Those to limited partners in respect to the capital of their contributions; (4) Those to general partners other than for capital and profits; (5) Those to general partners in respect to profits; (6) Those to general partners in respect to capital.
REQUIREMENTS FOR AMENDMENT OR CANCELLATION
To amend or cancel a certificate: (1) The amendment or cancellation must be in writing; (2) It must be signed and sworn to by all the members including the new members, and the assigning limited partner in case of substitution or addition of a limited or general partner; and (3) The writing to amend (with the certificate, as amended) or to cancel must be filed for record in the SEC.
Note: In settling accounts of a general partnership, those owing to partners in respect to capital enjoy preference over those in respect to profits.
From the moment the amended certificate/writing or a certified copy of a court order granting the petition for amendment has been filed, such amended certificate shall thereafter be the certificate of partnership. [Article 1865]
SHARE IN THE PARTNERSHIP ASSETS
The share of limited partners in respect to their claims for capital, profits, or for compensation by way of income, is in proportion of their contribution, unless: (1) There is a statement in the certificate as to their share in the profits; or (2) There is a subsequent agreement fixing their share. [Article 1863]
Contract of agency DEFINITION By the contract of agency, a person binds himself to render some service or to do something in representation or on behalf of another, with the consent or authority of the latter [Article 1868].
AMENDMENT OR CANCELLATION OF CERTIFICATE WHEN CERTIFICATE IS CANCELLED
The certificate shall be cancelled when: (1) The partnership is dissolved; or (2) All limited partners cease to be such.
Agency may refer to both a contract, as defined in the provision, and the representative relation created.
WHEN CERTIFICATE IS AMENDED
As a relation, agency is fiduciary (based on trust and confidence), which implies a power in an agent to contract with a third person on behalf of a principal.
A certificate shall be amended when: (1) There is a change in the name of the partnership or in the amount or character of the contribution of any limited partner; (2) A person is substituted as a limited partner;
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The basis of agency is representation [Victorias Milling v. CA (2000)].
BAR OPERATIONS COMMISSION
Ratio: One who acts through an agent in law does the act himself. As such, the capacity to act by an agent depends in general on the capacity of the principal to do the act himself as if he were present.
In an agent-principal relationship, the personality of the principal is extended through the facility of the agent. In so doing, the agent, by legal fiction, becomes the principal, authorized to perform all acts which the latter would have him do. Such a relationship can only be effected with the consent of the principal, which must not, in any way, be compelled by law or by any court. [Orient Air v. CA (1991)]
INTENTION OF PARTIES
On the part of the principal, there must be an actual intention to appoint or an intention naturally inferable from his words or actions; and on the part of the agent, there must be an intention to accept the appointment and act on it. [Victorias Milling v. CA (2000)]
CHARACTERISTICS The contract of agency is: (1) Consensual, perfected by mere consent; (2) Nominate, has its own name; (3) Preparatory, entered into as a means to enter into other contracts; (4) Principal, does not depend on another contract for existence and validity; (5) Bilateral, if for compensation, giving rise to reciprocal rights and obligations, but unilateral, if gratuitous, creating obligations only for the agent.
General rule: In the absence of such intent, there is generally no agency.
CONSTITUTION OF AGENCY
As to the principal, the appointment of an agent may be express, or implied: (1) From his acts; (2) From his silence or lack of action; or (3) From his failure to repudiate the agency, knowing that another person is acting on his behalf without authority.
Exceptions: (1) Agency by estoppel; and (2) Agency by operation of law. CONSENT OF PARTIES
An agency is either express or implied. This is true on the part of the principal as well as on the part of the agent. It does not require express appointment and acceptance.
ESSENTIAL ELEMENTS
(1) There is consent, express or implied, of the parties to establish the relationship; (2) The object is the execution of a juridical act in relation to third persons; (3) The agent acts as a representative and not for himself; and (4) The agent acts within the scope of his authority. [Rallos v. Felix Go Chan (1978)]
The appointment may be oral, unless the law requires a specific form. [Article 1869] As to the agent, acceptance may also be express, or implied. (1) From his acts which carry out the agency; (2) From his silence or inaction according to the circumstances [Article 1870]; (3) Both the principal and the agent being present if: (a) The principal delivers his power of attorney to the agent; and (b) The agent receives it without any objection [Article 1871]; (4) Both the principal and the agent being absent, when: (a) The principal transmits his power of attorney to the agent, who receives it without any objection; or (b) When the principal entrusts to him by letter or telegram a power of attorney with respect to the business in which he is habitually engaged as an agent, and he did not reply to the letter or telegram.
PARTIES
(1) Principal, one whom the agent represents and from whom he derives his authority; and (2) Agent, who acts for and represents the principal, having derivative authority in carrying out the business of the latter. Juridical persons such as corporations and partnerships can be principals and agents [Article 1919(4)]. CAPACITY OF PARTIES
(1) A principal must have legal capacity to enter into contract in his own right. (2) An agent must have legal capacity to enter into the contract of agency, although he may not have capacity to enter into the particular contract subject of agency.
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PRESUMPTION OF EXISTENCE
In other cases between persons who are absent, acceptance cannot be implied from the silence of the agent. [Article 1872] POWER OF ATTORNEY
General rule: It [agency] must exist as a fact. The law makes no presumption thereof. The person alleging it has the burden of proof to show, not only the fact of its existence, but also its nature and extent. [People v. Yabut (1977)]
A power of attorney is an instrument in writing by which one person, as principal, appoints another as his agent and confers upon him the authority to perform certain specified acts of kinds of acts on his behalf. The written authorization itself is the power of attorney. It has also been called a "letter of attorney."
Exceptions: A presumption of agency may arise: (1) Where an agency may arise by operation of law (e.g., all the partners being considered agents of the partnership when the manner of management has not been agreed upon); or (2) To prevent unjust enrichment. [De Leon (2010)]
Its primary purpose is not to define the authority of the agent, but to evidence the authority of the agent to third parties with whom the agent deals. The person holding the power of attorney is designated as an "attorney-in-fact."
COMMUNICATION OF EXISTENCE OF AGENCY
There are two ways of giving notice of agency (that a person has given a power of attorney to a third person), with different effects: (1) If a person specially informs another (e.g., by letter), the person appointed as agent is considered such with respect to the person specially informed; (2) If a person states by public advertisement, the person appointed as agent is considered such with regard to any person.
FORM OF CONTRACT
General rule: There are no formal requirements governing the appointment of an agent. Exceptions: (1) When the law requires a specific form [2nd par., Article 1869]; (2) When a sale of piece of land or any interest therein is through an agent, in which case the authority shall be in writing; otherwise the sale is void [Article 1874]; (3) When the law requires a special power of attorney [Article 1878].
In either case, the power of the agent continues in full force until the notice is rescinded in the same manner in which it was given. [Article 1873] DUTY OF THIRD PERSON
The person dealing with the agent must act with ordinary prudence and reasonable diligence. Obviously, if he knows or has good reason to believe that the agent is exceeding his authority, he cannot claim protection. [Keeler Electric v. Rodriguez (1922)]
DESIGNATION BY THE PARTIES
The manner in which the parties designate the relationship is not controlling. The use of this term ("agent") in one clause of the contract cannot dominate the real nature of the agreement as revealed in other clauses, no less than in the caption ["agency agreement"] of the agreement itself. [Albadejo y Cia v. Phil. Refining (1923)]
EFFECT EXTENSION OF PERSONALITY
It bears stressing that in an agent-principal relationship, the personality of the principal is extended through the facility of the agent. In so doing, the agent, by legal fiction, becomes the principal, authorized to perform all acts which the latter would have him do. [Litonjua v. Eternit Corp. (2006)]
ACTS DELEGATED
General rule: What a person may do in person, he may do through another. Exceptions: (1) Personal acts, which the law or public policy requires to be performed personally (e.g., to vote, make a will, make statements under oath, or attend board meetings as director or trustee of a corporation); (2) Criminal acts; (3) Acts not allowed by law to be done by the principal.
THEORY OF IMPUTED KNOWLEDGE
An important implication of this extension of personality is the general rule that knowledge of the agent is imputed to the principal even though the agent never communicated such knowledge to the principal. Requisites: (1) Actual notice to the agent;
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(2) Notice must pertain to a matter of fact and not of law; (3) The fact must be within the scope of the agent's authority.
Agency
Independent Contractor Control
An agent acts under the An independent control and instruction of contractor is not subject to the principal control, except insofar as the result of the work is concerned
Thus, it is only logical that the agent is required to notify the principal of all matters that came to his attention that are material to the subject matter of the agency.
Liability for tort
Exceptions: (1) Where the agent's interests are adverse to those of the principal; (2) Where the agent's duty is not to disclose the information (e.g., he is informed by way of confidential information); (3) Where the person claiming the benefit of the rule colludes with the agent to defraud the principal.
Principal is liable for torts Employer is not liable for committed by the agent torts committed by the with the scope of his independent contractor authority Sub-agents Agents of the agent is still Employees of subject to the control of independent contractor the principal are not subject to control of his employer
DISTINGUISHED FROM OTHER CONTRACTS Agency
BAR OPERATIONS COMMISSION
Partnership Representation
Agency
An agent acts only for the A partner acts for the principal other partners, the partnership and himself
Lease of Service Basis
Representation
Control
Employment Purpose
An agent's power to bind A partner's power to bind the principal is subject to his co-partners is not the latter's control subject to their control
Execution of juridical acts Execution of piece of work in relation to third persons or rendition of service
Personal liability
Authorized acts
An agent does not assume personal liability, if he acts within the scope of his authority
A partner is personally liable with all his property, after exhaustion of the partnership properties
Juridical acts (creation, Material acts only modification, extinction of relations with third parties)
Share in profits
Discretion
An agent is not entitled to A partner is entitled to a profits, only compensation share in the profits of the partnership
An agent is authorized to Ordinarily, lessor performs exercise discretion only ministerial functions Parties Three parties are involved Two parties are involved
One factor which most clearly distinguishes agency from other legal concepts is control; one person – the agent – agrees to act under the control or direction of another – the principal. Indeed, the very word "agency" has come to connote control by the principal. The control factor, more than any other, has caused the courts to put contracts between principal and agent in a separate category. [Victorias Milling v. CA (2000)]
Agency
Lease of Property Control
An agent acts under the A lessee is not subject to control and instruction of the control of the lessor the principal
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Agency
Lease of Property
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Agency
Things involved
Person represented
Agency may involve things Lease of property involves other than property property only
An agent represents a capacitated person
Binding power An agent can bind the principal
Guardianship
A guardian represents an incapacitated person
Source of authority
Lessee cannot bind the lessor
An agent is appointed by A guardian is appointed the principal by the court Control
Agency to Sell
An agent is subject to the A guardian is not subject control of the principal to the control of the ward
Sale
Ownership of goods Principal retains ownership
Binding power
Buyer acquires ownership
An agent can make the A guardian has no power principal principally liable to impose personal liability on the ward
Payment An agent delivers the A buyer pays the purchase proceeds of the sale to the price principal
Agency
Return of goods Generally, an agent can return goods unsold
Title and control of property
Generally, a buyer cannot return the goods bought
Title passes to the trustee Title retained by principal Control
Dealing with the goods An agent deals with the goods according to the instructions of the principal
An agent is subject to the A trustee is only subject to control of the principal the stipulated guidance of the cestui
A buyer, being the owner, can deal with the goods as he pleases
Agency to Buy
Trust
Termination In general, an agency may In general, a trust may be be revoked at any time terminated only when its purpose is fulfilled
Sale
Ownership of goods Ownership is acquired in Ownership is transferred behalf of the principal to the buyer
Kinds of agency
Changes in price
KINDS OF AGENCY, IN GENERAL
Generally, any change in A buyer cannot adjust the the price is borne by the price already agreed upon principal
AS TO MANNER OF ITS CREATION
(1) Express; (2) Implied.
Payment Price is paid in behalf of the principal
AS TO CAUSE OR CONSIDERATION
Price is paid by the buyer
(1) Gratuitous; or (2) Compensated or onerous. Agency is presumed to be for a compensation, unless there is proof to the contrary [Article 1875].
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AS TO EXTENT OF BUSINESS COVERED
GENERAL AGENCY
(1) Universal; (2) General; or (3) Special.
General agency comprises all the business of the principal. SPECIAL AGENCY
Special agency comprises one or more specific transactions.
AS TO AUTHORITY CONFERRED
(1) Couched in general terms; or (2) Couched in specific terms.
General Agency
AS TO ITS NATURE AND EFFECTS
(1) Ostensible or representative, where the agent acts in the name and representation of the principal [Article 1868]; (2) Simple or commission, where the agent acts in his own name but for the account of the principal.
Special Agency
Scope of authority All acts connected with the business or employment in which agent is engaged
AS TO KINDS OF PRINCIPAL
Only specific authorized acts or those necessarily implied
Nature of service authorized
(1) With a disclosed principal, where, at the time the transaction was contracted by the agent, the other party thereto has known: (a) that the agent is acting for a principal; and (b) the principal's identity; (2) Partially disclosed, where the other party knows or has reason to know that the agent is or may be acting for a principal but is unaware of the principal's identity; or (3) Undisclosed, where the party has no notice of the fact that the agent is acting as such for a principal.
Involves continuous service
Usually involves a single transaction
Extent to which agent may bind principal Acts within the scope of Acts beyond authority authority, even in conflict given cannot bind with special instructions, principal may bind principal Termination of authority Notice to third persons required to terminate apparent authority
KINDS OF AGENCY AS TO MANNER OF CREATION EXPRESS AGENCY
An express agency is one where the agent has been actually authorized by the principal, either: (a) Orally; or (b) In writing. [Article 1869]
No notice required, since third parties are required to inquire as to authority
Construction of instructions Notice to third persons required
IMPLIED AGENCY
The creation of implied agency is implied: (1) As to the appointment of an agent by the principal: (a) From his acts; (b) From his silence or lack of action; or (c) From his failure to repudiate the agency knowing that another person is acting on his behalf without authority. [Article 1869] (2) As to the acceptance of the agency by the agent: (a) From his acts which carry out the agency; (b) From his silence or inaction according to the circumstances (i.e., presence or absence of the parties) [Articles 1870, 1871 and 1872]
The instructions, in so far as they grant authority, are strictly construed
KINDS OF AGENCY AS TO AUTHORITY CONFERRED COUCHED IN GENERAL TERMS
An agency couched in general terms is one created in general terms and is deemed to comprise only acts of administration, even if: (1) The principal should state that he withholds no power; (2) He should state that the agent may execute such acts as he may consider appropriate; or (3) Even though the agency should authorize a general and unlimited management [Article 1877].
KINDS OF AGENCY AS TO EXTENT OF BUSINESS COVERED
COUCHED IN SPECIFIC TERMS
An agency couched in specific terms authorizes only the performance of specific acts [Article 1878]. Certain specific acts, however, require special powers of attorney.
UNIVERSAL AGENCY
Universal agency comprises all acts which the principal can lawfully delegate to an agent;
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(3) A special power to sell excludes the power to mortgage; and a special power to mortgage does not include the power to sell [Article 1879]. (4) A special power to compromise does not authorize submission to arbitration [Article 1880]. (5) The power to "exact the payment" of sums of money "by legal means" include the power to institute suits for their recovery [Germann & Co., v. Donaldson, Sim & Co. (1901)]. (6) A power of attorney “to loan and borrow money” and to mortgage the principal’s property does not carry with it or imply that that the agent has a legal right to make the principal liable for the personal debts of the agent [BPI v. De Coster (1925)]. (7) Unless the contrary appears, the authority of an agent must be presumed to include all the necessary and usual means of carrying the agency into effect [Macke v. Camps (1907)].
A special power of attorney is an instrument in writing by which one person, as principal, appoints another as his agent and confers upon him the authority to perform certain specified acts or kinds of acts on behalf of the principal. The following acts of strict dominion require special powers of attorney: (1) To make such payments as are not usually considered as acts of administration; (2) To effect novations which put an end to obligations already in existence at the time the agency was constituted; (3) To compromise, to submit questions to arbitration, to renounce the right to appeal from a judgment, to waive objections to the venue of an action or to abandon a prescription already acquired; (4) To waive any obligation gratuitously; (5) To enter into any contract by which the ownership of an immovable is transmitted or acquired either gratuitously or for a valuable consideration; (6) To make gifts, except customary ones for charity or those made to employees in the business managed by the agent; (7) To loan or borrow money, unless the latter act be urgent and indispensable for the preservation of the things which are under administration; (8) To lease any real property to another person for more than one year; (9) To bind the principal to render some service without compensation; (10)To bind the principal in a contract of partnership; (11) To obligate the principal as a guarantor or surety; (12)To create or convey real rights over immovable property; (13)To accept or repudiate an inheritance; (14)To ratify or recognize obligations contracted before the agency; (15)Any other act of strict dominion. [Article 1878]
However, although the Civil Code expressly requires a special power of attorney in order that one may compromise an interest of another, it is neither accurate nor correct to conclude that its absence renders the compromise agreement void. In such a case, the compromise is merely unenforceable. [Duñgo v. Lopena (1962)] SPECIAL KINDS OF AGENCY AGENCY BY ESTOPPEL
Through estoppel, an admission or representation is rendered conclusive upon the person making it, and cannot be denied or disproved as against the person relying thereon [Article 1431]. Ratification
Notes: (1) The requirement of special power of attorney in Article 1878 refers to the nature of the authorization, not to its form. Even if a document is titled as a general power of attorney, the requirement of a special power of attorney is met if there is a clear mandate from the principal specifically authorizing the performance of the act [Bravo-Guerrero v. Bravo (2005)]. (2) A special power of attorney can be included in the general power when it is specified therein the act or transaction for which the special power is required [Veloso v. CA (1996)].
Estoppel
Rests on intention
Rests on prejudice
Retroacts as if originally authorized
Affects only relevant parts of the transaction
Substance is confirmation Substance is the of unauthorized acts after principal's inducement for it has been done third party to act to his prejudice For an agency by estoppel to exist, the following must be established: (1) The principal manifested a representation of the agent’s authority or knowingly allowed the agent to assume such authority; (2) The third person, in good faith, relied upon such representation; (3) Relying upon such representation, such third person has changed his position to his detriment.
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An agency by estoppel, which is similar to the doctrine of apparent authority, requires proof of reliance upon the representations, and that, in turn, needs proof that the representations predated the action taken in reliance. [Litonjua v. Eternit Corp. (2006)] Implied Agency Principal is liable
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Qualification: The exception only applies if the agent contracts with the properties of the principal within the scope of his authority [PNB v. Agudelo (1933)]. AGENCY BY OPERATION OF LAW
An agency may exist by operation of law, such as in the following cases: (1) Every partner is an agent of the partnership for the purpose of its business [Article 1818]; (2) When the principal's actions would reasonably lead a third person to conclude that an agency exists, an agency by estoppel is created by operation law [Black's Law Dictionary (9th)]; (3) In case of certain necessity or emergency, an agency by necessity may arise.
Agency by Estoppel Person who is in bad faith is liable
One who clothes another with apparent authority as his agent, and holds him out to the public as such, cannot be permitted to deny the authority of such person to act as his agent, to the prejudice of innocent third parties dealing with such person in good faith.
IRREVOCABLE AGENCY
Article 1927 (on agency coupled with an interest) mentions three instances where the sole will of the principal cannot terminate (revoke) an agency: (1) A bilateral contract depends upon it; (2) It is the means of fulfilling an obligation already contracted; or (3) A partner is appointed manager of a partnership in the contract of partnership and his removal from the management is unjustifiable.
Note: Article 1911 states that: "Even when the agent has exceeded his authority, the principal is solidarily liable with the agent if the former allowed the latter to act as though he had full powers." In this case, there is a duly formed agency and estoppel only applies to the excess of authority. This is an application of the doctrine of apparent authority Under the doctrine of apparent authority, the question in every case is whether the principal has, by his voluntary act, placed the agent in such a situation that a person of ordinary prudence, conversant with business usages and the nature of the particular business, is justified in presuming that such agent has authority to perform the particular act in question. [Professional Services v. Agana (2008)]
Qualifications: (1) Coupled with interest or not, the authority certainly can be revoked for a just cause, such as when the attorney-in-fact betrays the interest of the principal, xxx. It is not open to serious doubt that the irrevocability of the power of attorney may not be used to shield the perpetration of acts in bad faith, breach of confidence, or betrayal of trust, by the agent for that would amount to holding that a power coupled with an interest authorizes the agent to commit frauds against the principal. [Coleongco v. Claparols (1964)]
In agency by estoppel, there is no agency. The alleged agent seemed to have apparent or ostensible authority, but not real authority to represent another. AGENCY WITH UNDISCLOSED PRINCIPAL
(2) A mere statement in the power of attorney that it is coupled with an interest is not enough. In what does such interest consist must be stated in the power of attorney. [Del Rosario v. Abad (1958)]
General rule: If an agent acts in his own name (the principal is undisclosed), the agent is the one directly bound in favor of the person with whom he has contracted, as if the transaction were his own.
(3) An agency couple with an interest cannot affect third persons. They are obligatory only on the principal who executed the agency. [New Manila Lumber v. Republic (1960)]
Ratio: There is no representation of the principal when the agent acts in his own name. The third person cannot allege that he was misled by any representation since he did not know of the existence of the undisclosed principal.
KINDS OF AGENTS AS TO NATURE AND EXTENT OF AUTHORITY
Exception: The principal is bound when the contract involves things belonging to him [Article 1883]. In this case, the contract is considered as one between the principal and the third person.
According to the nature and extent of their authority, agents have been classified into: (1) Universal agents are authorized to do all acts for his principal which can lawfully be delegated to an agent. So far as such a condition is possible,
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Powers of the agent
such an agent may be said to have universal authority. (2) General agents are authorized to do all acts pertaining to a business of a certain kind or at a particular place, or all acts pertaining to a business of a particular class or series. He has usually authority either expressly conferred in general terms or in effect made general by the usages, customs or nature of the business which he is authorized to transact. An agent, therefore, who is empowered to transact all the business of his principal of a particular kind or in a particular place, would, for this reason, be ordinarily deemed a general agent. (3) Special agents are authorized to do some particular act or to act upon some particular occasion (i.e., acts usually in accordance with specific instructions or under limitations necessarily implied from the nature of the act to be done). [Siasat v. IAC (1985)]
AUTHORITY OF AN AGENT Authority is the power of the agent to affect the legal relations of his principal by acts done in accordance with the principal’s manifestations of consent. An agent can make the principal legally responsible only when he is authorized by the principal to act the way he did. KINDS OF AUTHORITY (1) Actual, when it is actually granted, and it may be express or implied. It is the authority that the agent does, in fact, have. It results from what the principal indicates to the agent; (2) Express, when it is directly conferred by words; (3) Implied, when it is incidental to the transaction or reasonably necessary to accomplish the main purpose of the agency; (4) Apparent or ostensible, when it arises by the acts or conduct of the principal giving rise to an appearance of authority. It makes the principal responsible to third persons for certain actions of the agent that were not really authorized; (5) General, when it refers to all the business of the principal; (6) Special, when it is limited only to one or more specific transactions; and (7) By necessity or by operation of law, when it is demanded by necessity or by virtue of the existence of an emergency. The agency terminates when the emergency passes.
SPECIAL TYPES OF AGENTS
(1) Attorney-at-law is one whose business is to represent clients in legal proceedings; (2) Auctioneer is one whose business is to sell property for others to the highest bidder at a public sale; (3) Broker is one whose business is to act as intermediary between two other parties such as insurance broker and real estate broker; (4) Factor or commission merchant is one whose business is to receive and sell goods for a commission, being entrusted with the possession of the goods involved in the transaction. (5) Cashier in bank is one whose business is to represent a banking institution in its financial transactions; and (5) Attorney-in-fact is one who is given authority by his principal to do a particular act not of a legal character. In its strict legal sense, it means an agent having a special authority.
SCOPE OF AUTHORITY General rule: The scope of the authority of the agent is what appears in the terms of the power of attorney [Siredy Enterprises v. CA (2002)]. Exceptions: An agent is considered acting within the scope of his authority when: (1) He performs acts which are conducive to the accomplishment of the purpose of the agency [Article 1881]; (2) He performed the agency in a manner more advantageous to the principal than that specified by said principal [Article 1881]; (3) The principal ratifies the act, expressly or tacitly [Article 1910].
Attorneys have authority to bind their clients in any case by any agreement in relation thereto made in writing, and in taking appeals, and in all matters of ordinary judicial procedure. But they cannot, without special authority, compromise their client's litigation, or receive anything in discharge of a client's claim but the full amount in cash. [Section 23, Rule 138, Rules of Court]
So far as third persons are concerned, an act is deemed to have been performed within the scope of the agent's authority if such act is within the terms of the power of attorney, as written, even if the agent has in fact exceeded the limits of his authority
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according to an understanding between the principal and the agent. [Article 1901]
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demands that the agent look out for the best interests of the principal as against his own or those of third parties. [See Article 1889]
While third persons are bound to inquire into the extent or scope of the agent’s authority, they are not required to go beyond the terms of the written power of attorney. Third persons cannot be adversely affected by an understanding between the principal and his agent as to the limits of the latter’s authority. In the same way, third persons need not concern themselves with instructions given by the principal to his agent outside of the written power of attorney. [Siredy Enterprises v. CA (2002)]
Thus, an act of the agent which tends to violate his fiduciary duty is not only invalid as to the principal, but is also against public policy. Presumption: Until proven otherwise, however, the presumption arises that an agent has performed his duty in good faith, and the principal, until notice is received of a breach of relational duties, may rely upon his agent's faithfulness.
POWER TO BIND THE PRINCIPAL Requisites: (1) The agent must act within the scope of his authority; and (2) The agent must act in behalf of the principal.
Exception: The presumption does not arise when there is no relation of trust or confidence between the parties (e.g., the agent is bound merely as an instrument/servant, or there is no agency relationship). [De Leon (2010)]
Even when the agent acts in his own name, however, the principal is still bound, when the contract involves things belonging to the principal [Article 1883] or when the principal ratifies the contract, expressly or tacitly [Article 1910].
OBEDIENCE TO PRINCIPAL'S INSTRUCTIONS
General rule: An agent must obey all lawful orders and instructions of the principal within the scope of the agency. If he fails to do so, he becomes liable for any loss the principal incurs even though he can show that he acted in good faith or exercised reasonableness. [See Article 1887]
EFFECTS OF ACTS OF AN AGENT In summary, when the agent acts: (1) With authority of the principal: (a) If done in the name of the principal, the principal is bound to comply with the obligations contracted [Article 1910] and the agent is not personally liable to the party with whom he contracts [Article 1897]; (b) If done in the name of the agent, the agent is the one directly bound in favor of the person with whom he has contracted, except when the contract involves things belonging to the principal; (2) Without authority or beyond the authority granted by the principal: (a) If done in the name of the principal, it is unenforceable against him, unless he ratifies it expressly or tacitly [Article 1910]. (b) If done in the name of the agent, he is personally liable.
EXERCISE OF REASONABLE CARE
By accepting an employment whose requirements he knows, without stipulating otherwise, the agent impliedly undertakes that he possesses a degree of skill reasonably and ordinarily competent for the performance of the service, and that in performing his undertaking, he will exercise reasonable care, skill and diligence. [De Leon (2010)] The specific obligations of the parties to each other are merely specific applications of the general fiduciary obligation [De Leon (2010)]. OBLIGATION TO CARRY OUT AGENCY General rule: The agent is: (1) Bound by his acceptance to carry out the agency; (2) Liable for damages, which the principal may suffer, in case of non-performance; (3) Bound to finish the business already begun on the death of the principal should delay entail danger. [Article 1884]
Obligations of the agent
Exception: An agent shall not carry out an agency if its execution would manifestly result in loss or damage to the principal [Article 1888].
OBLIGATIONS, IN GENERAL GOOD FAITH AND LOYALTY TO HIS TRUST
The duty of good faith is also called the fiduciary duty, which imposes upon the agent the obligation of faithful service. The duty to be loyal to the principal
OBLIGATION IN CASE HE DECLINES AGENCY In case a person declines an agency, he is bound to observe the diligence of a good father of a family in
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the custody and preservation of the goods forwarded to him.
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Authority
Instructions
Relates to the transaction Refers to the manner or or business with which the mode of agent's action agent is empowered to act with respect to matters within the permitted scope of authority
The obligation lasts until the owner, as soon as practicable: (1) Appoints an agent; or (2) Takes charge of the goods. [Article 1886] The case treated in this provision is different from withdrawal. In this case, no agency was formed. Withdrawal presupposes an existing agency.
Binds third parties
The obligation of the agent, in case of withdrawal, is to continue to act as such agent until the principal has had reasonable opportunity to take the necessary steps to meet the situation. [Article 1929]
OBLIGATION TO PREFER INTEREST OF PRINCIPAL General rule: The agent shall be liable for damages if, there being a conflict between his interest and those of the principal, he should prefer his own [Article 1889].
OBLIGATION TO ADVANCE NECESSARY FUNDS General rule: The agent is not bound to advance the necessary funds. The principal is obliged to advance to the agent, should the latter so request, the sums necessary for the execution of the agency.
Exceptions: The agent is not liable for giving preference to his own when: (1) The principal waives the benefit of this rule, with full knowledge of the facts; or (2) When the interest of the agent is superior.
Exception: He shall be bound to do so should there be a stipulation to that effect, subject to the obligation of the principal to reimburse the agent.
An example of the latter is where the agent has security interest in goods of the principal in his possession, he may protect his interest even if in doing so, he disobeys the principal's orders or injures his interest [De Leon (2010)].
Exception to the exception: He is not bound to do so, even when there is a stipulation, when the principal is insolvent. [Article 1886] Note: Insolvency of the principal is also a ground for extinguishment.
BASIS OF THE RULE
The underlying basis of the rule, which precludes an agent from engaging in self-dealing, is to shut the door against temptation and keep the agent's eye single to the rights and welfare of the principal.
OBLIGATION TO ACT IN ACCORDANCE WITH INSTRUCTIONS In the execution of the agency, the agent shall act in accordance with the instructions of the principal.
APPLICATION
(1) A specific application of this subordination of interests is found in Article 1890: If the agent has been empowered to borrow money, he may himself be the lender at the current rate of interest. If he has been authorized to lend money at interest, he cannot borrow it without the consent of the principal. (2) An agent authorized to sell merchandise cannot bind the principal by selling to himself directly or indirectly, unless the principal consented or ratified the purchase.
In the absence of such instructions, he shall do all that a good father of a family would do, as required by the nature of the business. [Article 1887] Note: The limits of the agent's authority shall not be considered exceeded should it have been performed in a manner more advantageous to the principal than that specified by him [Article 1882]. Authority
Does not bind third parties
Instructions
Sum total of the powers Private rule of guidance to committed or permitted to the agent the agent
OBLIGATION TO ACCOUNT AND TO DELIVER THINGS RECEIVED Every agent is bound to: (1) Render an account of his transactions; and (2) Deliver to the principal whatever he may have received by virtue of the agency, even though it may not be owing to the principal.
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The agent is a principal with respect to the subagent.
WHAT TO DELIVER
What has to be delivered include all money and property which may have come into his hands or in that of a sub-agent. This includes gifts from third parties in connection with the agency.
POWER TO APPOINT
General rule: The agent may appoint a sub-agent. Ratio: The law allows such substitution for reasons of convenience and practicality.
It is immaterial whether such money or property is the result of the performance or violation of the agent's duty, if it be the fruit of the agency.
Exceptions: (1) The appointment is prohibited by the principal [Article 1892]; (2) The work entrusted to the agent requires special knowledge, skill, or competence, unless authorized to do so by the principal [De Leon (2010)].
LIABILITY FOR CONVERSION
If the agent fails to deliver and instead converts or appropriates for his own use the money or property belonging to the principal, he is liable for estafa. EXEMPTING STIPULATION
Every stipulation exempting the agent to render an account shall be void. [Article 1891]
RELATIONS AMONG THE PARTIES
(1) When the sub-agent has been employed for own account of the agent, to assist him, the sub-agent is a stranger to the principal. (2) When the appointment was authorized by the principal, a fiduciary relationship is created between and among the principal, agent, and sub-agent, such that neither the agent nor the substitute can be held personally liable so long as they act within the scope of their authority [Macias & Co. v. Warner, Barnes & Co. (1922)].
WHEN OBLIGATION NOT APPLICABLE
(1) If the agent or broker acted only as a middleman with the task of merely bringing together the vendor and the vendee [Domingo v. Domingo (1971)]. (2) If the agent had informed the principal of the gift or bonus or profit he received from the purchaser and the principal did not object thereto; (3) When a right of lien exists in favor of the agent.
EFFECTS OF SUBSTITUTION
RESPONSIBILITY FOR ACTS OF SUBSTITUTE The agent may appoint a substitute if the principal has not prohibited him from doing so.
(1) When substitution was prohibited by the principal, appointment by the agent is an act in excess of the limits of his authority. All acts of the substitute are void [Article 1892]. (2) When substitution was authorized, the agent is only liable when he appointed one who is notoriously incompetent or insolvent, unless the person was designated by the principal. (3) When substitution was not authorized, but also not prohibited, the appointment is valid, but the agent is liable for damage caused by the substitution to the principal. (4) When substitution was authorized and the subagent was designated by the principal, the agent is released from any liability for the acts of the sub-agent.
The agent is responsible for the acts of the substitute: (1) When he was not given the power to appoint one; (2) When he was given such power, but: (a) Without designating the person; and (b) The person appointed was notoriously incompetent or insolvent. All acts of the substitute appointed against the prohibition of the principal shall be void. [Article 1892] The principal may bring an action against the substitute with respect to the obligations which the latter contracted under the substitution [Article 1893].
RESPONSIBILITY OF TWO OR MORE AGENTS General rule: The responsibility of two or more agents is not solidary, even though they have been appointed simultaneously. They are liable jointly.
SUB-AGENCY
A sub-agent or substitute is a person employed or appointed by an agent as his agent, to assist him in the performance of an act for the principal, which the agent has been empowered to perform.
Exception: They are solidarily liable if solidarity has been expressly stipulated [Article 1894]. If solidarity has been thus agreed upon, each of the agents is responsible for:
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(1) The non-fulfillment of agency, even when the fellow agents acted beyond the scope of their authority; and (2) The fault or negligence of his fellow agents, except when the fellow agents acted beyond their authority.
(4) The party with whom the agent contracted is aware of the limits of the powers granted by the principal.
OBLIGATION FOR SUMS APPLIED TO HIS OWN USE The agent owes interest: (1) On the sums applied to his own use from the day on which he did so; and (2) On the sums which he still owes after the agency is extinguished. [Article 1896]
PRESENTATION OF POWER OF ATTORNEY
The agent, however, is liable if he undertook to secure the principal's ratification. A third person with whom the agent wishes to contract on behalf of the principal may require the presentation of the power of attorney, or the instructions as regards the agency. Private or secret orders and instructions of the principal do not prejudice third persons who have relied upon the power of attorney or instructions shown them. [Article 1902]
The liability of the agent for interest for sums converted to his own use is without prejudice to a criminal action that may be brought against him [De Leon (2010)]. The sums referred to as still owing to the principal after extinguishment of the agency are those which were not misapplied by the agent, but were found to be owing to the principal after such extinguishment.
So far as third persons are concerned, an act is deemed to have been performed within the scope of the agent's authority, if such act is within the terms of the power of attorney, as written, even if the agent has in fact exceeded the limits of his authority according to an understanding between the principal and the agent. [Article 1900]
OBLIGATIONS TO THIRD PERSONS
RATIFICATION BY PRINCIPAL
LIABILITY OF AGENT FOR OBLIGATIONS CONTRACTED
A third person, who contracts with the agent (thereby recognizing the authority of the agent), cannot later disaffirm his contract based on the fact that the agent has exceeded his powers, if the principal has: (1) Ratified the acts of the agent; or (2) Signified his willingness to ratify said acts. [Article 1901]
General rule: The agent who acts as such is not personally liable to the party with whom he contracts. The principal is responsible for such acts done within the scope of the authority granted to the agent, and should bear any damage caused to third persons. [Article 1910]
Thus, the third person can be compelled to abide by the contract in this case.
Exceptions: He is personally liable when: (1) He acts in his own name [Article 1883]; (2) He expressly binds himself; or (3) He exceeds the limits of his authority without giving such party sufficient notice of his powers. [Article 1897]
The ratification has retroactive effect, relating back to the time of the act or contract ratified and is equivalent to original authority [Board of Liquidators v. Kalaw].
Note: If the agent acts in his own name, he is directly bound in favor of the person with whom he contracted, as if the transaction were his own, except when the contract involves things belonging to the principal.
A principal may not accept the benefits of a transaction and repudiate its burdens. Thus, a principal who seeks to enforce a sale made by the agent cannot ordinarily allege that the agent exceeded his authority.
VOID CONTRACTS
Before ratification, however, the third person may repudiate the contract.
The contract entered into by an agent on behalf of the principal shall be void when: (1) The agent contracts in the name of the principal; (2) He exceeded the scope of his authority; (3) The principal does not ratify the contract; and
IGNORANCE OF AGENT
If a duly authorized agent acts in accordance with the orders of the principal, said principal cannot set up the ignorance of the agent as to circumstances
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whereof he himself was, or ought to have been, aware. [Article 1899]
SALE OF GOODS ON CREDIT WITHOUT AUTHORITY
General rule: The commission agent cannot sell on credit. Should he do so, the principal may: (1) Demand from him payment in cash, in which case the commission agent shall be entitled to any interest or benefit, which may result from such sale [Article 1905]; or (2) Ratify the sale on credit, in which case the principal will have all the risks and advantages to him [De Leon (2010)].
Thus, if the principal appoints an agent who is ignorant, the fault is his alone. He is bound by the acts of the agent. The agent is not liable to third persons in this case. OBLIGATIONS OF COMMISSION AGENT FACTOR OR COMMISSION AGENT
A factor or commission agent is one whose business is to receive and sell goods for a commission (also called factorage) and who is entrusted by the principal with the possession of goods to be sold, and usually selling in his own name.
Exception: The commission agent can sell on credit with the express or implied consent of the principal. SALE OF GOODS ON CREDIT WITH AUTHORITY
If the commission agent was authorized to sell on credit and should he so sell on credit, he shall inform the principal of such sale, with a statement of the names of the buyers.
He may act in his own name or in that of the principal. An ordinary agent need not have possession of the goods of the principal, while the commission agent must be in possession. [De Leon (2010)] Ordinary Agent Acts for and in behalf of the principal
Should he fail to inform the principal, the sale is deemed to have been made for cash as far as the principal is concerned. [Article 1906] As such, as to the buyer, the sale may be on credit, but the principal may demand the payment in cash from the agent.
Commission Agent Acts in his own name or that of his principal
Should the commission agent receive a guarantee commission (del credere commission) on a sale, in addition to the ordinary commission, he shall: (1) Bear the risk of collection; and (2) Pay the principal the proceeds of the sale on the terms agreed upon with the purchaser.
Need not have possession Must have possession of of the goods the goods
Broker
Commission Agent
In case of a sale on credit, the commission agent is obliged to collect the credits of his principal when they become due and demandable.
Has no custody of the Has custody or possession thing to be disposed of, of the things to be sold only acts as intermediary between seller and buyer Maintains no relations with things to be sold/bought
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General rule: Failing to so collect, the agent shall be liable for damages
Maintains relations with the thing, the buyer and the seller
Exception: He is not liable if he proves that he exercised due diligence for that purpose. RESPONSIBILITY FOR FRAUD AND NEGLIGENCE In the fulfillment of his obligation, the agent is responsible for: (1) Fraud; and (2) Negligence
RESPONSIBILITY FOR GOODS RECEIVED
(1) The commission agent shall be responsible for goods received by him in the terms and conditions and as described in the consignment, unless upon receiving them he should make a written statement of the damage and deterioration suffered by the same [Article 1903]. (2) The commission agent who handles goods of the same kind and mark, which belong to different owners, shall distinguish them by countermarks, and designate the merchandise respectively belonging to each principal [Article 1904].
The circumstance that the agency is or is not gratuitous will be considered by the courts in fixing the liability for negligence only. The liability may be to the principal or to third persons.
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The principal is solidarily liable if quasi-delict was committed by the agent while performing his duties in furtherance of the principal's business.
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The effects of ratification are: (1) With respect to the agent, it relieves him of liability. He may thus recover compensation from the principal. (2) With respect to the principal, he assumes responsibility for the unauthorized act as fully as if the agent had acted under an original authority. But he is not liable for acts outside the authority affirmed by his ratification. (3) With respect to third persons, they are bound by the ratification and cannot set up the fact that the agent has exceeded his powers [Article 1901].
Obligations of the principal OBLIGATIONS, IN GENERAL In addition to his duties specified under the contract itself, the principal is under obligation to deal fairly and in good faith with his agent, who owes the same to his principal.
SEPARATE CONTRACTS WITH PRINCIPAL AND AGENT
When two persons contract with regard to the same thing, one of them with the agent and the other with the principal, and the two contracts are incompatible with each other, that of prior date shall be preferred, subject to the rules on double sales [Article 1916].
OBLIGATION TO COMPLY WITH OBLIGATIONS CONTRACTED General rule: The principal must comply with all the obligations which the agent may have contracted within the scope of his authority. As for any obligation where in the agent has exceeded his power, the principal is not bound.
The rules on double sales (Article 1544) provide: (1) If the same movable property is sold to different persons, ownership is transferred to whoever first took possession in good faith. (2) If it be immovable: (a) Ownership belongs to the person who in good faith first recorded it in the Registry of Property. (b) If there is no inscription, ownership shall belong to the person who, in good faith was first in possession; and in the absence of such, to the one who presents the oldest title, provided there is good faith.
Exceptions: The principal is: (1) Bound by the obligation entered into by the agent in excess of his power, when he ratifies it expressly or tacitly [Article 1910]; (2) Solidarily liable with the agent if the principal allowed the agent to act as though he had full powers [Article 1911]. Note: If the agent acts in his own name, but the contract involves things belonging to the principal, the contract must be considered as entered into between the principal and the third person [Sy-Juco and Viardo v. Sy-Juco (1920)].
The liability for damages suffered by the third person whose contract must be rejected shall be borne by: (1) The principal, if the agent acted in good faith; or (2) The agent, if he acted in bad faith. [Article 1918]
RATIFICATION
Ratification is the adoption or affirmance by a person of a prior act which did not bind him, but which was done or professed to be done on his account, thus giving effect to the acts as if originally authorized.
WHEN PRINCIPAL NOT LIABLE, IN SUMMARY
(1) Void or inexistent contracts [Article 1409]; (2) Sale of a piece of land or any interest therein when the authority of the agent is not in writing [Article 1874]; (3) Acts of the substitute appointed against the prohibition of the principal [Article 1892]; (4) Acts done in excess of the scope of the agent's authority [Articles 1898 and 1910]; (5) When the agent acts in his own name, except when the contract involves things belonging to the principal [Article 1883]; (6) Unenforceable contracts [Article 1403].
Aside from the intent to ratify, the following conditions must be fulfilled for ratification to be effective: (1) The principal must have the capacity and power to ratify; (2) He must have had knowledge or had reason to know of material or essential facts about the transaction; (3) He must ratify the acts entirely; (4) The act must be capable of ratification; and (5) The act must be done in behalf of the principal. [De Leon (2010)]
OBLIGATION FOR COMPENSATION OF AGENT Agency is presumed to be for a compensation, unless there is proof to the contrary [Article 1875].
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(b) Provided that the agent is free from all fault. [Article 1912]
AMOUNT OF COMPENSATION
The principal must pay the agent the compensation agreed upon, or the reasonable value of the agent's services if no compensation was specified.
The reimbursement shall include the interest on the sums advanced from the day the advances were made.
This obligation presupposes that the agent complied with his obligation to the principal.
WHEN PRINCIPAL NOT LIABLE FOR EXPENSES
The principal is not liable for the expenses incurred by the agent in the following cases: (1) If the agent acted in contravention of the principal's instructions, unless the latter should wish to avail himself of the benefits derived from the contract; (2) When the expenses were due to the fault of the agent; (3) When the agent incurred them with knowledge that an unfavorable result would ensue, if the principal was not aware thereof; (4) When it was stipulated that: (a) The expenses would be borne by the agent; or (b) That the latter would be allowed only a certain sum. [Article 1918]
COMPENSATION OF BROKER
A broker is entitled to the usual commissions whenever he brings to his principal a party who is able and willing to take the property and enter into a valid contract upon the terms named by the principal, although the terms may be arranged and the matter negotiated and consummated between the principal and the purchaser directly. A broker is never entitled to commission for unsuccessful efforts. The governing rule is that the agent must prove that he was the procuring cause of the transaction. Otherwise, he is not entitled to the stipulated broker's commission [Inland Realty v. CA (1997)].
DAMAGES
Procuring cause refers to a cause originating a series of events which, without break in their continuity, result in the accomplishment of the prime objective
The principal must also indemnify the agent for all the damages which the execution of the agency may have caused the latter, without fault or negligence or his part. [Article 1913]
of the employment of the broker – producing a purchaser ready, willing and able to buy on the owner's terms.
RIGHT OF RETENTION BY AGENT
The agent may retain in pledge the things which are the object of the agency until the principal effects: (1) Reimbursement of necessary funds advanced; and (2) Payment of indemnity for damages. [Article 1914]
Since the broker’s only job is to bring together the parties to a transaction, it follows that if the broker does not succeed in bringing the mind of the purchaser and the vendor to an agreement with reference to the terms of a sale, he is not entitled to a commission [Rocha v. Prats (1922)].
This is a case of legal pledge. However, the agent is not entitled to the excess in case the things are sold to satisfy his claims.
If the principal breaks off from negotiations with a buyer brought by the agent in order to deliberately deal later with the buyer personally, this is evident bad faith. In such case, justice demands compensation for the agent. [Infante v. Cunanan (1953)]
MULTIPLE PRINCIPALS
If there are two or more principals who appointed the agent for a common transaction or undertaking, they shall be solidarily liable for all the consequences of the agency [Article 1915]. Requisites: (1) There are two or more principals; (2) The principals have all concurred in the appointment of the same agent; and (3) The agent is appointed for a common transaction or undertaking.
LIABILITY FOR EXPENSES AND DAMAGES NECESSARY FUNDS
(1) The principal must advance to the agent, should the latter so request, the sums necessary for the execution of the agency. (2) In case the agent already advanced them, the principal must reimburse him therefor: (a) Even if the business or undertaking was not successful;
LIABILITY FOR QUASI-DELICT BY AGENT
The principal is solidarily liable to third persons for torts of an agent committed:
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(1) At the principal's direction; or (2) In the course and within the scope of the agent's employment.
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Exception: Agency cannot be revoked if it is coupled with an interest, such that: (1) A bilateral contract depends upon it; (2) It is the means of fulfilling an obligation already contracted; or (3) A partner is appointed manager of a partnership in the contract of partnership and his removal from the management is unjustifiable.
Extinguishment of agency MODES OF EXTINGUISHING AGENCY, IN GENERAL Agency is extinguished: (1) By its revocation; (2) By the withdrawal of the agent; (3) By the death, civil interdiction, insanity or insolvency of the principal or of the agent; (4) By the dissolution of the firm or corporation which entrusted or accepted the agency; (5) By the accomplishment of the object or purpose of the agency; (6) By the expiration of the period for which the agency was constituted. [Article 1919]
MULTIPLE PRINCIPALS
When two or more principals have granted a power of attorney for a common transaction, any one of them may revoke the same without the consent of the others. [Article 1925] MANNER OF REVOCATION
Revocation may be express or implied. There is express revocation when the principal clearly and directly makes a cancellation of the authority of the agent orally or in writing. There is implied revocation in the following cases: (1) The appointment of a new agent for the same business or transaction revokes the previous agency from the day on which notice thereof was given to the former agent, without prejudice to the requirement of notice to third persons [Article 1923]. (2) The agency is revoked if the principal directly manages the business entrusted to the agent, dealing directly with third persons [Article 1924]. (3) A general power of attorney is revoked by a special one granted to another agent, as regards the special matter involved in the latter [Article 1926].
The provision enumerates only those which are peculiar to agency and is, therefore, not exclusive. Agency may also be extinguished by the modes of extinguishment of obligations in general. The modes of extinguishment may be classified into three: (1) By agreement (Nos. 5 and 6); (2) By subsequent acts of the parties: (a) By the act of both parties or by mutual consent; or (b) By the unilateral act of one of them (Nos. 1 and 2) (3) By operation of law (Nos. 3 and 4)
There is implied revocation only where the new appointment is incompatible with the previous one.
In the absence of anything to show its termination, the agency relation will be presumed to have continued. The burden of proving termination is on the party asserting it.
EFFECT OF REVOCATION IN RELATION TO THIRD PARTIES
If the agency has been entrusted for the purpose of contracting with specified persons, its revocation shall not prejudice the latter if they were not given notice thereof [Article 1921].
REVOCATION BY PRINCIPAL General rule: The principal may: (1) Revoke the agency at will; and (2) Compel the agent to return the document evidencing the agency.
If the agent had general powers, revocation of the agency does not prejudice third persons who acted: (1) In good faith; and (2) Without knowledge of the revocation.
Qualifications: The right of the principal to terminate the authority of his agent is absolute and unrestricted, except that he is liable for damages in case: (1) He revokes the agency in bad faith [Danon v. Brimo (1921)]; or (2) He revokes the agency before the expiration of the period stipulated in the agency contract.
Notice of the revocation in a newspaper of general circulation is a sufficient warning to third persons. [Article 1922]
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WITHDRAWAL BY AGENT The agent may withdraw from the agency by giving due notice to the principal.
accomplished, the agency continues indefinitely for as long as the intent to continue is manifested through words or actions of the parties.
LIABILITY FOR DAMAGES
DISSOLUTION OF FIRM OR CORPORATION The dissolution of a partnership or corporation which entrusted (principal) or accepted (agent) the agency extinguishes its juridical existence, except for the purpose of winding up its affairs. It is equivalent to its death.
General rule: If the principal should suffer any damage by reason of the withdrawal, the agent must indemnify him therefor. Exception: The agent is not liable for damages if he should base his withdrawal upon the impossibility of continuing the performance of the agency without grave detriment to himself. [Article 1928]
EXPIRATION OF TERM If created for fixed period, expiration of the period extinguishes agency even if the purpose was not accomplished.
OBLIGATION TO CONTINUE AGENCY
The agent, even if he should withdraw from the agency for a valid reason, must continue to act until the principal has had reasonable opportunity to take the necessary steps to meet the situation [Article 1929].
If no time is specified, the courts may fix the period as under the circumstances have been probably contemplated by the parties [Article 1197]. Otherwise, the agency terminates at the end of a reasonable period of time. Either party can terminate the relationship at will by giving notice to the other. [De Leon (2010)]
DEATH, CIVIL INTERDICTION, INSANITY OR INSOLVENCY DEATH OF PRINCIPAL
General rule: Death extinguishes agency.
Period may be implied from terms of agreement, purpose of agency, and the circumstances of the parties.
Exceptions: (1) The agency remains in full force and effect even after the death of the principal, if it has been constituted: (a) In the common interest of the principal and agent; or (b) In the interest of a third person who has accepted the stipulation in his favor. [Article 1930] (2) Anything done by the agent, without knowledge of the death of the principal or of any other cause which extinguishes the agency, is valid and shall be fully effective with respect to third persons who may have contracted with him in good faith [Article 1931]. (3) The agent must finish business already begun on the death of the principal, should delay entail any danger [Article 1884]. DEATH OF AGENT
If the agent dies, his heirs must: (1) Notify the principal thereof; and (2) In the meantime adopt such measures as the circumstances may demand in the interest of the latter. [Article 1932] ACCOMPLISHMENT OF OBJECT OR PURPOSE Between principal and agent, the fulfillment of the purpose for which agency was created ipso facto terminates agency, even though it was expressly made irrevocable. If the purpose has not been
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Credit Transactions
Upon delivery of the object of the contract of loan (in this case the money received by the debtor when the checks were encashed) the debtor acquires ownership of such money or loan proceeds and is bound to pay the creditor an equal amount. [Garcia v. Thio, G.R. No. 154878]
MEANING AND SCOPE OF CREDIT TRANSACTIONS Credit transactions include all transactions involving the purchase or loan of goods, services, or money in the present with a promise to pay or deliver in the future. TWO TYPES OF CREDIT TRANSACTIONS/CONTRACTS OF SECURITY (1) Secured transactions or contracts of real security – supported by a collateral or an encumbrance of property (2) Unsecured transactions or contracts of personal security – fulfillment by the debtor is supported only by a promise to pay or the personal commitment of another Examples of credit transactions (1) Bailment contracts (2) Contracts of guaranty and suretyship (3) Mortgage (4) Antichresis (5) Concurrence and preference of credits
Loan [A] contract by which one of the parties delivers to another, either something not consumable so that the latter may use the same for a certain time and return it, in which case the contract is called commodatum; or money or other consumable thing, upon the condition that the same amount of the same kind and quality shall be paid, in which case the contract is called a simple loan or mutuum. [Art.1933] CHARACTERISTICS OF A LOAN (1) Real contract (a) Delivery is essential for perfection of the contract of loan. (b) An accepted promise to loan, is nevertheless binding on the parties, it being a consensual contract.
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COMMODATUM V. MUTUUM
Commodatum
Mutuum
Ordinarily involves something not consumable* (Art.1936)
Involves money or other consumable thing
Ownership of the thing loaned is retained by lender (Art.1933) Essentially gratuitous (Art.1933)
Ownership is transferred to the borrower
Borrower must return the same thing loaned (Art.1933) May involve real or personal property (Art.1937) Loan for use or temporary possession (Art.1935) Bailor may demand the return of the thing loaned before the expiration of the term in case of urgent need (Art.1946) Bailor suffers the loss of the subject matter since he is the owner (Art.1942; Art.1174) Purely personal in character (Art 1939)
May be gratuitous or onerous, i.e. with stipulated interest Borrower need only pay an equal amount of the same kind and quality (Art. 1953) Refers only to personal property Loan for consumption Lender may not demand its return before the lapse of the term agreed upon
Borrower suffers the loss even if caused exclusively by a fortuitous event and he is not, therefore, discharged from his duty to pay Not purely personal in character
If consumable goods are loaned only for purposes of exhibition, or when the intention of the parties is to lend consumable goods and to have the very same goods returned at the end of the period agreed upon, the loan is a commodatum and not a mutuum. [Producers Bank v. CA, Feb. 19, 2003]
(2) Unilateral contract (a) creates obligations on only one party, i.e., the borrower
OBLIGATIONS OF BAILOR AND BAILEE WHO MAY BE A BAILOR IN COMMODATUM? (a) Anyone. The bailor in commodatum need not be the owner of the thing loaned. [Art.1938] (b) But the bailee himself may not lend nor lease the thing loaned to him to a third person [Art 1939(2)]
In a contract of loan, the cause is, as to the borrower, the acquisition of the thing, and as to the lender, the right to demand its return or its equivalent. [Monte de Piedad v. Javier]
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(4) To pay damages to bailee for known hidden flaws in the thing loaned [Art. 1951]
WHAT ARE THE TWO (2) KINDS OF COMMODATUM?
(a) Ordinary commodatum [Art. 1933] (b) Precarium - bailor may demand the thing loaned at will [Art. 1947]
(NOTE: Bailor has no right of abandonment; he cannot exempt himself from payment of expenses or damages to the bailee by abandoning the thing to the latter. [Art. 1952]) OBLIGATIONS OF A BAILEE IN COMMODATUM (1) Obligation to pay for the ordinary expenses for the use and preservation of the thing loaned [Art. 1941] (2) Obligation to take good care of the thing with the diligence of a good father of a family [Art. 1163] (3) Liability for loss, even if loss through fortuitous event, under certain circumstances [Art. 1942] (4) Liability for deterioration of thing loaned, except under certain circumstances [Art. 1943] (5) Obligation to return the thing upon expiration of term or upon demand in case of urgent need [Art. 1946] (6) Solidary obligation where there are 2 or more bailees to whom a thing was loaned in the same contract [Art.1945]
OBLIGATIONS OF A BAILOR IN COMMODATUM (1) To allow the bailee the use of the thing loaned for the duration of period stipulated or until the accomplishment of the purpose for which commodatum was constituted. Exceptions: (a) Urgent need of the thing, during which time he may demand its return or temporary use (Art.1946) (b) Precarium (Art.1947) (i) If duration of the contract has not been stipulated (ii) If use or purpose of the thing has not been stipulated (iii) If use of thing is merely tolerated by the bailor (c) Bailee commits an act of ingratitude specified in Art. 765 [Art. 1948]: (1) Commission of offenses against the person, the honor, or the property of the bailor, or of his wife or children under his parental authority (2) Imputing to the bailor any criminal offense, or any act involving moral turpitude, even though he should prove it, unless the crime or the act has been committed against the bailee himself, his wife, or children under his authority (3) Undue refusal to give the bailor support when the bailee is legally or morally bound to do so
General Rule: Bailee is not liable for loss or damage due to a fortuitous event [Art. 1174], since the bailor retains ownership of the thing Exception: Bailee is liable for loss even if due to a fortuitous event when: [Art. 1942] (1) He devotes the thing to any purpose different from that for which it was loaned (2) He keeps it longer than the period stipulated, or after the accomplishment of the use for which the commodatum has been constituted (3) The thing loaned has been delivered with appraisal of its value, unless there is stipulation exempting the bailee from responsibility in case of a fortuitous event (4) He lends or leases the thing to a third person who is a not a member of his household (5) Being able to save either the thing borrowed or his own thing, he chose to save the latter.
(NOTE: Article 765 is applicable, because like donation, commodatum is essentially gratuitous. [Art.1933, par.2] (2) To refund extraordinary expenses for the preservation of the thing loaned provided bailor is notified before the expenses were incurred. [Art. 1949] (a) Exception: Urgent need such that reply to the notification cannot be awaited without danger, hence no notice is necessary.
General Rule [1]: Bailee is liable for deterioration of thing loaned. Exception [1]: The deterioration of the thing is due only to the use thereof and without his fault [Art. 1943] General Rule [2]: Bailee has no right of retention of the thing loaned, on the ground that the bailor owes him something. [Art. 1944]
(3) To bear 50% of the extraordinary expenses arising from actual use of bailee of the thing loaned [Art. 1949] (a) Exception: Contrary stipulation
Exception [2]: Bailee has a right of retention for damages for known hidden flaws mentioned in Art
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1951. [Art. 1944]
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forbearance of money, the interest due should be that which may have been stipulated in writing. Furthermore, the interest due shall itself earn legal interest from the time it is judicially demanded. In the absence of stipulation, the rate of interest shall be 12% per annum to be computed from default, i.e., from judicial or extrajudicial demand under and subject to the provisions of Art.1169.
INTEREST AND SUSPENSION OF USURY LAW Interest – is the compensation allowed by law or fixed by the parties for the loan or forbearance of money, goods or credits KINDS OF INTEREST
(1) Simple interest – Paid for the principal at a certain rate fixed or stipulated by the parties. (2) Compound Interest – that which is imposed upon interest due and unpaid. (3) Legal Interest – that which the law directs to be charged in the absence of any agreement as to the rate between the parties. (4) Lawful Interest – that which the laws allow or do not prohibit (5) Unlawful or Usurious Interest – paid or stipulated to be paid beyond the maximum fixed by law. However, by virtue of CB Circular 905, usury has become “legally inexistent.”
(2) When an obligation, not constituting a loan or forbearance of money, is breached, an interest on the amount of damages awarded may be imposed at the discretion of the court at the rate of 6% per annum. No interest, however, shall be adjudged on unliquidated claims or damages except when or until the demand can be established with reasonable certainty. Accordingly, where the demand is established with reasonable certainty, the interest shall begin to run from the time the claim is made judicially or extrajudicially (Art. 1169) but when such certainty cannot be so reasonably established at the time the demand is made, the interest shall begin to run only from the date the judgment of the court is made (at which time the quantification of damages may be deemed to have been reasonably ascertained). The actual base for the computation of legal interest shall, in any case, be on the amount finally adjudged.
WHEN IS COMPOUND INTEREST ALLOWED?
(1) When there is an express written stipulation to that effect [Art. 1956] (2) Upon judicial demand. HOWEVER, debtor is not liable to pay compound interest even after judicial demand when there is no stipulation for payment of interest. [Art. 2212] REQUISITES FOR INTEREST TO BE CHARGEABLE
(1) Must be expressly stipulated [Art 1956] (2) Agreement must be in writing [Art.1956] (3) Must be lawful
(3) When the judgment of the court awarding a sum of money becomes final and executory, the rate of legal interest, whether the case falls under paragraph 1 or paragraph 2, above, shall be 12% per annum from such finality until its satisfaction, this interim period being deemed to be by then an equivalent to a forbearance of credit.
While it is true that under Article 1956 of the Civil Code no interest shall be due unless it has been expressly stipulated in writing, this applies only to interest for the use of money. It does not comprehend interest paid as damages. [Integrated Realty Corporation v. Philippine National Bank, 174 SCRA 295]
Forbearance is defined, within the context of usury law, as a contractual obligation of lender or creditor to refrain, during given period of time, from requiring borrower or debtor to repay loan or debt then due and payable (Bataan Seedling v. Republic, 383 SCRA 590)
EXCEPTIONS TO REQUISITE OF EXPRESS STIPULATION
(1) The debtor in delay is liable to pay legal interest (6% or 12% per annum) as indemnity for damages [Art. 2209] (2) Interest accruing from unpaid interest – Interest demanded shall earn interest from the time it is judicially demanded [Art. 2212] or where there is an express stipulation [Art. 1959]
THE USURY LAW (Act No.2566) is an act fixing rates of interests upon loans and declaring the effect of receiving or taking usurious rates and for other purposes. (Arevalo v. Dimayuga, 49 Phil 894) CB Circular No. 905 – abolished interest rate ceilings. With the promulgation of such circular, usury has become “legally inexistent” as the parties can now legally agree on any interest that may be charged on the loan.
RULES FOR AWARD OF INTEREST IN THE CONCEPT OF ACTUAL AND COMPENSATORY DAMAGES (Eastern
Shipping Lines v. CA, 234 SCRA 78) (1) When the obligation breached consists in the payment of a sum of money, i.e., a loan or
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OBLIGATIONS OF DEPOSITOR (1) Depositor is obliged to reimburse the depositary for expenses incurred for preservation – if deposit is gratuitous. [Art. 1992] (2) Depositor is obliged to pay losses incurred due to character of thing deposited. [Art. 1993]
ELEMENTS OF USURY
(1) A loan or forbearance of money (2) An understanding between parties that the loan shall and may be returned (3) An unlawful intent to take more than the legal rate for the use of money or its equivalent (4) The taking or agreeing to take for the use of the loan of something in excess of what is allowed by law.
General Rule: The depositor shall reimburse the depositary for any loss arising from the character of the thing deposited [Art. 1993]
A usurious loan transaction is not a complete nullity but defective only with respect to the agreed interest. (Carpo v. Chua, G.R. Nos. 150773 and 153599)
Exceptions (1) Depositor was not aware of the danger; (2) Depositor was not expected to know the dangerous character of the thing; (3) Depositor notified the depositary of such dangerous character; (4) Depositary was aware of the danger without advice from the depositor.
Deposit Deposit is constituted from the moment a person receives a thing belonging to another, with the obligation of safely keeping it and of returning the same. If the safekeeping of the thing delivered is not the principal purpose of the contract, there is no deposit but some other contract. [Art.1962]
EXTINGUISHMENT OF DEPOSIT A DEPOSIT IS EXTINGUISHED: (1) Upon the loss or deterioration of the thing deposited; (2) Upon the death of either the depositor or the depositary, ONLY in gratuitous deposits; (3) By other modes provided in the Civil Code, e.g. novation, merger, etc. [See Art. 1231]
CHARACTERISTICS (1) Real Contract because it is perfected by the delivery of the subject matter. (2) Principal purpose of the contract of deposit is the safekeeping of the thing delivered. (3) If gratuitous, it is unilateral because only the depository has an obligation. If onerous, it is bilateral.
EFFECT OF DEATH OF DEPOSITOR OR DEPOSITARY [Art. 1995] (1) Where deposit gratuitous – death of either of the depositor or depositary extinguishes the deposit (personal in nature). By the word “extinguished,” the law really means that the depositary is not obliged to continue with the contract of deposit. (2) Where deposit for compensation – not extinguished by the death of either party.
The principal purpose is safekeeping of the thing delivered, so that if it is only an accessory or secondary obligation, deposit is not constituted but some other contract.
KINDS OF DEPOSIT (1) Judicial (2) Extrajudicial (a) Voluntary (b) Necessary
CONTRACT OF DEPOSIT IS GENERALLY GRATUITOUS [Art. 1965], subject to the following exceptions: (1) There is a contrary stipulation (2) Depository is in the business of storing goods (3) Property saved from destruction during calamity without owner’s knowledge; just compensation should be given to the depository. [Art. 1996(2) and Art. 1997, par.2]
VOLUNTARY DEPOSIT Voluntary Deposit - delivery is made by the will of the depositor or by two or more persons each of whom believes himself entitled to the thing deposited [Art. 1968]
ONLY MOVABLE THINGS MAY BE THE OBJECT OF A DEPOSIT [Art. 1966] if the deposit is either voluntary [Art. 1968] or necessary [Art. 1996]. HOWEVER, a judicial deposit may cover movable as well an immovable property, its purpose being to protect the rights of parties to the suit [Art. 2006].
NECESSARY DEPOSIT Necessary Deposit - made in compliance with a legal obligation, or on the occasion of any calamity, or by travelers in hotels and inns [Arts. 1996-2004] or by travelers with common carriers [Arts. 1734-1735]
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KINDS OF NECESSARY DEPOSITS
(1) It is made in compliance with a legal obligation, in which case it is governed by the law establishing it, and in case of deficiency, the rules on voluntary deposit e.g. Arts. 538, 586 and 2104 (2) It takes place on the occasion of any calamity, such as fire, storm, flood, pillage, shipwreck, or other similar events. There must be a causal relation between the calamity and the constitution of the deposit. In this case the deposit is governed by the rules on voluntary deposit and Art. 2168 (3) Made by passengers with common carriers. [Art. 1754] (4) Made by travelers in hotels or inns. [Art. 1998]
(Note: The hotel-keeper cannot free himself from responsibility by posting notices to the effect that he is not liable for the articles brought by the guest. Such kind of stipulation shall be VOID. [Art. 2003]) Triple-V Food Services v. Filipino Merchants Insurance Company: Regarding the legal deposit of a vehicle that was stolen while parked with Saisaki restaurant, “the depositary may not exempt itself from responsibility for loss or damage of the thing deposited with it, by exclusionary stipulation. Such stipulations are void for being contrary to law.” HOTEL-KEEPER’S RIGHT TO RETENTION
(1) The hotel-keeper has a right to retain the things brought into the hotel by the guest, as a security for credits on account of (a) lodging, and (b) supplies usually furnished to hotel guests (Art. 2004) (2) NOTE: The right of retention recognized in this article is in the nature of a pledge created by operation of law.
DEPOSITS BY TRAVELERS IN HOTELS AND INNS
Before keepers of hotels or inns may be held responsible as depositaries with regard to the effects of their guests, the following must concur: (1) They have been previously informed about the effects brought by the guests; and (2) The latter have taken the precautions prescribed regarding their safekeeping. EXTENT OF LIABILITY UNDER ART.1998
JUDICIAL DEPOSIT Judicial Deposit – takes place when an attachment or seizure of property in litigation is ordered [Arts. 2005-2009]
(1) Those in hotel rooms which come under the term “baggage” or articles such as clothing as are ordinarily used by travelers (2) Include those lost or damaged in hotel annexes such as vehicles in the hotel’s garage.
NATURE AND PURPOSE
It is auxiliary to a case pending in court. The purpose is to maintain the status quo during pendency of the litigation or to insure the right of the parties to the property in case of a favorable judgment.
WHEN HOTEL-KEEPER LIABLE
Regardless of the amount of care exercised: (1) The loss or injury to personal property is caused by his servants or employees as well as by strangers [Art. 2000]. (2) The loss is caused by the act of a thief or robber done without the use of arms and irresistible force. [Art. 2001]
DEPOSITARY OF SEQUESTERED PROPERTY
A person is appointed by the court [Art. 2007] with the obligations: (1) To take care of the property with the diligence of a good father of the family. [Art. 2008] (2) To continue in his responsibility until the controversy which give rise thereto is ended unless the court so orders. [Art. 2007]
WHEN HOTEL-KEEPER NOT LIABLE
(1) The loss or injury is caused by force majeure, like flood, fire, [Art. 2000] theft or robbery by a stranger - not the hotel-keeper’s servant or employee with the use of firearms or irresistible force [Art. 2001]
APPLICABLE LAW
(1) The law on judicial deposit is remedial or procedural in nature. (2) Rules of Court shall govern matters not provided for in the Civil Code. [Art. 2009]
Exception: Hotel-keeper is guilty of fault or negligence in failing to provide against the loss or injury from his cause. [Arts. 1170 and 1174] (2) The loss is due to the acts of the guests, his family, servants, visitors [Art.2002]
Guaranty and Suretyship
(3) The loss arises from the character of the things brought into the hotel (Ibid.)
Guaranty is a contract whereby a person, called the guarantor, binds himself to the creditor to fulfill the
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obligation of the principal debtor in case the latter should fail to do so. [Art. 2047]
(a) Presence of cause which supports principal obligation: Cause of the contract is the same cause which supports the obligation as to the principal debtor. The consideration which supports the obligation as to the principal debtor is a sufficient consideration to support the obligation of a guarantor or surety. (b) Absence of direct consideration or benefit to guarantor: Guaranty or surety agreement is regarded valid despite the absence of any direct consideration received by the guarantor or surety, such consideration need not pass directly to the guarantor or surety; a consideration moving to the principal will suffice.
While a surety undertakes to pay if the principal does not pay, the guarantor only binds himself to pay if the principal cannot pay [See benefit of excussion, Art. 2058]. Suretyship is a relation which exists where one person (principal) has undertaken an obligation and another person (surety) is also under a direct and primary obligation or other duty to a third person (oblige), who is entitled to but one performance, and as between the two who are bound, the one rather than the other should perform. If a person binds himself solidarily with the principal debtor, the contract is called suretyship and the guarantor is called a surety.
(3) A married woman who is a guarantor binds only her separate property, generally [2049]
GUARANTY DISTINGUISHED FROM SURETYSHIP Guaranty
Suretyship
Guarantor’s liability depends upon an independent agreement to pay the obligation Guarantor’s engagement is a collateral undertaking Guarantor is subsidiarily liable i.e. only obliged to pay if the principal cannot pay Guarantor not bound to take notice of default of his principal Guarantor often discharged by the mere indulgence of the creditor and is usually not liable unless notified of the principal’s default
Surety assumes liability as a regular party to the undertaking
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Exceptions (a) With her husband’s consent, bind the community or conjugal partnership property (b) Without husband’s consent, in cases provided by law, such as when the guaranty has redounded to the benefit of the family. (4) A guaranty need not be undertaken with the knowledge of the debtor [2050] (a) Guaranty is unilateral – exists for the benefit of the creditor and not for the benefit of the principal debtor (b) Creditor has every right to take all possible measures to secure payment of his credit – guaranty can be constituted even against the will of the principal debtor
Surety is an original promissory Surety is primarily liable i.e. bound to pay if the principal does not pay Surety ordinarily held to know every default of his principal Surety not discharged either by the mere indulgence of the creditor or by want of notice of default of the principal
However, as regards payment made by a third person: (a) Payment without the knowledge or against the will of the debtor: (i) Guarantor can recover only insofar as the payment has been beneficial to the debtor [Art. 1236] (ii) Guarantor cannot compel the creditor to subrogate him in his rights [Art. 1237] (b) Payment with knowledge or consent of the debtor: Subrogated to all the rights which the creditor had against the debtor
NATURE AND EXTENT OF GUARANTY NATURE AND EXTENT OF GUARANTY
(1) A guaranty is generally gratuitous [2048] (a) General Rule: Guaranty is gratuitous (b) Exception: When there is a stipulation to the contrary
(5) The guaranty must be founded on a valid principal obligation [2052(1)]
(2) On the cause of a guaranty contract A guarantor or surety is bound by the same consideration that makes the contract effective between the principal parties thereto. [Severino v. Severino]
Guaranty is an accessory contract: It is an indispensable condition for its existence that there must be a principal obligation. Hence, if the principal obligation is void, it is also void.
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condition precedent are valid and binding before the occurrence of the condition precedent.
(6) A guaranty may secure the performance of a voidable, unenforceable, and natural obligation [2052(2)] A guaranty may secure the performance of a: (a) Voidable contract – such contract is binding, unless it is annulled by a proper court action (b) Unenforceable contract – because such contract is not void (c) Natural obligation – the creditor may proceed against the guarantor although he has no right of action against the principal debtor for the reason that the latter’s obligation is not civilly enforceable. When the debtor himself offers a guaranty for his natural obligation, he impliedly recognizes his liability, thereby transforming the obligation from a natural into a civil one.
A continuing guaranty is one which is not limited to a single transaction, but which contemplates a future course of dealing, covering a series of transactions, generally for an indefinite time or until revoked. It is prospective in its operation and is generally intended to provide security with respect to future transactions within certain limits, and contemplates a succession of liabilities, for which, as they accrue, the guarantor becomes liable. A continuing guaranty is one which covers all transactions, including those arising in the future, which are within the description or contemplation of the contract of guaranty, until the expiration or termination thereof. A guaranty shall be construed as continuing when by the terms thereof it is evident that the object is to give a standing credit to the principal debtor to be used from time to time either indefinitely or until a certain period, especially if the right to recall the guaranty is expressly reserved.
(7) A guaranty may secure a future debt [2053] Continuing Guaranty or Suretyship: (a) Under the Civil Code, a guaranty may be given to secure even future debts, the amount of which may not be known at the time the guaranty is executed. This is the basis for contracts denominated as continuing guaranty or suretyship. [Diño v. CA] (b) Future debts, even if the amount is not yet known, may be guaranteed but there can be no claim against the guarantor until the amount of the debt is ascertained or fixed and demandable
Where the contract of guaranty states that the same is to secure advances to be made "from time to time" the guaranty will be construed to be a continuing one.” (8) A guaranty may secure the performance of a conditional obligation [2053] (a) Principal obligation subject to a suspensive condition – the guarantor is liable only after the fulfillment of the condition. (b) Principal obligation subject to a resolutory condition – the happening of the condition extinguishes both the principal obligation and the guaranty
Rationale: A contract of guaranty is subsidiary. (a) To secure the payment of a loan at maturity – surety binds himself to guarantee the punctual payment of a loan at maturity and all other obligations of indebtedness which may become due or owing to the principal by the borrower. (b) To secure payment of any debt to be subsequently incurred – a guaranty shall be construed as continuing when by the terms thereof it is evident that the object is to give a standing credit to the principal debtor to be used from time to time either indefinitely or until a certain period, especially if the right to recall the guaranty is expressly reserved. (c) To secure existing unliquidated debts – refers to debts existing at the time of the constitution of the guaranty but the amount thereof is unknown and not to debts not yet incurred and existing at that time. (d) The surety agreement itself is valid and binding even before the principal obligation intended to be secured thereby is born, just like obligations which are subject to a
(9) A guarantor’s liability cannot exceed the principal obligation [2054] General Rule: Guaranty is a subsidiary and accessory contract – guarantor cannot bind himself for more than the principal debtor and even if he does, his liability shall be reduced to the limits of that of the debtor. But the guarantor may bind himself for less than that of the principal. Exceptions (a) Interest, judicial costs, and attorney’s fees as part of damages may be recovered – creditors suing on a suretyship bond may recover from the surety as part of their damages, interest at the legal rate, judicial costs, and attorney’s
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fees when appropriate, even without stipulation and even if the surety would thereby become liable to pay more than the total amount stipulated in the bond.
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NATURE AND EXTENT OF SURETYSHIP (1) Liability is contractual and accessory but direct (2) Liability is limited by the terms of the contract (3) Liability arises only if principal debtor is held liable (a) In the absence of collusion, the surety is bound by a judgment against the principal even though he was not a party to the proceedings; (b) The creditor may sue, separately or together, the principal debtor and the surety; (c) A demand or notice of default is not required to fix the surety’s liability Exception: Where required by the provisions of the contract of suretyship (d) A surety bond is void where there is no principal debtor because such an undertaking presupposes that the obligation is to be enforceable against someone else besides the surety, and the latter can always claim that it was never his intention to be the sole person obligated thereby.
Interest runs from: (1) Filing of the complaint (upon judicial demand); or (2) The time demand was made upon the surety until the principal obligation is fully paid (upon extra-judicial demand) Rationale: Surety is made to pay, not by reason of the contract, but by reason of his failure to pay when demanded and for having compelled the creditor to resort to the courts to obtain payment. (b) Penalty may be provided – a surety may be held liable for the penalty provided for in a bond for violation of the condition therein.
Note: Surety is not entitled to exhaustion
Principal’s liability may exceed guarantor’s obligations The amount specified in a surety bond as the surety’s obligation does not limit the extent of the damages that may be recovered from the principal, the latter’s liability being governed by the obligations he assumed under his contract
(1) The undertaking is to the creditor, not the debtor The surety makes no covenant or agreement with the principal that it will fulfill the obligation guaranteed for the benefit of the principal. The surety’s undertaking is that the principal shall fulfill his obligation and that the surety shall be relieved of liability when the obligation secured is performed.
(10) The existence of a guaranty is not presumed [2055] Guaranty requires the expression of consent on the part of the guarantor to be bound. It cannot be presumed because of the existence of a contract or principal obligation.
Exception: Unless otherwise expressly provided. (2) Prior demand by the creditor upon principal not required. Surety is not exonerated by neglect of creditor to sue principal.
Rationale: (a) There be assurance that the guarantor had the true intention to bind himself; (b) To make certain that on making it, the guarantor proceeded with consciousness of what he was doing.
Strictissimi juris rule applicable only to accommodation surety Reason: An accommodation surety acts without motive of pecuniary gain and hence, should be protected against unjust pecuniary impoverishment by imposing on the principal, duties akin to those of a fiduciary. This rule will apply only after it has been definitely ascertained that the contract is one of suretyship or guaranty.
(11) Contract of guaranty is covered by the Statute of Frauds [See Art. 1403(2)(b)] Guaranty must not only be expressed but must so be reduced into writing. Hence, it shall be unenforceable by action, unless the same or some note or memorandum thereof be in writing, and subscribed by the party charged, or by his agent; evidence, therefore, of the agreement cannot be received without the writing, or a secondary evidence of its contents. However, it need not appear in a public document
Strictissimi juris rule NOT applicable to compensated sureties Reasons: (1) Compensated corporate sureties are business associations organized for the purpose of assuming classified risks in large numbers, for profit and on an impersonal basis. (2) They are secured from all possible loss by
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adequate counter-bonds agreements.
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or
indemnity
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the satisfaction of the obligation – If such judicial action including execution would not satisfy the obligation, the guarantor can no longer require the creditor to resort to all such remedies against the debtor as the same would be but a useless formality. It is not necessary that the debtor be judicially declared insolvent.
Such corporations are in fact insurers and in determining their rights and liabilities, the rules peculiar to suretyship do not apply. The stipulation in the indemnity agreement allowing the surety to recover even before it paid the creditor is enforceable. In accordance therewith, the surety may demand from the indemnitors even before paying the creditors. [Mercantile Insurance Company v. Ysmael, 169 SCRA 66]
Southern Motors, Inc. v. Barbosa: “The right of guarantors…to demand exhaustion of the property of the principal debtor, exists only when a pledge or a mortgage has not been given as special security for the payment of the principal obligation.”
EFFECT OF GUARANTY EFFECTS OF GUARANTY BETWEEN THE GUARANTOR AND THE CREDITOR
(1) The guarantor has the right to benefit from excussion/ exhaustion [2058]
Luzon Steel Corp. v. Sia: “The surety in the present case bound itself "jointly and severally" (in solidum) with the defendant; and excussion (previous exhaustion of the property of the debtor) shall not take place "if he (the guarantor) has bound himself solidarily with the debtor".
The guarantor cannot be compelled to pay the creditor unless the latter has: (a) Exhausted all of the property of the debtor; and (b) Resorted to all the legal remedies against the debtor.
(b) In order that the guarantor may make use of the benefit of excussion, he must: (i) Set it up against the creditor upon the latter’s demand for payment from him; (ii) Point out to the creditor: (a) Available property of the debtor – the guarantor should facilitate the realization of the excussion since he is the most interested in its benefit. (b) Within the Philippine territory – excussion of property located abroad would be a lengthy and extremely difficult proceeding and would not conform with the purpose of the guaranty to provide the creditor with the means of obtaining the fulfillment of the obligation. (c) Sufficient to cover the amount of the debt (c) If he is a judicial bondsman and sub- surety (2084) (d) Where a pledge or mortgage has been given by him as a special security (e) If he fails to interpose it as a defense before judgment is rendered against him.
Exceptions to the benefit of excussion (2059) (a) As provided in Art. 2059: (i) If the guarantor has expressly renounced it. (ii) If he has bound himself solidarily with the debtor. Here, the liability assumed is that of a surety. The guarantor becomes primarily liable as a solidary co- debtor. In effect, he renounces in the contract itself the benefit of exhaustion. (iii) In case of insolvency of the debtor – guarantor guarantees the solvency of the debtor. If the debtor becomes insolvent, the liability of the guarantor arises as the debtor cannot fulfill his obligation (iv) When the debtor has absconded, or cannot be sued within the Philippines – the creditor is not required to go after a debtor who is hiding or cannot be sued in our courts, and to incur the delays and expenses incident thereto. Exception: When the debtor has left a manager or representative (v) If it may be presumed that an execution on the property of the principal debtor would not result in
(2) The creditor has the right to secure a judgment against the guarantor prior to the excussion General Rule: An ordinary personal guarantor (NOT a pledgor or mortgagor), may demand exhaustion of all the property of the debtor
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before he can be compelled to pay. Exception: The creditor may, prior thereto, secure a judgment against the guarantor, who shall be entitled, however, to a deferment of the execution of said judgment against him, until after the properties of the principal debtor shall have been exhausted, to satisfy the latter’s obligation.
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(8) Co-guarantors are entitled to the benefit of division [2065] The benefit of division applies only when there are several guarantors and one debtor for a single debt. Except when solidarity has been stipulated, a co-guarantor is liable only to the extent of his share in the obligation as divided among all the co-guarantors.
(3) The creditor has the duty to make prior demand for payment from the guarantor 2060) (a) The demand is to be made only after judgment on the debt (b) Joining the guarantor in the suit against the principal debtor is not the demand intended by law. Actual demand has to be made.
EFFECTS OF GUARANTY BETWEEN THE DEBTOR AND THE GUARANTOR
(1) The guarantor who pays has the right to be subrogated to the rights of the creditor [2067] A guarantor who pays the debt is entitled to every remedy which the creditor has against the principal debtor, to enforce every security and all means of payments; to stand in the place of the creditor not only through the medium of the contract, but even by means of the securities entered into w/out the knowledge of the surety; having the right to have those securities transferred to him though there was no stipulation for it, and to avail himself of all securities against the debtor
(4) The guarantor has the duty to set up the benefit of excussion [2060] As soon as he is required to pay, guarantor must also point out to the creditor available property (not in litigation or encumbered) of the debtor within the Philippines. (5) The creditor has the duty to resort to all legal remedies [2058, 2061] After the guarantor has fulfilled the conditions required for making use of the benefit of excussion, it becomes the duty of the creditor to: (a) Exhaust all the property of the debtor pointed out by the guarantor; (b) If he fails to do so, he shall suffer the loss for the insolvency of the debtor, but only to the extent of the value of the said property
The need to enforce the provisions on indemnity in Article 2066 forms the basis for the subrogation clause of Article 2067. The assumption, however, is that the guarantor who is subrogated to the rights of the creditor, has the right to be reimbursed for his answering for the obligation of the debtor. Absent this right of reimbursement, subrogation will not be proper.
(6) The creditor has the duty to notify the guarantor in the action against the debtor [2062] Notice to the guarantor is mandatory in the action against the principal debtor. The guarantor, however, is not duty bound to appear in the case, and his non- appearance shall not constitute default, w/ its consequential effects.
(2) The guarantor has the duty to notify the debtor before paying the creditor [2068]. Should payment be made without notification, and supposing the debtor has already made a prior payment, the debtor would be justified in setting up the defense that the obligation has already been extinguished by the time the guarantor made the payment. The guarantor will then lose the right of reimbursement and consequently the right of subrogation.
Rationale: To give the guarantor the opportunity to allege and substantiate whatever defenses he may have against the principal obligation, and chances to set up such defenses as are afforded him by law
(3) The guarantor cannot demand reimbursement for payment made by him before the obligation has become due [2069].
(7) A compromise shall not prejudice the person not party to it [2063] (a) A compromise between creditor and principal debtor benefits the guarantor but does not prejudice him. (b) A compromise between guarantor and the creditor benefits but does not prejudice the principal debtor.
General Rule: Since a contract of guaranty is only subsidiary, the guarantor cannot be liable for the obligation before the period on which the debtor’s Liability will accrue. Any payment made by the guarantor before the obligation is due cannot be indemnified by the debtor.
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Exception: Prior consent ratification by the debtor
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or
subsequent
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(b) By judicial demand (3) The paying guarantor seeks to be indemnified only to the extent of his proportionate share in the total obligation.
(4) The guarantor may proceed against the debtor even before payment has been made [2071] General Rule: Guarantor has no cause of action against the debtor until after the former has paid the obligation.
EXTINGUISHMENT OF GUARANTY (1) Once the obligation of the debtor is extinguished in any manner provided in the Civil Code, the obligation of the guarantor is also extinguished [2076]. However, there may be instances when, after the extinguishment of the guarantor’s obligation (as in the case of a release from the guaranty), the obligation of the debtor still subsists. (2) Although the guarantor generally has to make payment in money, any other thing of value, if accepted by the creditor, is valid payment and therefore releases the guarantor [dacion en pago] [2077]. (3) If one guarantor is released without the consent of the others, the release would benefit the coguarantors to the extent of the proportionate share of the guarantor released [2078]. (4) A guarantor is released if the creditor, without the guarantor’s consent, extends the time within which the debtor may perform his obligation [2079]. This is to protect the interest of the guarantor should the debtor be insolvent during the period of extension and deprive the guarantor of his right to reimbursement. (5) The guarantors are released if by some act of the creditor they cannot be subrogated to the rights, mortgages and preferences of the latter. [2080]
Exceptions (Art. 2071) (a) When he is sued for the payment; (b) In case of insolvency of the principal debtor; (c) When the debtor has bound himself to relieve him from the guaranty within a specified period, and this period has expired; (d) When the debt has become demandable, by reason of the expiration of the period for payment; (e) After the lapse of 10 years, when the principal obligation has no fixed period for its maturity, unless it be of such nature that it cannot be extinguished except within a period longer than 10 years; (f) If there are reasonable grounds to fear that the principal debtor intends to abscond; (g) If the principal debtor is in imminent danger of becoming insolvent. Rationale: To enable the guarantor to take measures for the protection of his interest in view of the probability that he would be called upon to pay the debt. As such, he may, in the alternative, obtain release from the guaranty; or demand security that shall protect him from any proceeding by the creditor, and against the insolvency of the debtor.
In order to constitute an extension discharging the surety, it should appear that the extension was for (1) a definite period, (2) pursuant to an enforceable agreement between the principal and the creditor, and (3) that it was made without the consent of the surety or with a reservation of rights with respect to him. (Filipinas Textile Mills v. CA, November 12, 2003)
EFFECTS OF GUARANTY AS BETWEEN CO-GUARANTORS
When there are two or more guarantors, one debtor and one debt: (a) The one who pays may demand from each of the others the share proportionally owing to him (b) If any of the guarantors is insolvent, his share shall be borne by the others, including the payer, in the same proportion [Art. 2073]
LEGAL AND JUDICIAL BONDS Bond – an undertaking that is sufficiently secured, and not cash or currency.
For purposes of proportionate reimbursement, the other guarantors may interpose such defenses against the paying guarantor as are available to the debtor against the creditor, except those that are personal to the debtor [Art. 2074]
Bondsman – a surety offered in virtue of a provision of law or a judicial order. QUALIFICATIONS OF PERSONAL BONDSMAN RELATION TO ART. 2056]
[2082 IN
(1) He possesses integrity; (2) He has capacity to bind himself; (3) He has sufficient property to answer for the obligation which he guarantees.
Requisites for the applicability of Art. 2073: (1) Payment has been made by one guarantor; (2) The payment was made because (a) Of the insolvency of the debtor, or
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PLEDGE OR MORTGAGE IN LIEU OF BOND [2083]
(6) Creditor has the right to retain the thing in his possession or in that of a third person to whom it has been delivered, until the debt is paid [2098]. (7) Special Laws apply to pawnshops and establishments engaged in making loans secured by pledges. Provisions of the Civil Code shall apply subsidiarily to them.
BONDSMAN NOT ENTITLED TO EXCUSSION [2084]
In case of doubt as to whether a transaction is a pledge or a dation in payment, the presumption is in favor of pledge, the latter being the lesser transmission of rights and interests. (Manila Banking Corp. v. Teodoro, 169 SCRA 95)
(a) Guaranty or suretyship is a personal security. (b) Pledge or mortgage is a property or real security. If the person required to give a legal or judicial bond should not be able to do so, a pledge or mortgage sufficient to cover the obligation shall be admitted in lieu thereof. A judicial bondsman and the sub-surety are not entitled to the benefit of excussion. (a) Reason: They are not mere guarantors, but sureties whose liability is primary and solidary. (b) Effect of negligence of creditor: Mere negligence on the part of the creditor in collecting from the debtor will not relieve the surety from liability.
KINDS (1) Voluntary or conventional – Created by agreement of parties. (2) Legal – Created by operation of law.
Pledge
ESSENTIAL REQUIREMENTS ESSENTIAL REQUISITES COMMON TO PLEDGE AND MORTGAGE [ART. 2085]
DEFINITION Pledge is a contract by virtue of which the debtor delivers to the creditor or to a third person a movable or document evidencing incorporeal rights for the purpose of securing the fulfillment of a principal obligation with the understanding that when the obligation is fulfilled, the thing delivered shall be returned with all its fruits and accessions. [Art.2085 in relation to 2093]
(1) Constituted to secure the fulfillment of a principal obligation. (2) Pledgor or mortgagor must be the absolute owner of the thing pledged or mortgaged. (3) The persons constituting the pledge or mortgage have the free disposal of their property, and in the absence thereof, that they be legally authorized for the purpose. (4) Cannot exist without a valid obligation. (5) Debtor retains the ownership of the thing given as a security. (6) When the principal obligation becomes due, the thing pledged or mortgaged may be alienated for the payment to the creditor. [Art. 2087]
PROVISIONS APPLICABLE ONLY TO PLEDGE (1) Transfer of possession to the creditor or to third person by common agreement is essential [2093]. (a) Actual delivery is important. (b) Constructive or symbolic delivery of the key to the warehouse is sufficient to show that the depositary appointed by common consent of the parties was legally placed in possession. (2) All movables within the commerce of man may be pledged as long as they are susceptible of possession [2094]. (3) Incorporeal rights may be pledged. The instruments representing the pledged rights shall be delivered to the creditor; if negotiable, they must be indorsed [2095]. (4) Pledge shall take effect against 3rd persons only if the following appear in a public instrument: (a) Description of the thing pledged. (b) Date of the pledge [2096]. (5) The thing pledged may be alienated by the pledgor or owner only with the consent of the pledgee. Ownership of the thing pledged is transmitted to the vendee or transferee as soon as the pledgee consents to the alienation, but the latter shall continue to have possession [2097].
OBLIGATION OF PLEDGEE (1) The pledgee cannot deposit the thing pledged with a 3rd person, unless there is a contrary stipulation [2100]. (2) Is responsible for the acts of his agents or employees with respect to the thing pledged [2100]. (3) Has no right to use the thing or to appropriate its fruits without authority from the owner [2104] (4) May cause the public sale of the thing pledged if, without fault on his part, there is danger of destruction, impairment or dimunition in value of the thing. The proceeds of the auction shall be a security for the principal obligation [2108]. RIGHTS OF PLEDGOR (1) Takes responsibility for the flaws of the thing pledged [2101 in relation to Art. 1951]. (2) Cannot ask for the return of the thing against the will of the creditor, unless and until he has paid
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the debt and its interest, with expenses in a proper case [2105].
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EFFECT OF THE SALE OF THE THING PLEDGED [Art 2115]
(1) Extinguishes the principal obligation, whether the proceeds of the sale is more or less than the amount due. (2) If the price of sale is more than amount due, the debtor is not entitled to the excess unless the contrary is provided. (3) If the price of sale is less, the creditor is not entitled to recover the deficiency. A contrary stipulation is void.
Yuliongsiu vs. PNB: There is authority supporting the proposition that the pledgee can temporarily entrust the physical possession of the chattels pledged to the pledgor without invalidating the pledge. In such a case, the pledgor is regarded as holding the pledged property merely as trustee for the pledgee. The type of delivery will depend upon the nature and the peculiar circumstances of each case.
PLEDGE BY OPERATION OF LAW – ART. 2121-
2122
PNB vs. Atendido: according to law, a pledgee cannot become the owner of, nor appropriate to himself, the thing given in pledge. If by the contract of pledge the pledgor continues to be the owner of the thing pledged during the pendency of the obligation, it stands to reason that in case of loss of the property, the loss should be borne by the pledgor.
LEGAL PLEDGES/PLEDGE BY OPERATION OF LAW
[Art. 2121] (1) Necessary expenses shall be refunded to every possessor, but only a possessor in good faith may retain the thing until he has been reimbursed. (a) Useful expenses shall be refunded only to the possessor in good faith with the same right of retention, the person who has defeated him in the possession having the option of refunding the amount of the expenses or of paying the increase in value which the thing may have acquired and by reason thereof [Art. 546] (2) He who has executed work upon a movable has a right to retain it by way of pledge until he is paid. This is called the mechanic’s lien. [Art. 1731] (3) The agent may retain the things which are the objects of agency until the principal effects the reimbursement and pays the indemnity. This is called the agent’s lien. [Art. 1914] (4) The laborer’s wages shall be a lien on the goods manufactured or the work done. [Art. 1707]
(3) Subject to the right of the pledgee under article 2108, pledgor is allowed to substitute the thing which is in danger of destruction or impairment without any fault on the part of the pledgee with another thing of the same kind and quality [2107]. (4) May require that the thing be deposited with a 3rd person, if through the negligence or willful act of the pledgee the thing is in danger of being lost or impaired [2106]. PERFECTION – ARTS. 2093, 2096 REQUISITES FOR PERFECTION
(1) The thing pledged is placed in the possession of the creditor or a third person [2093] (2) For the pledge to take effect as against third persons, a description of the thing pledged and the date of the pledge should appear in a public instrument [2096]
Note: (1) In legal pledges, the remainder of the price of the sale shall be delivered to the obligor. (2) Public auction of legal pledges may only be executed after demand of the amount for which the thing is retained. It shall take place within one month after the demand, otherwise the pledgor may demand the return of the thing pledged, provided s/he is able to show that the creditor did not cause the public sale without justifiable grounds. [Article 2122]
FORECLOSURE ARTS. 2112, 2115 REQUIREMENTS IN SALE OF THE THING PLEDGED BY A CREDITOR, IF CREDIT IS NOT PAID ON TIME (ART 2112)
(1) Debt is due and unpaid. (2) Sale must be at a public auction. (3) Notice to the pledgor and owner, stating the amount due. (4) Sale must be made with the intervention of a notary public. (5) If at the first auction the thing is not sold, a second one with the same formalities shall be held. (6) If at the second auction, there is no sale either, the creditor may appropriate the thing pledged but he shall give an acquittance (release) for his entire claim.
DISTINGUISHED FROM CHATTEL MORTGAGE – ARTS. 2140, 1484 Chattel Mortgager
Pledge
Delivery of Personal Property Not required
Delivery is required for the validity of the pledge
Registration in the Chattel Mortgage Register
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Chattel Mortgager
property, but ownership of the property is not parted with. It merely restricts the mortgagor’s jus disponendi over the property. The mortgagor may still sell the property, and any stipulation to the contrary is void [Art. 2130] (4) Mortgage extends to the natural accessions, to the improvements of growing fruits and the rents or income NOT YET RECEIVED when the obligation becomes DUE, including indemnity from insurance, and/or amount received from expropriation for public use [Art. 2127] (a) Applies only when the accessions and accessories subsequently introduced belongs to the mortgagor. (b) To exclude them, there must be an express stipulation, or the fruits must be collected before the obligation becomes due. (c) Third persons who introduce improvements upon the mortgaged property may remove them at any time
Pledge
Necessary for validity of Not necessary; the CM against third Public document is persons enough to bind third persons Right to Excess of Proceeds of Sale The excess goes to the The excess goes to the debtor/ mortgagor pledgee/creditor, unless otherwise stipulated Right to Recover Deficiency Creditor/ mortgagee can recover from the debtor/ mortgagor, except if covered by Recto Law
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Creditor/ mortgagee is not entitled to recover any deficiency after the property is sold, notwithstanding contrary stipulation
Note: The provisions of the Civil Code on pledge, insofar as they are not in conflict with the Chattel Mortgage Law shall be applicable to chattel mortgages [Art. 2141]
The consideration of the accessory contract of real estate mortgage is the same as that of the principal contract. [Central Bank v. CA, 139 SCRA 46] KINDS
Real Mortgage
(1) Voluntary – constituted by the will of the owner of the property on which it is created
DEFINITION AND CHARACTERISTICS Mortgage is a contract whereby the debtor secures to the creditor the fulfillment of a principal obligation, immediately making immovable property or real rights answerable to the principal obligation in case it is not complied with at the time stipulated.
(2) Legal – required by law to be executed in favor of certain persons: (a) Persons in whose favor the law establishes a mortgage have no other right than to demand the execution and recording of the document in which the mortgage is formalized [Article 2125] (b) The bondsman who is to be offered in virtue of a provision of law or of a judicial order shall have the qualifications prescribed in Art 2056 (integrity, capacity to bind himself, and sufficient property to answer for the obligation), and in other laws [Article 2082] (c) If the person bound to give a bond should not be able to do so, a pledge or mortgage considered sufficient to recover his obligation shall be admitted in lieu thereof [Article 2083]
OBJECTS OF REAL MORTGAGE [Art. 2124]
(1) Immovables (2) Alienable real rights over immovables. (a) Future property cannot be an object of mortgage; however, a stipulation subjecting to the mortgage improvements which the mortgagor may subsequently acquire, install or use in connection with real property already mortgaged belonging to the mortgagor is valid. CHARACTERISTICS
(3) Equitable – One which, although lacking the proper formalities of a mortgage, shows the intention of the parties to make the property a security for the debt. (a) lien created through equitable mortgage ought not to be defeated by requiring compliance with formalities necessary to the validity of a voluntary real estate mortgage. Ex.: Pacto de retro (b) provisions governing equitable mortgage:
(1) As a general rule, the mortgagor retains possession of the property. He may deliver said property to the mortgagee without altering the nature of the contract of mortgage. (2) It is not an essential requisite that the principal of the credit bears interest, or that the interest as compensation for the use of the principal and the enjoyment of its fruits be in the form of a certain percentage thereof. (3) Mortgage creates an encumbrance over the
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Arts. 1365, 1450, 1454, 1602, 1603, 1604 and 1607.
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(4) Cannot exist without a valid obligation. (5) Debtor retains the ownership of the thing given
as a security.
(6) When the principal obligation becomes due, the PRINCIPLE OF INDIVISIBILITY OF PLEDGE/MORTGAGE [ART. 2089 TO 2090]
thing pledged or mortgaged may be alienated for the payment to the creditor. [Art. 2087] (7) Must be recorded in the Registry of Property in order to be validly constituted. Note: The mortgage would still be binding between the parties even if the instrument is not recorded.
(a) Dayrit v. CA: A mortgage directly and immediately subjects the property upon which it is imposed. It is indivisible even though the debt may be divided, and such indivisibility is likewise unaffected by the fact that the debtors are not solidarity liable. (b) Central Bank v. CA: Where only a portion of the loan is released, the mortgage becomes enforceable only as to the proportionate value of the loan
FORECLOSURE FORECLOSURE OF MORTGAGE
It is the remedy available to the mortgagee by which he subjects the mortgaged property to the satisfaction of the obligation secured by the mortgage. (a) In General: An action for foreclosure of a mortgage is limited to the amount mentioned in the mortgage, EXCEPT when the mortgage contract intends to secure future loans or advancements (b) BLANKET mortgage/DRAGNET– mortgage that subsumes all debts of past or future origin (c) Mortgage may be used as a “continuing security” which secures future advancements and is not discharged by the repayment of the amount in the mortgage (d) Alienation or assignment of mortgage credit is valid even if it is not registered
Indivisibility applies only as to pledgors/mortgagors who are themselves debtors in the principal obligation, and not to accommodation pledgors/ mortgagors "When several things are pledged or mortgaged, each thing for a determinate portion of the debt, the pledges or mortgage, are considered separate from each other. But when the several things are given to secure the same debt in its entirety, all of them are liable for the debt, and the creditor does not have to divide his action by distributing the debt among the various things pledged or mortgaged. Even when only a part of the debt remains unpaid, all the things are still liable for such balance." [Tolentino]
Acceleration Clause, or the stipulation stating that on the occasion of the mortgagor’s default, the whole sum remaining unpaid automatically becomes due and demandable, is ALLOWED
The question is whether or not the written instrument in controversy was a mortgage OR a conditional sale. The correct test, where it can be applied, is the continued existence of a debt or liability between the parties. If such exists, the conveyance may be held to be merely a security for the debt or an indemnity against the liability. (Reyes v. Sierra, 93 SCRA 473)
KINDS OF FORECLOSURE
(1) Judicial Foreclosure (2) Extrajudicial Foreclosure JUDICIAL FORECLOSURE
Rule 68, ROC: (a) May be availed of by bringing an action in the proper court which has jurisdiction over the area wherein the real or personal (in case of chattel mortgage) property involved or a portion thereof is situated. (b) If the court finds the complaint to be wellfounded, it shall order the mortgagor to pay the amount due with interest and other charges within a period of not less than 90 days nor more than 120 days from the entry of judgment. If the mortgagor fails to pay at the time directed, the court, upon motion, shall order the property to be sold to the highest bidder at a public auction. (c) Upon confirmation of the sale by the court, it
ESSENTIAL REQUISITES ESSENTIAL REQUISITES COMMON TO PLEDGE AND MORTGAGE
(1) Constituted to secure the fulfillment of a principal
obligation. (2) Pledgor or mortgagor must be the absolute
owner of the thing pledged or mortgaged.
(3) The persons constituting the pledge or mortgage
have the free disposal of their property, and in the absence thereof, that they be legally authorized for the purpose. Note: Third persons who are not parties to the principal obligation may secure the latter by pledging or mortgaging their own property. [Art. 2085]
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shall operate to divest the rights of all parties to the action and to vest their rights to the purchaser subject to such rights of redemption as may be allowed by law. (d) Before the confirmation, the court retains control of the proceedings (e) Execution of judgment subject to APPEAL but not annulment (f) The foreclosure of the property is completed only when the sheriff’s certificate is executed, acknowledged and recorded
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to the buyer, which is similar to the equity of redemption. The TCT must be registered within THREE MONTHS after the foreclosure. (b) The mortgagor can only legally transfer the right to redeem and the use of the property during the period of redemption. (7) Remedy of party aggrieved by foreclosure is a petition to set aside sale and the cancellation of writ of possession. However, if the mortgagee is a bank, the mortgagor is required to post a bond equal to the value of the mortgagee’s claim. (8) Republication of the notice of sale is necessary for the validity of the postponed extrajudicial sale (9) In foreclosure of real estate mortgage under Act 3135, the buyer at auction may petition the land registration court for a writ of possession pending the one-year period of redemption of the foreclosed property.
The Proceeds of the Sale shall be applied to the Payment of the: (a) Costs of the sale; (b) Amount due the mortgagee; (c) Claims of junior encumbrancers or persons holding subsequent mortgages in the order of their priority; and (d) Balance, if any shall be paid to the mortgagor.
Nature of Power of Foreclosure by Extrajudicial Sale (1) Conferred for mortgagee’s protection. (2) An ancillary stipulation. (3) A prerogative of the mortgagee.
Nature of Judicial Foreclosure Proceedings (1) Quasi in rem action. Hence, jurisdiction may be acquired through publication. (2) Foreclosure is only the result or incident of the failure to pay debt. (3) Survives death of mortgagor.
Note: (a) Both should be distinguished from execution sale governed by Rule 39, ROC. (b) Foreclosure retroacts to the date of registration of mortgage. (c) A stipulation of upset price, or the minimum price at which the property shall be sold to become operative in the event of a foreclosure sale at public auction, is null and void.
EXTRAJUDICIAL FORECLOSURE [ACT NO. 3135]
(1) Applies to mortgages where the authority to foreclose is granted to the mortgagee. (2) Authority is not extinguished by death of mortgagor or mortgagee. This is an agency coupled with interest. (3) Public sale should be made after proper notice to the public, otherwise it is a jurisdictional defect which could render the sale voidable. (4) There is no need to notify the mortgagor, where there is no contractual stipulation therefor.
Right of mortgagee to recover deficiency (1) Mortgagee is entitled to recover deficiency. (2) If the deficiency is embodied in a judgment, it is referred to as deficiency judgment. (3) Action for recovery of deficiency may be filed even during redemption period. (4) Action to recover prescribes after 10 years from the time the right of action accrues.
Proper notice consists of: (a) posting notice in three public places and/or (b) publication in newspaper of general circulation
Effect of inadequacy of price in foreclosure sale (1) Where there is right to redeem, inadequacy of price is immaterial because the judgment debtor may redeem the property. (a) Exception: Where the price is so inadequate as to shock the conscience of the court, taking into consideration the peculiar circumstances. (2) Property may be sold for less than its fair market value, upon the theory that the lesser the price the easier it is for the owner to redeem. (3) The value of the mortgaged property has no bearing on the bid price at the public auction, provided that the public auction was regularly and honestly conducted.
Purpose of notice is to obtain the best bid for the foreclosed property (5) Surplus proceeds of foreclosure sale belong to the mortgagor. (6) Debtor (who must be a NATURAL PERSON) has the right to redeem the property sold within 1 year from and after the date of sale. (a) If the mortgagee is a bank and the debtor is a juridical person, then there is no right of redemption. However, it may redeem the property BEFORE the registration of the TCT
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Antichresis
A suit for the recovery of the deficiency after the foreclosure of a mortgage is in the nature of a mortgage action because its purpose is precisely to enforce the mortgage contract. [Caltex v. IAC, 176 SCRA 741]
DEFINITION AND CHARACTERISTICS Antichresis is a contract whereby the creditor acquires the right to receive the fruits of an immovable of the debtor, with the obligation to apply then to the payment of the interest, if owing, and thereafter to the principal of the credit [Art 2132]
Waiver of security by creditor (1) Mortgagee may waive the right to foreclose his mortgage and maintain a personal action for recovery of the indebtedness. (2) Mortgagee cannot have both remedies. This is because he only has one cause of action, the nonpayment of the mortgage debt.
CHARACTERISTICS
(1) Accessory contract – it secures the performance of a principal obligation (2) Formal contract – it must be in a specified form to be valid [Art. 2134]
Redemption (1) It is a transaction by which the mortgagor reacquires the property which may have passed under the mortgage or divests the property of the lien which the mortgage may have created (2) Kinds: (a) Equity of redemption: in judicial foreclosure of real estate mortgage under the ROC, it is the right of the mortgagor to redeem the mortgaged property by paying the secured debt within the 120 day period from entry of judgment or after the foreclosure sale, but before the sale of the mortgaged property or confirmation of sale (i) formal offer to redeem preserves the right of redemption, e.g., by filing an action to enforce the right to redeem (b) Right of redemption: in extrajudicial foreclosure of real estate mortgage, the right of the mortgagor to redeem the property within a certain period after it was sold for the satisfaction of the debt. (ii) For natural persons – one year from the registration of the TCT (iii) For juridical persons – three months from the foreclosure (iv) Formal offer to redeem must be with tender of redemption price to preserve right of redemption
SPECIAL REQUISITES:
(1) It can cover only the fruits of an immovable property (2) Delivery of the immovable is necessary for the creditor to receive the fruits, not to make the contract binding (3) Amount of principal and interest must be specified in writing [Art. 2134] (4) Express agreement that debtor will give possession of the property to creditor and that the latter will apply the fruits to the interest, if any, then to the principal of his credit NOTE: The obligation to pay interest is not the essence of the contract of antichresis; there being nothing in the Code to show that antichresis is only applicable to securing the payment of interestbearing loans. On the contrary, antichresis is susceptible of guaranteeing all kinds of obligations, pure or conditional OBLIGATIONS OF ANTICHRETIC CREDITOR (1) To pay taxes and charges on the estate, including necessary expenses [Art. 2135]. Creditor may avoid said obligation by: (a) compelling the debtor to reacquire enjoyment of the property (b) by stipulation to the contrary (2) To apply all the fruits, after receiving them, to the payment of interest, if owing, and thereafter to the principal (3) To render an account of the fruits to the debtor (4) To bear the expenses necessary for its preservation and repair
Note: There is no right of redemption in pledge and chattel mortgage. Medida v. CA: The rule up to now is that the right of a purchaser at a foreclosure sale is merely inchoate until after the period of redemption has expired without the right being exercised. The title to land sold under mortgage foreclosure remains, in the mortgagor or his grantee until the expiration of the redemption period and conveyance by the master's deed
REMEDIES OF CREDITOR IN CASE OF NON-PAYMENT OF DEBT
(1) Action for specific performance (2) Petition for the sale of the real property as in a foreclosure of mortgage under Rule 68 of the
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Rules of Court [Art. 2137] (a) The parties, however, may agree on an extrajudicial foreclosure in the same manner as they are allowed in contracts of mortgage and pledge [Tavera v. El Hogar Filipino, Inc. 68 Phil 712] (b) A stipulation authorizing the antichretic creditor to appropriate the property upon the non-payment of the debt within the agreed period is void [Art. 2088]
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REGISTRATION OF ASSIGNMENT OF MORTGAGE NOT REQUIRED
(a) A chattel mortgage may be alienated or assigned to a third person (b) The debtor is protected if he pays his creditor without actual knowledge that the debt has been assigned (c) Affidavit of good faith is required. AFFIDAVIT OF GOOD FAITH is an oath in a contract of chattel mortgage wherein the parties “severally swear that the mortgage is made for the purpose of securing the obligation specified in the conditions thereof and for no other purposes and that the same is a just and valid obligation and one not entered into for the purpose of fraud.”
Chattel Mortgage DEFINITION AND CHARACTERISTICS Chattel Mortgage is a conditional sale of personal property as security for the payment of a debt, or the performance of some other obligation specified therein, the condition being that the sale shall be void upon the seller paying to the purchaser a sum of money or doing some other act named. If the condition is performed according to its terms, the mortgage and sale immediately become void, and the mortgagee is thereby divested of his title. [Section 3, Act 1508]
Effect of Absence: Mortgage is vitiated only as against third persons without notice. VENUE OF REGISTRATION
(a) If he resides in the Philippines, in the office of the register of deeds of the province in which the mortgagor resides at the time of the making of the chattel mortgage (b) If he does not reside in the Philippines, in the province in which the property is situated (c) If the property is situated in a province different from that in which the mortgagor resides, the mortgage shall be recorded in both provinces. [Sec. 4, Act 1508]
CHARACTERISTICS
(1) It is an accessory contract because it secures performance of a principal obligation (2) It is a formal contract because it requires registration in the Chattel Mortgage Register for its validity (but only as against third persons) (3) It is a unilateral contract because it produces only obligations on the part of the creditor to free the thing from the encumbrance on fulfillment of the obligation. (4) The excess of the proceeds of the sale goes to the debtor/mortgagor (5) Creditor/mortgagee can recover deficiency from the debtor/mortgagor, except if covered by the Recto Law
When a corporation is a party to a chattel mortgage, the affidavit may be made and subscribed by a director, trustee, cashier, treasurer, or manager thereof, or by a person authorized to make or receive such mortgage. When a partnership is a party, the affidavit may be made and subscribed by one member thereof. VALIDITY OF CHATTEL MORTGAGE Chattel mortgage shall not be valid against any person except the mortgagor, his executors or administrators unless: (1) The possession of the property is delivered to and retained by the mortgagee or (2) The mortgage is recorded. (Sec. 4, Act 1508)
REGISTRATION PERIOD WITHIN WHICH REGISTRATION SHOULD BE MADE
The law is substantially and sufficiently complied with where the registration is made by the mortgagee before the mortgagor has complied with his principal obligation and no right of innocent third persons is prejudiced.
FORMAL REQUISITES (a) It should substantially comply with the form prescribed by law (b) It should be signed by the person/s executing the same in the presence of two witnesses who shall sign the mortgage as witnesses to the execution thereof and
EFFECT OF REGISTRATION
(1) Creates real rights (2) Adds nothing to mortgage
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(c) Each mortgagor and mortgagee or, in the absence of the mortgagee, his agent or attorney, shall make and subscribe an affidavit in the form prescribed by law, which affidavit, signed by the parties to the mortgage and the two witnesses and the certificate of the oath signed by the person authorized to administer an oath shall be appended to such mortgage and recorded therewith. [Sec. 5, Act 1508]
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does not within ten days after being requested thereto by any person entitled to redeem, discharge the mortgage in the manner provided by law, the person entitled to redeem may recover of the person whose duty it is to discharge the same, twenty pesos for his neglect and all damages occasioned thereby in an action in any court having jurisdiction of the subject-matter thereof. [Sec. 8] When the condition of the chattel mortgage is broken, a mortgagor or person holding a subsequent mortgage, or a subsequent attaching creditor may redeem the same by paying or delivering to the mortgagee the amount due on such mortgage and the reasonable costs and expenses incurred by such breach of condition before the sale thereof. An attaching creditor who so redeems shall be subrogated to the rights of the mortgagee and entitled to foreclose the mortgage in the same manner that the mortgagee could foreclose it Foreclosure The mortgagee, his executor, administrator or assign may cause the mortgaged property or any part thereof to be sold at a public auction by a public officer: (1) After 30 days from the time of condition broken (2) At a public place in the municipality where the mortgagor resides, or where the property is situated (3) Provided at least 10 day-notice of the time, place, and purpose of such sale has been posted at 2 or more public places in such municipality, and (4) The mortgagee, his executor, administrator, or assign shall notify the mortgagor or person holding under him and the persons holding subsequent mortgages of the time and place of sale at least 10 days previous to the sale: (a) either by notice in writing directed to him or left at his abode, if within the municipality, or (b) sent by mail if he does not reside in such municipality
DESCRIPTION OF PROPERTY
The mortgaged property should be described such as to enable the parties to the mortgage, or any other person, after reasonable inquiry and investigation, to identify the same. Large cattle as chattel mortgage The description in the mortgage shall contain the brands, class, sex, age, knots of radiated hair commonly known as remolinos or cowlicks, and other marks of ownership as described and set forth in the certificate of ownership of said animal/s, together with the number and place of issue of such certificates of ownership. Growing crops as chattel mortgage The mortgage may contain an agreement stipulating that the mortgagor binds himself properly to tend, care for and protect the crop while growing, and faithfully and without delay to harvest the same, and that in default of the performance of such duties, the mortgagee may enter upon the premises, take all the necessary measures for the protection of said crop, and retain possession thereof and sell the same, and from the proceeds of such sale pay all expenses incurred in caring for, harvesting, and selling the crop and the amount of the indebtedness or obligation secured by the mortgage, and the surplus, if any, shall be paid to the mortgagor or those entitled to the same. PROPERTY COVERED BY CM
It is deemed to cover only the property described therein and not like or substituted property thereafter acquired by the mortgagor and placed in the same depository as the property originally mortgaged, anything in the mortgage to the contrary notwithstanding. [Sec. 8, Act 1508]
DISPOSITION OF PROCEEDS The proceeds of the sale shall be applied to the payment: (1) first, to the costs and expenses of mortgage (2) the residue shall be paid to persons holding subsequent mortgages in their order (3) the balance, after paying the mortgages, shall be paid to the mortgagor or person holding under him on demand
Breaches Failure of mortgagee to discharge the mortgage If the mortgagee, assign, administrator, executor, or either of them, (1) after performance of the condition before or after the breach thereof, or (2) after tender of the performance of the condition, at or after the time fixed for the performance,
Quasi-Contracts A quasi-contract is that juridical relation resulting
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from a lawful, voluntary and unilateral act, and which has for its purpose the payment of indemnity to the end that no one shall be unjustly enriched or benefited at the expense of another [Art. 2142]
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(5) Be personally liable for contracts which he entered into with third persons, even though he acted in the name of the owner, and there shall be no right of action between the owner and third persons.
NEGOTIORUM GESTIO
(UNAUTHORIZED MANAGEMENT) This takes place when a person voluntarily takes charge of another’s abandoned business or property without the owner’s authority [Art. 2144]. Reimbursement must be made to the gestor (i.e. one who carried out the business) for necessary and useful expenses, as a rule.
The gestor shall not be personally liable for such contracts, provided: (a) The owner has expressly or tacitly ratified the management, or (b) When the contract refers to things pertaining to the owner of the business. [Art. 2152] Note: The responsibility of two or more gestors shall be solidary, unless the management was assumed to save the thing or business from imminent danger.
THE OBLIGATION DOES NOT ARISE:
(1) When the property or business is not neglected or abandoned; (2) If in fact the manager has been tacitly authorized by the owner.
OBLIGATIONS OF THE OWNER OF THE PROPERTY OR BUSINESS
In the first case, the provisions of Articles 1317, 1403, No. 1, and 1404 regarding unauthorized contracts shall govern.
Although the management was not expressly ratified, the owner who enjoys the advantages of the same shall: (a) Be liable for the obligations incurred in his interest (b) Reimburse the gestor for the necessary and useful expenses and for the damages the latter may have suffered in the performance of his duties
In the second case, the rules on agency in Title X of this Book shall be applicable. [Art. 2144] OBLIGATIONS OF A GESTOR
(1) Perform his duties with all the diligence of a good father of a family (2) Pay the damages which through his fault and negligence may be suffered by the owner of the property/business under his management [Art. 2145] (3) Be liable for the acts of the persons to whom he delegated all or some of his duties. This is without prejudice to the direct obligation of the delegate to the owner of the business. [Art. 2146] (4) Be liable for any fortuitous event under the following conditions: (a) If he undertakes risky operations which the owner was not accustomed to embark upon (b) If he has preferred his own interest to that of the owner (c) If he fails to return the property or business after demand of the owner (d) If he assumed management in bad faith [Art. 2147] (e) If he is manifestly unfit to carry on the management (f) If by his intervention he prevented a more competent person from taking up the management. [Art. 2148]
The above obligations shall be incumbent upon the owner if the management had for its purpose the prevention of an imminent and manifest loss, although no benefit may have been derived. [Art. 2150] If the owner did not derive any benefit and there was no imminent and manifest danger to the property or business, the owner would still be liable for the abovementioned obligations and expenses, provided: (a) The gestor has acted in good faith; AND (b) The property or business is intact, ready to be returned to the owner. [Art. 2151] EFFECT OF RATIFICATION
The ratification of the management by the owner of the business produces the effects of an express agency, even if the business may not have been successful. [Art. 2149] EXTINGUISHMENT OF MANAGEMENT
(1) When the owner repudiates or puts an end thereto (2) When the gestor withdraws from the management, subject to [Art. 2144]
Note: The gestor shall not be liable for “e” and “f” if the management was assumed to save the property or business from imminent danger.
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(3) By the death, civil interdiction, insanity or insolvency of the owner or the gestor. [Art. 2153]
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(2) For the return of the price or assign the action to collect the sum if he has alienated the same. [Art. 2160]
SOLUTIO INDEBITI (UNDUE PAYMENT)
This takes place when something is received when there is no right to demand it, and it was unduly delivered through mistake. The recipient has the duty to return it [Art. 2154].
EXEMPTION FROM THE OBLIGATION TO RESTORE THE PAYMENT UNDULY MADE
A person who, believing in good faith that the payment was being made of a legitimate and subsisting claim, (1) destroyed the document, or (2) allowed the action to prescribe, or (3) gave up the pledges, or (4) cancelled the guaranties for his right shall be exempt from the obligation to restore.
This situation covers payment by reason of a mistake in the construction or application of a doubtful or difficult question of law [Art. 2155] WHEN DEBT NOT YET DUE
If the payer was in doubt whether the debt was due, he may recover if he proves that it was not due. [Art. 2156]
The person who paid unduly may proceed only against the true debtor or the guarantors with regard to whom the action is still effective. [Art. 2162]
RESPONSIBILITY OF TWO OR MORE PAYEES
When there has been payment of what is not due, their responsibility is solidary.
PRESUMPTION OF PAYMENT BY MISTAKE, DEFENSE
The presumption arises if something which had never been due or had already been paid was delivered; but he from whom the return is claimed may prove that the delivery was made out of liberality or for any other just cause.
WHEN MONEY OR THING DELIVERED IS OWNED BY THIRD PERSON
The payee cannot demand that the payor prove his ownership of the thing delivered. Nevertheless, should he discover that the thing has been stolen and who its true owner is, he must advise the latter.
OTHER QUASI-CONTRACTS (1) When, without the knowledge of the person obliged to give support, it is given by a stranger, the latter shall have a right to claim the same from the former, unless it appears that he gave it out of piety and without intention of being repaid. [Art. 2164] (2) When funeral expenses are borne by a third person, without the knowledge of those relatives who were obliged to give support to the deceased, said relatives shall reimburse the third person, should the latter claim reimbursement. [Art. 2165] (3) When the person obliged to support an orphan, or an insane or other indigent person unjustly refuses to give support to the latter, any third person may furnish support to the needy individual, with right of reimbursement from the person obliged to give support. The provisions of this article apply when the father or mother of a child under eighteen years of age unjustly refuses to support him. [Art. 2166] (4) When through an accident or other cause a person is injured or becomes seriously ill, and he is treated or helped while he is not in a condition to give consent to a contract, he shall be liable to pay for the services of the physician or other person aiding him, unless the service has been rendered out of pure generosity. [Art. 2167] (5) When during a fire, flood, storm, or other calamity, property is saved from destruction by
If the owner, in spite of such information, does not claim it within the period of one month, the payee shall be relieved of all responsibility by returning the thing deposited to the payor. If the payee has reasonable grounds to believe that the thing has not been lawfully acquired by the payor, the former may return the same. [Art. 2158] LIABILITY OF PAYEE
If in bad faith, he shall be liable: (1) For legal interest if a sum of money is involved, or (2) For the fruits received or which should have been received if the thing produces fruits AND (3) For any loss or impairment of the thing for any cause, and (4) For damages to the person who delivered the thing, until it is recovered. [Art. 2159] If in good faith, he shall be liable: (1) For the impairment or loss of the thing certain and determinable or its accessories and accessions insofar as he has thereby been benefited.
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another person without the knowledge of the owner, the latter is bound to pay the former just compensation. [Art. 2168] (6) When the government, upon the failure of any person to comply with health or safety regulations concerning property, undertakes to do the necessary work, even over his objection, he shall be liable to pay the expenses. [Art. 2169] (7) When by accident or other fortuitous event, movables separately pertaining to two or more persons are commingled or confused, the rules on co-ownership shall be applicable. [Art. 2170] (8) The rights and obligations of the finder of lost personal property shall be governed by Articles 719 and 720. [Art. 2171] (9) The right of every possessor in good faith to reimbursement for necessary and useful expenses is governed by Article 546. [Art. 2172] (10) When a third person, without the knowledge of the debtor, pays the debt, the rights of the former are governed by Articles 1236 and 1237. [Art. 2173] (11) When in a small community a nationality of the inhabitants of age decide upon a measure for protection against lawlessness, fire, flood, storm or other calamity, any one who objects to the plan and refuses to contribute to the expenses but is benefited by the project as executed shall be liable to pay his share of said expenses. [Art. 2174] (12) Any person who is constrained to pay the taxes of another shall be entitled to reimbursement from the latter. [Art. 2175]
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(2) Claims arising from misappropriation, breach of trust, or malfeasance by public officials committed in the performance of their duties, on the movables, money or securities obtained by them; (3) Claims for the unpaid price of movables sold, on said movables, so long as they are in the possession of the debtor, up to the value of the same; and if the movable has been resold by the debtor and the price is still unpaid, the lien may be enforced on the price; this right is not lost by the immobilization of the thing by destination, provided it has not lost its form, substance and identity; neither is the right lost by the sale of the thing together with other property for a lump sum, when the price thereof can be determined proportionally; (4) Credits guaranteed with a pledge so long as the things pledged are in the hands of the creditor, or those guaranteed by a chattel mortgage, upon the things pledged or mortgaged, up to the value thereof; (5) Credits for the making, repair, safekeeping or preservation of personal property, on the movable thus made, repaired, kept or possessed; (6) Claims for laborers' wages, on the goods manufactured or the work done; (7) For expenses of salvage, upon the goods salvaged;
Concurrence and Preference of Credits
(8) Credits between the landlord and the tenant, arising from the contract of tenancy on shares, on the share of each in the fruits or harvest;
MEANING OF CONCURRENCE AND PREFERENCE Concurrence of Credit implies possession by two or more creditors of equal right or privileges over the same property or all of the property of a debtor.
(9) Credits for transportation, upon the goods carried, for the price of the contract and incidental expenses, until their delivery and for thirty days thereafter;
Preference of Credit is the right held by a creditor to be preferred in the payment of his claim above others out of the debtor’s assets.
(10) Credits for lodging and supplies usually furnished to travelers by hotel keepers, on the movables belonging to the guest as long as such movables are in the hotel, but not for money loaned to the guests;
PREFERRED CREDITS ON SPECIFIC MOVABLES [ART. 2241] With reference to specific movable property of the debtor, the following claims or liens shall be preferred:
(11) Credits for seeds and expenses for cultivation and harvest advanced to the debtor, upon the fruits harvested;
(1) Duties, taxes and fees due thereon to the State or any subdivision thereof;
(12) Credits for rent for one year, upon the personal property of the lessee existing on the immovable
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leased and on the fruits of the same, but not on money or instruments of credit;
(9) Claims of donors or real property for pecuniary charges or other conditions imposed upon the donee, upon the immovable donated;
(13) Claims in favor of the depositor if the depositary has wrongfully sold the thing deposited, upon the price of the sale.
(10) Credits of insurers, upon the property insured, for the insurance premium for two years.
In the foregoing cases, if the movables to which the lien or preference attaches have been wrongfully taken, the creditor may demand them from any possessor, within thirty days from the unlawful seizure. PREFERRED CREDITS ON SPECIFIC IMMOVABLES AND REAL RIGHTS [ART. 2242] With reference to specific immovable property and real rights of the debtor, the following claims, mortgages and liens shall be preferred, and shall constitute an encumbrance on the immovable or real right:
PREFERRED CREDITS ON OTHER PROPERTY, REAL AND PERSONAL [ART. 2244] With reference to other property, real and personal, of the debtor, the following claims or credits shall be preferred in the order named: i.
Proper funeral expenses for the debtor, or children under his or her parental authority who have no property of their own, when approved by the court;
ii.
Credits for services rendered the insolvent by employees, laborers, or household helpers for one year preceding the commencement of the proceedings in insolvency;
iii.
Expenses during the last illness of the debtor or of his or her spouse and children under his or her parental authority, if they have no property of their own;
iv.
Compensation due the laborers or their dependents under laws providing for indemnity for damages in cases of labor accident, or illness resulting from the nature of the employment;
v.
Credits and advancements made to the debtor for support of himself or herself, and family, during the last year preceding the insolvency;
vi.
Support during the insolvency proceedings, and for three months thereafter;
vii.
Fines and civil indemnification arising from a criminal offense;
viii.
Legal expenses, and expenses incurred in the administration of the insolvent's estate for the common interest of the creditors, when properly authorized and approved by the court;
ix.
Taxes and assessments due the national government, other than those mentioned in Articles 2241, No. 1, and 2242, No. 1;
x.
Taxes and assessments due any province, other than those referred to in Articles 2241, No. 1, and 2242, No. 1;
(1) Taxes due upon the land or building; (2) For the unpaid price of real property sold, upon the immovable sold; (3) Claims of laborers, masons, mechanics and other workmen, as well as of architects, engineers and contractors, engaged in the construction, reconstruction or repair of buildings, canals or other works, upon said buildings, canals or other works; (4) Claims of furnishers of materials used in the construction, reconstruction, or repair of buildings, canals or other works, upon said buildings, canals or other works; (5) Mortgage credits recorded in the Registry of Property, upon the real estate mortgaged; (6) Expenses for the preservation or improvement of real property when the law authorizes reimbursement, upon the immovable preserved or improved; (7) Credits annotated in the Registry of Property, in virtue of a judicial order, by attachments or executions, upon the property affected, and only as to later credits; (8) Claims of co-heirs for warranty in the partition of an immovable among them, upon the real property thus divided;
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xi.
Taxes and assessments due any city or municipality, other than those indicated in Articles 2241, No. 1, and 2242, No. 1;
xii.
Damages for death or personal injuries caused by a quasi-delict;
xiii.
Gifts due to public and private institutions of charity or beneficence;
xiv.
Credits which, without special privilege, appear in (a) a public instrument; or (b) in a final judgment, if they have been the subject of litigation. These credits shall have preference among themselves in the order of priority of the dates of the instruments and of the judgments, respectively.
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thereof [Art. 2247] (3) Those credits which enjoy preference in relation to specific real property or real rights exclude all others to the extent of the value of the immovable or real right to which the preference refers [Art. 2248]. (4) If there are 2 or more credits with respect to the same specific real property or real rights, they shall be satisfied pro rata, after the payment of the taxes and assessment of the taxes and assessments upon the immovable property or real right [Art. 2249]. (5) The excess, if any, after the payment of the credits which enjoy preference with respect to specific property, real or personal, shall be added to the free property which the debtor may have, for the payment of other credits [Art. 2250]. (6) Those credits which do not enjoy any preference with respect to specific property, and those which enjoy preference, as to the amount not paid, shall be satisfied according to the following rules: (a) Order established by Art 2244 (b) Common credits referred to in Art 2245 shall be paid pro rata regardless of dates [Art. 2251].
EXEMPT PROPERTY (1) Present property: (a) Family home. [Arts. 152, 153 and 155, CC] (b) Right to receive support, as well as money or property obtained by such support, shall not be levied upon on attachment or execution. [Art. 205, CC] (c) Sec. 13, Rule 39, ROC. (d) Sec 118, Public Land Act. [CA 141, as amended] (2) Future property: A debtor who obtains a discharge from his debts on account of insolvency, is not liable for the unsatisfied claims of his creditors with said property. [Sec. 68 and 69, Insolvency Law, Act 1956] (3) Property in custodia legis and of public dominion. CLASSIFICATION OF CREDITS (1) Special preferred credits. [Art. 2241 and 2242, CC] (a) Considered as mortgages or pledges of real or personal property or liens within the purview of legal provisions governing insolvency. (b) Taxes due to the State shall first be satisfied. (2) Ordinary preferred credits [Art. 2244] – Preferred in the order given by law. (3) Common credits [Art. 2245] – Credits of any other kind or class, or by any other right or title not comprised in Arts. 2241- 2244 shall enjoy no preference. ORDER OF PREFERENCE OF CREDITS (1) Credits which enjoy preference with respect to specific movables exclude all others to the extent of the value of the personal property to which the preference refers [Art. 2246]. (2) If there are 2 or more credits with respect to the same specific movable property, they shall be satisfied pro rata, after the payment of duties, taxes and fees due the State or any subdivision
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Torrens System
with the delay, uncertainty, and expense of the old conveyancing system.
THE TORRENS SYSTEM: A system for registration of land under which, upon landowner’s application, the court may, after appropriate proceedings, direct the issuance of a certificate of title. (Black’s Law Dictionary)
By "Torrens" system generally are meant those systems of registration of transactions with interest in land whose declared object… is, under governmental authority, to establish and certify to the ownership of an absolute and indefeasible title to realty, and to simplify its transfer. (Grey-Alba v. Dela Cruz, GR No. L-524)
The underlying principle of the Torrens system is security with facility in dealing with land. This is made possible by defining the absolute status of a given property in a certificate of title with a governmental and universal guaranty. This certificate of title should better be known as certificate of title and encumbrances. In the words of torrens himself the main objects are “to simplify, quicken, and cheapen the transfer of real estate and to render title safe and indefeasible.” (The Philippine Torrens System by Florencio Ponce 1964)
CERTIFICATE OF TITLE ORIGINAL CERTIFICATE OF TITLE OR OCT
It is the first certificate of title issued in the name of a registered owner by the Register of Deeds covering a parcel of land which had been registered under the Torrens System, by virtue of judicial or administrative proceedings. TRANSFER CERTIFICATE OF TITLE OR TCT
PURPOSE:
The subsequent certificate of title pursuant to any deed of transfer or conveyance to another person. The Register of Deeds shall make a new certificate of title and given him an owner’s duplicate certificate. The previous certificate (need not be an OCT) shall be stamped “cancelled”.
The real purpose of that system is to quiet title to land; to put a stop forever to any question of the legality of the title, except claims which were noted at the time of registration, in the certificate, or which may arise subsequent thereto. (Legarda v Saleeby, GR No. 8936) Avoid possible conflicts of title in and to real property
PATENTS
PD 1529, Sec. 103. Certificates of title pursuant to patents. Whenever public land is by the Government alienated, granted or conveyed to any person, the same shall be brought forthwith under the operation of this Decree.
ADVANTAGES:
(a) Secures title (b) Protection against fraud (c) Simplified dealings (d) Restoration of the estates to its just value, whose depreciation is cause by some blur, technical defect (e) Barred the recurrence of faults in the title (See Legarda v. Saleeby)
It shall be the duty of the official issuing the instrument of alienation, grant, patent or conveyance in behalf of the Government to cause such instrument to be filed with the Register of Deeds of the province or city where the land lies, and to be there registered like other deeds and conveyance, whereupon a certificate of title shall be entered as in other cases of registered land, and an owner's duplicate issued to the grantee.
BACKGROUND:
The boldest effort to grapple with the problem of simplification of title to land was made by Mr. (afterwards Sir Robert) Torrens, a layman, in South Australia in 1857. . . . In the Torrens system title by registration takes the place of "title by deeds" of the system under the "general" law. A sale of land, for example, is effected by a registered transfer, upon which a certificate of title is issued. The certificate is guaranteed by statute, and, with certain exceptions, constitutes indefeasible title to the land mentioned therein. Under the old system the same sale would be effected by a conveyance, depending for its validity, apart from intrinsic flaws, on the correctness of a long series of prior deeds, wills, etc. . . . The object of the Torrens system, them, is to do away
The deed, grant, patent or instrument of conveyance from the Government to the grantee shall not take effect as a conveyance or bind the land but shall operate only as a contract between the Government and the grantee and as evidence of authority to the Register of Deeds to make registration. It is the act of registration that shall be the operative act to affect and convey the land, and in all cases under this Decree, registration shall be made in the office of the Register of Deeds of the province or city where the land lies. The fees for registration shall be
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paid by the grantee. After due registration and issuance of the certificate of title, such land shall be deemed to be registered land to all intents and purposes under this Decree.
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been held prior the Spanish conquest and never to have been public land. EFFECTS All lands of public domain belong to the state, and that the State is the source of any asserted right to ownership in land and charged with the conservation of such patrimony (Republic v IAC, GR No. 71285)
Note: (a) Patents only involve public lands which are alienated by the Government, pursuant to the Public Land Act. (b) The patent (even if denominated as deed of conveyance) is not really a conveyance but a contract between the grantee and the Government and evidence of authority to the Register of Deeds to make registration. (c) The act of registration is the operative act to affect and convey the land.
Any applicant for judicial confirmation of an imperfect title has the burden of proving, by incontrovertible evidence, that the (a) land applied for is alienable and disposable public land; and, (b) the applicant, by himself or through his predecessors-in-interest had occupied and possessed the land, in the concept of owner, openly, continuously, exclusively, and adversely since June 12, 1945, or earlier. (Pelbel Manufacturing Corp. v. CA, GR No. 141325)
General Rule: A Torrens Certificate of Title is valid and enforceable against the whole world. A Torrens title, once registered, cannot be defeated, even by adverse, open and notorious possession. A registered title under the Torrens system cannot be defeated by prescription. The title, once registered, is notice to the whole world. All persons must take notice. No one can plead ignorance of the registration. (Egao vs. CA, 1989)
CONCEPT OF NATIVE TITLE, TIME IMMEMORIAL POSSESSION A recognized exception to the theory of jura regalia, the ruling in Carino v Insular Government institutionalized the recognition of the existence of native title to land, or ownership of land by Filipinos by virtue of possession under a claim of ownership since time immemorial and independent of any grant from the Spanish Crown (Agcaoli)
Regalian Doctrine
Lands under native title are not part of public domain, “lands possessed by an occupant and his predecessors since time immemorial, such possession would justify the presumption that the land had never been part of the public domain or that it had been private property even before the Spanish conquest (Republic v CA, GR No. 130174)
A western legal concept that was first introduced by the Spaniards into the country through the laws of the Indies and the Royal Cedulas. Whereby the Philippines passed to Spain by virtue of “discovery” and conquest. Consequently, all lands became the exclusive patrimony and dominion of the Spanish Crown. (Agcaoli)
Citizenship Doctrine
Enshrined in the Constitution (Art 12, Sec 2 & 3), it states that all lands of public domain belong to the state, thus private title to land must be traced to some grant, express or implied, from the state, i.e. The Spanish Crown or its successors, the American Colonial government and thereafter the Philippine Republic
INDIVIDUALS AND CORPORATIONS CONSTITUTIONAL REQUIREMENTS AND LIMITATIONS
Only Filipino citizens (Art. XII, Sec. 3, 1987 Constitution)
It does not negate native title to lands held in private ownership since time immemorial (Cruz vs. Sec. of Environment and Natural Resources)
KRIVENKO DOCTRINE
The capacity to acquire private land is made dependent upon the capacity to acquire or hold lands of public domain. Private land may be transferred or conveyed only to individuals or entities ‘qualified to acquire lands of public domain’ (II Bernas)
It recognized ownership of land by Filipinos independent of any grant from the Spanish crown on the basis of possession since time immemorial (cf: Carino v Insular Government), it is presumed to have
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The 1935 Constitution reserved the right xxx for Filipino citizens or corporations at least sixty percent of the capital of which was owned by Filipinos. Aliens, whether individuals or corporations, have been disqualified from acquiring public lands; hence they have also been disqualified from acquiring private lands. (Krivenko v ROD, GR No. L-630: Ong Ching Po v CA, GR. No. 113427)
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Where the land is Owned in common, all the co-owners shall file the application jointly. Where the land has been sold under Pacto de retro, the vendor a retro may file an application for the original registration of the land, provided, however, that should the period for redemption expire during the pendency of the registration proceedings and ownership to the property consolidated in the vendee a retro, the latter shall be substituted for the applicant and may continue the proceedings.
Non-Filipinos cannot acquire or hold title to private lands of public domain, except only by way of legal succession (Halili v CA, GR No. 113539); BASIS Sec 2, 5 Art XII Constitution
A trustee on behalf of his principal may apply for original registration of any land held in trust by him, unless prohibited by the instrument creating the trust. (PD 1529, Sec. 14)
Exceptions: (a) Aliens by way of hereditary succession (b) Natural born citizens who have lost their citizenship- limited to 5,000 sq. m. for urban land and 3 hectares for rural land (RA No. 7042 as amended by RA No. 8179) Aliens, although disqualified to acquire lands of public domain, may lease private land for a reasonable period provided, that such lease does not amount to a virtual transfer of ownership. They may also be given an option to buy property on the condition that he is granted Philippine citizenship. (Llantino v Co liong Chong, GR No. 29663)
A corporation sole may acquire and register private agricultural land (RC Apostolic Administrator of Davao v LRC GR No. L-8415): A corporation sole, which consists of one person only, is vested with the right to purchase and hold real estate and register the same in trust for the faithful or members of the religious society or church for which the corporation was organized
Private corporations may not hold alienable lands of the public domain except by lease for a period not exceeding twenty-five years, renewable for not more than twenty-five years, and not to exceed one thousand hectares in area. (1987 Constitution, Art. XII, Sec. 3)
Lands acquired by an American citizen prior the proclamation of Philippine Independence on July 4, 1946 but after the passage of the 1935 Constitution may be registered, based on the ordinance appended to the 1935 Constitution (See: Moss v Director of Lands, GR No. L-27170)
Private lands may be owned for as long as the corporation is at least 60% Filipino: (a) Provided that at the time the corporation acquired the land, it is under private ownership. (b) Additional Requirements: (OCEN-PAAL) (1) Those who by themselves or through their predecessors-in-interest have been in Open, continuous, exclusive and notorious possession and occupation of alienable and disposable lands of the public domain under a bona fide claim of ownership since June 12, 1945, or earlier. (2) Those who have acquired ownership of private lands by Prescription under the provision of existing laws. (3) Those who have acquired ownership of private lands or abandoned river beds by right of Accession or accretion under the existing laws. (4) Those who have acquired ownership of land in any other manner provided for by Law.
Land sold to an alien which is now in the hands of a naturalized citizen can no longer be annulled (De Castro v Tan, GR No. L-31956). The litigated property is now in the hands of a naturalized Filipino. It is no longer owned by a disqualified vendee. The purpose of the prohibition ceases to be applicable. (Barsobia v Cuenco, GR No. L-33048)
Original Registration WHO MAY APPLY under pd 1529 The following persons may file an application for registration of title to land: (1) Those who by themselves or through their predecessors-in-interest have been in open,
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continuous, exclusive and notorious possession and occupation of alienable and disposable lands of the public domain under a bona fide claim of ownership since June 12, 1945, or earlier.
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slope of eighteen percent (18%) or more, are hereby classified as alienable and disposable agricultural lands. The option granted under this Section shall be exercised within twenty (20) years from the approval of this Act.
(2) Those who have acquired ownership of private lands by prescription under the provision of existing laws.
Sec. 51. Delineation and Recognition of Ancestral Domains. Self-delineation shall be the guiding principle in the identification and delineation of ancestral domains. As such, the ICCs/IPs concerned shall have a decisive role in all the activities pertinent thereto. The Sworn Statement of the Elders as to the Scope of the territories and agreements/pacts made with neighboring ICCs/IPs, if any, will be essential to the determination of these traditional territories. The Government shall take the necessary steps to identify lands which the ICCs/IPs concerned traditionally occupy and guarantee effective protection of their rights of ownership and possession thereto. Measures shall be taken in appropriate cases to safeguard the rights of the ICCs/IPs concerned to land which may no longer be exclusively occupied by them, but to which they have traditionally had access for their subsistence and traditional activities, particularly of ICCs/IPs who are still nomadic and/or shifting cultivators.
(3) Those who have acquired ownership of private lands or abandoned river beds by right of accession or accretion under the existing laws. (4) Those who have acquired ownership of land in any other manner provided for by law. UNDER CA 141
Sec. 12. Any citizen of the Philippines over the age of eighteen years, or the head of a family, who does not own more than twenty-four hectares of land in the Philippines or has not had the benefit of any gratuitous allotment of more than twenty-four hectares of land since the occupation of the Philippines by the United States, may enter a homestead of not exceeding twenty-four hectares of agricultural land of the public domain. UNDER RA 8371
Sec. 11. Recognition of Ancestral Domain Rights. The rights of ICCs/IPs to their ancestral domains by virtue of Native Title shall be recognized and respected. Formal recognition, when solicited by ICCs/IPs concerned, shall be embodied in a Certificate of Ancestral Domain Title (CADT), which shall recognize the title of the concerned ICCs/IPs over the territories identified and delineated.
Sec. 52. Delineation Process.- The identification and delineation of ancestral domains shall be done in accordance with the following procedures: (a) Ancestral Domains Delineated Prior to this Act The provisions hereunder shall not apply to ancestral domains/lands already delineated according to DENR Administrative Order No. 2, series of 1993, nor to ancestral lands and domains delineated under any other community/ancestral domain program prior to the enactment of his law. ICCs/IPs enactment of this law shall have the right to apply for the issuance of a Certificate of Ancestral Domain Title (CADT) over the area without going through the process outlined hereunder; (b) Petition for Delineation - The process of delineating a specific perimeter may be initiated by the NCIP with the consent of the ICC/IP concerned, or through a Petition for Delineation filed with the NCIP, by a majority of the members of the ICCs/IPs; (c) Delineation Paper - The official delineation of ancestral domain boundaries including census of all community members therein, shall be immediately undertaken by the Ancestral Domains Office upon filing of the application by the ICCs/IPs concerned. Delineation will be
Sec. 12. Option to Secure Certificate of Title under Commonwealth Act 141, as amended, or the Land Registration Act 496. Individual members of cultural communities, with respect to individually-owned ancestral lands who, by themselves or through their predecessors-in -interest, have been in continuous possession and occupation of the same in the concept of owner since time immemorial or for a period of not less than thirty (30) years immediately preceding the approval of this Act and uncontested by the members of the same ICCs/IPs shall have the option to secure title to their ancestral lands under the provisions of Commonwealth Act 141, as amended, or the Land Registration Act 496. For this purpose, said individually-owned ancestral lands, which are agricultural in character and actually used for agricultural, residential, pasture, and tree farming purposes, including those with a
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(d)
(e)
(f)
(g)
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done in coordination with the community concerned and shall at all times include genuine involvement and participation by the members of the communities concerned; Proof required - Proof of Ancestral Domain Claims shall include the testimony of elders or community under oath, and other documents directly or indirectly attesting to the possession or occupation of the area since time immemorial by such ICCs/IPs in the concept of owners which shall be any one (1) of the following authentic documents: (1) Written accounts of the ICCs/IPs customs and traditions; (2) Written accounts of the ICCs/IPs political structure and institution; (3) Pictures showing long term occupation such as those of old improvements, burial grounds, sacred places and old villages; (4) Historical accounts, including pacts and agreements concerning boundaries entered into by the ICCs/IPs concerned with other ICCs/IPs; (5) Survey plans and sketch maps; (6) Anthropological data; (7) Genealogical surveys; (8) Pictures and descriptive histories of traditional communal forests and hunting grounds; (9) Pictures and descriptive histories of traditional landmarks such as mountains, rivers, creeks, ridges, hills, terraces and the like; and (10) Write-ups of names and places derived from the native dialect of the community. Preparation of Maps - On the basis of such investigation and the findings of fact based thereon, the Ancestral Domains Office of the NCIP shall prepare a perimeter map, complete with technical descriptions, and a description of the natural features and landmarks embraced therein; Report of Investigation and Other Documents - A complete copy of the preliminary census and a report of investigation, shall be prepared by the Ancestral Domains Office of the NCIP; Notice and Publication - A copy of each document, including a translation in the native language of the ICCs/IPs concerned shall be posted in a prominent place therein for at least fifteen (15) days. A copy of the document shall also be posted at the local, provincial and regional offices of the NCIP, and shall be published in a newspaper of general circulation once a week for two (2) consecutive weeks to allow other claimants to file opposition thereto within fifteen (15) days from the date of such
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publication: Provided, That in areas where no such newspaper exists, broadcasting in a radio station will be a valid substitute: Provided, further, That mere posting shall be deemed sufficient if both newspaper and radio station are not available; (h) Endorsement to NCIP - Within fifteen (15) days from publication, and of the inspection process, the Ancestral Domains Office shall prepare a report to the NCIP endorsing a favorable action upon a claim that is deemed to have sufficient proof. However, if the proof is deemed insufficient, the Ancestral Domains Office shall require the submission of additional evidence: Provided, That the Ancestral Domains Office shall reject any claim that is deemed patently false or fraudulent after inspection and verification: Provided, further, That in case of rejection, the Ancestral Domains Office shall give the applicant due notice, copy furnished all concerned, containing the grounds for denial. The denial shall be appealable to the NCIP: Provided, furthermore, That in cases where there are conflicting claims, the Ancestral Domains Office shall cause the contending parties to meet and assist them in coming up with a preliminary resolution of the conflict, without prejudice to its full adjudication according to the selection below. (i) Turnover of Areas Within Ancestral Domains Managed by Other Government Agencies - The Chairperson of the NCIP shall certify that the area covered is an ancestral domain. The secretaries of the Department of Agrarian Reform, Department of Environment and Natural Resources, Department of the Interior and Local Government, and Department of Justice, the Commissioner of the National Development Corporation, and any other government agency claiming jurisdiction over the area shall be notified thereof. Such notification shall terminate any legal basis for the jurisdiction previously claimed; (j) Issuance of CADT - ICCs/IPs whose ancestral domains have been officially delineated and determined by the NCIP shall be issued a CADT in the name of the community concerned, containing a list of all those identified in the census; and (k) Registration of CADTs - The NCIP shall register issued certificates of ancestral domain titles and certificates of ancestral lands titles before the Register of Deeds in the place where the property is situated. Sec. 53. Identification, Delineation and Certification of Ancestral Lands.
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meritorious, shall cause a parcellary survey of the area being claimed. The Ancestral Domains office shall reject any claim that is deemed patently false or fraudulent after inspection and verification. In case of rejection, the Ancestral Domains office shall give the applicant due notice, copy furnished all concerned, containing the grounds for denial. The denial shall be appealable to the NCIP. In case of conflicting claims among individual or indigenous corporate claimants, the Ancestral domains Office shall cause the contending parties to meet and assist them in coming up with a preliminary resolution of the conflict, without prejudice to its full adjudication according to Sec. 62 of this Act. In all proceedings for the identification or delineation of the ancestral domains as herein provided, the Director of Lands shall represent the interest of the Republic of the Philippines; and
(a) The allocation of lands within any ancestral domain to individual or indigenous corporate (family or clan) claimants shall be left to the ICCs/IPs concerned to decide in accordance with customs and traditions; (b) Individual and indigenous corporate claimants of ancestral lands which are not within ancestral domains, may have their claims officially established by filing applications for the identification and delineation of their claims with the Ancestral Domains Office. An individual or recognized head of a family or clan may file such application in his behalf or in behalf of his family or clan, respectively; (c) Proofs of such claims shall accompany the application form which shall include the testimony under oath of elders of the community and other documents directly or indirectly attesting to the possession or occupation of the areas since time immemorial by the individual or corporate claimants in the concept of owners which shall be any of the authentic documents enumerated under Sec. 52 (d) of this act, including tax declarations and proofs of payment of taxes;
(g) The Ancestral Domains Office shall prepare and submit a report on each and every application surveyed and delineated to the NCIP, which shall, in turn, evaluate or corporate (family or clan) claimant over ancestral lands. Sec. 54. Fraudulent Claims.- The Ancestral Domains Office may, upon written request from the ICCs/IPs, review existing claims which have been fraudulently acquired by any person or community. Any claim found to be fraudulently acquired by, and issued to, any person or community may be cancelled by the NCIP after due notice and hearing of all parties concerned.
(d) The Ancestral Domains Office may require from each ancestral claimant the submission of such other documents, Sworn Statements and the like, which in its opinion, may shed light on the veracity of the contents of the application/claim; (e) Upon receipt of the applications for delineation and recognition of ancestral land claims, the Ancestral Domains Office shall cause the publication of the application and a copy of each document submitted including a translation in the native language of the ICCs/IPs concerned in a prominent place therein for at least fifteen (15) days. A copy of the document shall also be posted at the local, provincial, and regional offices of the NCIP and shall be published in a newspaper of general circulation once a week for two (2) consecutive weeks to allow other claimants to file opposition thereto within fifteen (15) days from the date of such publication: Provided, That in areas where no such newspaper exists, broadcasting in a radio station will be a valid substitute: Provided, further, That mere posting shall be deemed sufficient if both newspapers and radio station are not available.
Sec. 55. Communal Rights.- Subject to Section 56 hereof, areas within the ancestral domains, whether delineated or not, shall be presumed to be communally held: Provide, That communal rights under this Act shall not be construed as coownership as provided in Republic Act. No. 386, otherwise known as the New Civil Code. REGISTRATION PROCESS AND REQUIREMENTS (1) (2) (3) (4) (5) (6) (7) (8)
(f) Fifteen (15) days after such publication, the Ancestral Domains Office shall investigate and inspect each application, and if found to be
Survey Application Initial Hearing Publication Opposition Hearing Judgment Issuance of Decree
WHAT LANDS ARE REGISTRABLE:
(a) Private Lands
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(b) Agricultural Lands
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factual proof of possession are unavailing. The deeds in its favor only proved possession of its predecessors-in-interest as early as 1948. (The law now stands that a mere showing of possession for 30 years is not sufficient. OCEN possession must be shown to have stated on June 12, 1945 or earlier.)
If in the public domain, the land must be classified as alienable and disposable. It must be classified as such at the time of filing the application for registration. (Republic vs. CA and Naguit, 2005) SURVEY
The survey may be done by a public or private surveyor. When done by a private surveyor it has to be approved by the Land Management Bureau. PD 239 withdrew the authority of the Land Registration Authority to approve original survey plans.
INITIAL HEARING
APPLICATION
PUBLICATION
The application for land registration shall be: (a) in writing (b) signed and sworn to by the applicant/duly authorized person, and if more than one applicant, it shall be signed and sworn to by and in behalf of each
The public shall be given notice of the initial hearing of the application for land registration by means of (1) publication; (2) mailing; and (3) posting. (PD 1529, Sec. 23)
The court shall issue an order setting the date and hour of the initial hearing within five days from filing of the application. The initial hearing shall be 45-90 days from the date of the order. (Sec. 23, PD 1529)
By publication The Commissioner of Land Registration shall cause it to be published: once in the Official Gazette (sufficient to confer jurisdiction) and once in a newspaper of general circulation in the Philippines
It shall contain: (a) a description of the land (b) citizenship and civil status of the applicant (c) if married, the name of the wife or husband (d) if the marriage has been legally dissolved, when and how (e) full names and addresses of all occupants and those of the adjoining owners, if known (f) if not known, it shall state the extent of the search made to find them. (Sec. 15, PD 1529)
The notice is addressed to: (a) all persons appearing to have an interest in the land the adjoining owners so far as known "to all whom it may concern" By mailing Within 7 days from publication in the OG, the Commissioner of Land Registration (CLR) shall mail a copy of the notice to: (a) Every person named in the notice whose address is known. (b) the Secretary of Public Highways, to the Provincial Governor, and to the Mayor of the municipality or city, in which the land lies, if the applicant requests to have the line of a public way or road determined (c) Secretary of Agrarian Reform, the Solicitor General, the Director of Lands, the Director of Mines and/or the Director of Fisheries and Aquatic Resources, (as appropriate) if the land borders on a river, navigable stream or shore, or on an arm of the sea where a river or harbor line has been established, or on a lake, or if it otherwise appears from the application or the proceedings that a tenant-farmer or the national government may have a claim adverse to that of the applicant
Note: It must be accompanied by the original tracing cloth plan, white or blue copies thereof, the original and copies of the technical description and geodetic engineer’s certification. Special Cases: (a) If the land bounded by a road, the applicant must state in his application if he claims any portion of the land within the limits of the road, or if he likes to have the boundaries determined. (Sec. 20, PD 1529) (b) If the applicant is a non-resident, he shall appoint an agent or representative who is a Philippine resident. (Sec. 16, PD 1529) (c) Intestate Estate of Don Mariano San Pedro vs. CA (1996): A person claiming ownership of real property must clearly identify the land claimed by him. (d) In re: Application for Land Registration vs. Republic (2008, Nachura): An applicant in a land registration case must prove the facts and circumstances evidencing the alleged ownership of the land applied for. General statements which are mere conclusions of law and not
By posting CLR shall cause the sheriff or his deputy to post the notice at least 14 days before the hearing: in a
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conspicuous place on each parcel of land included in the application and in a conspicuous place on the bulletin board of the municipal building of the municipality or city in which the land or portion thereof is situated.
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Forms of Judgment Writ of possession Vencilao vs. Vano, (1990): The writ may be issued not only against the person defeated in the registration case but also against any one adversely occupying the land during the proceedings.
The court may also cause notice to be served to such other persons and in such manner as it may deem proper.
Bernas vs. Nuevo, (1984): The writ does not lie against a person who entered the land after the issuance of the decree and who was not a party in the case. He can only be proceeded against in a separate action for ejectment or reinvindicatory action.
OPPOSITION
Who may file? Any person claiming an interest, whether named in the notice or not
Writ of demolition Gawaran vs. IAC, (1988): This writ is a complement of the writ of possession.
When to file? On or before the date of initial hearing, or within such further time as may be allowed by the court.
ISSUANCE OF DECREE
Preparation of the Decree (1) Court directs the Land Registration Authority to issue a decree of registration and certificate of Title within 15 days from entry of judgment. (a) Appeal reckoned from the Solicitor General’s receipt of the decision (b) Becomes final 15 days from receipt (2) Commissioner signs the decree (3) Decree is entered and filed with the LRC (4) OCT and owner’s duplicate certificate are sent to the Register of Deeds where property is situated. (5) Register of Deeds enters the information in his registration book. (6) Register of Deeds sends notice by mail to owner that his duplicate is ready for delivery upon payment of legal fees.
What shall it contain? It shall state all the objections and the interest claimed by the party the remedy desired. How shall it be made? It shall be signed and sworn to by him or by some other duly authorized person. Note: (a) If no one appears/files an answer, upon motion, the court shall order a default to be recorded. (b) By the description in the notice "To all Whom It May Concern", all the world are made parties defendant and shall be concluded by the default order. (c) Where an appearance has been entered and an answer filed, a default order shall be entered against persons who did not appear and answer. (d) Director of Lands vs. Agustin, (1921): Absence of opposition does not justify outright registration.
Gomez vs. CA (1988): Court retains jurisdiction over the case until after the expiration of 1 year from the issuance of the decree of registration.
HEARING
REMEDIES
Proof of ownership Municipality of Santiago vs. CA (1983): Tax declaration and receipts are not conclusive but have strong probative value when accompanied by proof of actual possession.
GROUND FOR REOPENING AND REVIEWING THE DECREE OF REGISTRATION: actual fraud PERIODS:
Must be reopened not later than 1 year from and after the date of the entry of such decree. Upon the expiration of said period of one year, the decree of registration and the certificate of title issued shall become incontrovertible. The only remedy left is an action for damages.
Republic vs. Tayag (1984): Payment in one lump sum to cover all past taxes is “irregular” and affects the validity of the applicant’s claim of ownership Spanish titles are no longer admissible.
PROHIBITIONS:
JUDGMENT
(a) Cannot be reopened because of absence, minority, or other disability of any person adversely affected thereby (b) Cannot be reopened where an innocent purchaser for value may be prejudiced (includes
Judgment becomes final upon expiration of 30 days from receipt of notice of judgment
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an innocent lessee, mortgagee, encumbrancer for value.)
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or
other
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not among the grounds for forcible entry and unlawful detainer, or when possession has been lost for more than one year and can no longer be maintained under Rule 70 of the Rules of Court.
Arguelles vs. Timbancaya (1976): The rule on the incontrovertible nature of a certificate of title applies when what is involved is the validity of the OCT, not when it concerns that of the TCT.
The objective of the plaintiffs in accion publiciana is to recover possession only, not ownership. The Velascos were able to establish lawful possession of the land when the Padillas occupied the property. The OCT was issued to the original owners who then sold the land to Artemio.
IMPRESCRIPTIBLE PD 1529, Sec 47. Registered land not subject to prescriptions. No title to registered land in derogation of the title of the registered owner shall be acquired by prescription or adverse possession.
From then on, he was in continuous possession of the land until his death. It was only in 1987, when the Padillas occupied the property. The argument that the lots are one and the same is a collateral attack on the title over the property which is registered in the name of Artemio, which cannot be countenanced.
Barcelona vs. Barcelona (1956): Prescription is unavailing not only against the registered owner but also against his hereditary successors because the latter merely step into the shoes of the decedent by operation of law and are merely the continuation of the personality of their predecessor-in-interest.
Remedies of the Aggrieved Party Motion for New 15 days from notice of judgment Trial Grounds: (a) Fraud, accident, mistake, excusable negligence (b) Newly discovered evidence (c) Awarded excessive damages, or insufficiency of evidence, or that the decision is against law Appeal (d) 15 days from notice (e) appealable to the CA or to the SC in the same manner as in ordinary actions Relief from (f) 60 days after petitioner Judgment learns of judgment, but not more than 6 months after judgment was entered (g) Grounds: Fraud, accident, mistake, excusable negligence Petition for Requisites: (Walstrom vs. Mapa, Review 1990) (h) petitioner must have an estate or interest in the land (i) he must show actual fraud (j) petition must be filed within one year form the issuance of the decree by LRA (k) property has not yet passed to an innocent purchaser for value. Grounds: (l) extrinsic fraud, (m)void decision for want of due process (n) lack of jurisdiction
NOT SUBJECT TO COLLATERAL ATTACK PD 1529, Sec 48. Certificate not subject to collateral attack. A certificate of title shall not be subject to collateral attack. It cannot be altered, modified, or canceled except in a direct proceeding in accordance with law. Spouses Padilla vs. Velasco, et. al, G.R. No. 169956 (2009, Nachura) Facts: Velasco et al (respondents) are the heirs of Artemio who died, leaving a parcel of land. He acquired it by virtue of a deed of sale in his favor. The Padilla sps (petitioners) entered the land as trustees by virtue of a deed of sale executed by a bank in favor of the Solomon sps. Velascos demanded that the Padillas vacate the property. Padillas cut trees, built a house and harvested crops. Velascos filed a complaint for accion publiciana before the RTC. Velascos presented deed of sale in favor of Artemio, while Padillas presented deed of sale between bank and Solomons. The Padillas also argue that the Solomon sps acquired the land in good faith and for value and that they argue that Lot 2161 (the one they are occupying) and Lot 76-pt (the lot the Solomon spouses bought) are one and the same. Held: The Velascos have a better right to the land. The instant case is for accion publiciana, or for recovery of the right to possess. Accion publiciana is also used to refer to an ejectment suit where the cause of dispossession is
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Calalang vs. Register of Deeds, 1992: Under the Torrens system of registration, the Torrens still becomes indefeasible and incontrovertible one year from the issuance of the final decree and is generally conclusive evidence of the ownership
Action for Reconveyance
Damages
Action for Compensation from the 1 Assurance Fund
And is barred from bringing an action for recovery of the land. The action has not prescribed. It must be instituted within 6 years from the time the right to bring such action first occurred--> date of issue of the certificate of title
Iglesia ni Cristo vs. CFI, 1983: This applies as well to title acquired through homestead or free patents (o) before issuance of decree, or within/after 1 year from entry (p) if based on implied trust, 10 years; (q) if based on expressed trust and void contract, imprescriptible (r) if based on fraud, 4 years from the discovery (s) not available if the property has already been transferred to an innocent purchaser for value. Esconde vs. Barlongay, 1987: It does not reopen proceedings but a mere transfer of the land from registered owner to the rightful owner Huang vs. CA,1994: It is available in case of fraud thereby creating a constructive trust between parties Ching vs. CA, 1990: It can be availed of when reconveyance is no longer possible as when the land has been transferred to an innocent purchaser for value Requisites: A person sustains loss or damage or is deprived by any estate or interest in land
Against whom filed: against the Register of Deeds and the National Treasurer if FEMOM is caused by court personnel, Register of Deeds, his deputy or other employees of the Registry
Annulment Judgment
of
If other than those above mentioned: the Register of Deeds, the National Treasurer and other person or persons, as co-defendants. Grounds: extrinsic fraud and lack of jurisdiction. Galicia vs. Marquez (2007): Ordinary remedies of appeal, motion for new trial etc should no longer be available. If based on extrinsic fraud, file 4 within years from discovery.
Reversion
Criminal Action
On account of bringing of land under the Torrens system
If based on lack of jurisdiction, before it is barred by laches or estoppel Instituted by the government, thru Solgen in all cases where lands of public domain are held in violation of the Constitution or were fraudulently conveyed. Indefeasibility of title, prescription, laches, and estoppel do not bar reversion suits. Perjury, Forgery, Others involving fraud
JUDICIAL CONFIRMATION OF IMPERFECT OR INCOMPLETE TITLES
Through (FEMOM) fraud, error, mistake, omission, or misdescription in the certificate of entry in the registration book Without negligence on his part
General Rule No title or right to, or equity in, any lands of the public domain may be acquired by prescription or by adverse possession or occupancy except as expressly provided by law. (CA 141, Sec 57) The Public Land Act recognizes the concept of ownership under the civil law. This ownership is based on adverse possession and the right of acquisition is governed
Upon registration, there shall be paid to the Register of Deeds ¼ of 1% of the assessed value of the real estate on the basis of the last assessment for taxation purposes, as contribution to the Assurance Fund. 1
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by the Chapter on judicial confirmation of imperfect or incomplete titles.
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CADASTRAL REGISTRATION Unlike other kinds of registration, this is compulsory as it is initiated by the government.
This applies only to alienable and disposable agricultural lands of the public domain. Under Sec. 6 of CA 141, the classification of public lands into alienable and disposable forest lands, or mineral lands is the prerogative of the Executive Department.
PD 1529, Sec 35. Cadastral Survey preparatory to filing of petition. (a) When in the opinion of the President of the Philippines public interest so requires that title to any unregistered lands be settled and adjudicated, he may to this end direct and order the Director of Lands to cause to be made a cadastral survey of the lands involved and the plans and technical description thereof prepared in due form.
Bracewell vs. CA, (2000): The rule on confirmation of imperfect title does not apply unless and until the land classified as, say, forest land, is released in an official proclamation to that effect so that if may form part of the disposable agricultural lands of the public domain. Period of filing RA No. 9176 extended the period to file an application for judicial confirmation of imperfect or incomplete title to December 31, 2020. It further limited the area applied for to 12 hectares.
(b) Thereupon, the Director of Lands shall give notice to persons claiming any interest in the lands as well as to the general public, of the day on which such survey will begin, giving as fully and accurately as possible the description of the lands to be surveyed. Such notice shall be punished once in the Official Gazette, and a copy of the notice in English or the national language shall be posted in a conspicuous place on the bulletin board of the municipal building of the municipality in which the lands or any portion thereof is situated. A copy of the notice shall also be sent to the mayor of such municipality as well as to the barangay captain and likewise to the Sangguniang Panlalawigan and the Sangguniang Bayan concerned.
Requisites (a) Filipino citizen (b) He must have, by himself, or thru his predecessors – in - interest, possessed and occupied an alienable and disposable agricultural portion of the public domain (c) Such possession and occupation must have been OCEN and in the concept of owner since June 12, 1945 (d) Application filed with proper court Private corporations Where at the time the corporation acquired the land, its predecessor-in-interest had been in possession and occupation thereof in the manner and for the period prescribed by law as to entitle him to registration in his name, then the proscription against corporation acquiring alienable lands of the public domain does not apply for the land was no longer public land but private property. Since the land is private, the corporation can institute confirmation proceedings. (Director of Lands vs. IAC and Acme Plywood and Veneer Co., 1986)
(c) The Geodetic Engineers or other employees of the Bureau of Lands in charge of the survey shall give notice reasonably in advance of the date on which the survey of any portion of such lands is to begin, which notice shall be posted in the bulletin board of the municipal building of the municipality or barrio in which the lands are situated, and shall mark the boundaries of the lands by monuments set up in proper places thereon. It shall be lawful for such Geodetic Engineers and other employees to enter upon the lands whenever necessary for the purposes of such survey or the placing of monuments.
NOTE: (a) MAXIMUM LAND THAT CAN BE APPLIED FOR: 144 hectares (b) In case of foreigner, it sufficient that he is already Filipino citizen at the time of his application. (c) Corporation which has less than 60% Filipino ownership cannot apply confirmation of imperfect title; can only lease (d) PERSONS COMPETENT TO QUESTION LAND GRANT: Persons who obtained title from State or thru persons who obtained title from State.
(d) It shall be the duty of every person claiming an interest in the lands to be surveyed, or in any parcel thereof, to communicate with the Geodetic Engineer upon his request therefor all information possessed by such person concerning the boundary lines of any lands to which he claims title or in which he claims any interest. (e) Any person who shall willfully obstruct the making of any survey undertaken by the Bureau of
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Lands or by a licensed Geodetic Engineer duly authorized to conduct the survey under this Section, or shall maliciously interfere with the placing of any monument or remove such monument, or shall destroy or remove any notice of survey posted on the land pursuant to law, shall be punished by a fine of not more than one thousand pesos or by imprisonment for not more than one year, or both.
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STEPS IN CADASTRAL REGION PROCEEDINGS
(1) Determination of the President that public interest requires title to unregistered lands be settled (2) Director of lands shall make a cadastral survey (3) Director of Lands gives notice to interested persons (4) Publication of notice (5) A copy of the notice shall also be sent to the mayor and the sanggunian (6) Geodetic engineers/ Bureau of Land employees shall notify (re: survey) by posting at the municipal building (7) Interested persons should communicate with the geodetic engineer if he requests for any information about the land (8) Actual survey/ plotting of the land (9) Director of Lands represented by Solicitor General shall institute original registration proceedings (10) Publication, mailing posting (11) Hearing (12) Decision (13) Issuance of the decree and certificate of title
PD 1529, Sec 36. Petition for registration. When the lands have been surveyed or plotted, the Director of Lands, represented by the Solicitor General, shall institute original registration proceedings by filing the necessary petition in the Court of First Instance of the place where the land is situated against the holders, claimants, possessors, or occupants of such lands or any part thereof, stating in substance that public interest requires that the title to such lands be settled and adjudicated and praying that such titles be so settled and adjudicated: The petition shall contain a description of the lands and shall be accompanied by a plan thereof, and may contain such other data as may serve to furnish full notice to the occupants of the lands and to all persons who may claim any right or interest therein.
Note: In voluntary registration proceedings, there is no res judicata when the applicant fails to prove his title. In cadastral registration, if the applicant cannot prove that he is entitled to the land, the land becomes public land. There is res judicata.
Where the land consists of two or more parcels held or occupied by different persons, the plan shall indicate the boundaries or limits of the various parcels as accurately as possible. The parcels shall be known as "lots" and shall on the plan filed in the case be given separate numbers by the Director of Lands, which numbers shall be known as "cadastral lot numbers".
Subsequent Registration TWO TYPES OF DEALINGS VOLUNTARY DEALINGS
The lots situated within each municipality shall, as far as practicable, be numbered consecutively beginning with number "one", and only one series of numbers shall be used for that purpose in each municipality. However in cities or townsites, a designation of the landholdings by blocks and lot numbers may be employed instead of the designation by cadastral lot numbers.
Deeds, instruments, documents which are the results of free and voluntary acts of parties thereto. INVOLUNTARY DEALINGS
Writ, order, or process issued by the court of record affecting registered land, also other instruments which are not willful acts of the registered owner, executed without his knowledge or consent.
The cadastral number of a lot shall not be changed after final decision has been entered decreasing the registration thereof, except by order of court. Future subdivisions of any lot shall be designated by a letter or letters of the alphabet added to the cadastral number of the lot to which the respective subdivisions pertain. The letter with which a subdivision is designated shall be known as its "cadastral letter": Provided, however, that the subdivisions of cities or townsites may be designated by blocks and lot numbers.
NECESSITY AND EFFECTS OF REGISTRATION PD 1529, Sec 51. Conveyance and other dealings by registered owner. An owner of registered land may convey, mortgage, lease, charge or otherwise deal with the same in accordance with existing laws. He may use such forms of deeds, mortgages, leases or other voluntary instruments as are sufficient in law. But no deed, mortgage, lease, or other voluntary instrument, except a will purporting to convey or affect registered land shall take effect as a
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conveyance or bind the land, but shall operate only as a contract between the parties and as evidence of authority to the Register of Deeds to make registration.
Voluntary Dealings deed of sale and the same is entered in the day book and at the same time he surrenders or presents the owner’s duplicate certificate of title covering the land sold and pays the registration fees. Villasor vs. Camon, (1951): It is necessary to register the deed or instrument in the entry book and a memorandum thereof shall also be made in the owner’s duplicate certificate and its original Spouses Labayen vs. Leonardo Serafica, (2008, Nachura): At the time of the filing of the petition for cancellation of encumbrance, the lease contract already lost its efficacy. Thus, there is no basis to save its annotation on defendant’s title. The fact that the cancellation of the lease contract was forged is of no moment, for there was no violation of a right.
The act of registration shall be the operative act to convey or affect the land insofar as third persons are concerned, and in all cases under this Decree, the registration shall be made in the office of the Register of Deeds for the province or city where the land lies. Note: The deed, mortgage, lease, or other voluntary instrument, except a will shall ONLY operate as: (1) A contract between the parties and (2) Evidence of authority to the Register of Deeds to make registration. (a) The act of registration shall be the operative act to convey or affect the land insofar as third persons are concerned. (b) A forged deed is an absolute nullity and conveys no title. (c) EXCEPTION: If there is good faith, a TCT has already been issued to the purchaser, the latter being an innocent purchaser for value according to Sec. 39, PD 1529, then the title is good. PD 1529, Sec 52. Constructive notice upon registration. Every conveyance, mortgage, lease, lien, attachment, order, judgment, instrument or entry affecting registered land shall, if registered, filed or entered in the office of the Register of Deeds for the province or city where the land to which it relates lies, be constructive notice to all persons from the time of such registering, filing or entering. Voluntary Dealings
Involuntary Dealings
Sale, mortgage, lease, patent, powers of attorney, trusts
Attachment, injunction, mandamus, levy on execution, notice of lis pendens Entry in the day book is sufficient notice to all persons
Presentation of the owner’s duplicate certificate of title is required to notify; mere entry insufficient An innocent purchaser for value of registered land becomes the registered owner the moment he presents and files a duly notarized and valid
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Involuntary Dealings
Dir. Of Lands vs. Reyes, (1976): Entry in the day book is sufficient notice to all persons of an adverse claim without the same being annotated at the back of the certificate of title AFP Mutual Benefit Association vs. Santiago, (2008, Nachura): Entry of the attachment in the books is sufficient notice to all persons. Hence, the fact that the deed of sale was already annotated is of no moment with regard to third persons. The preference created by the levy on attachment is not diminished by the subsequent registration of the deed of sale.
General Rule: (a) Campillo vs. PNB, 1969: A person dealing with registered property need not go beyond, but only has to rely on, the title. (b) He is charged with notice only of such burdens and claims which are annotated on the title, for registration is the operative act that binds the property.
Lenin vs. Bass, (1952): Entry thereof in the day book of the ROD is sufficient notice to all persons even if the owner’s duplicate certificate of title is not presented to the ROD.
WHEN SHOULD A PURCHASER INVESTIGATE? (c) Banks are required to exercise more care and prudence in dealing with registered lands for their business is one affected with public interest. The general rule does not apply.
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(d) Leung Yee vs. Strong Machinery, (1918): When party concerned has actual knowledge of facts and circumstances that would impel a reasonably cautious man to make inquiry. (e) Jamoc vs. CA, (1991): When purchaser is in bad faith; e.g. he had full knowledge of a previous sale. (f) Quiniano vs. CA, (1971): When a person buys land from one whose rights over the land is evidenced only by a deed of sale and an annotation in the certificate of title but no TCT.
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whether such person resides within or without the Philippines, but the court may, in its discretion, require further or other notice to be given in any case, if in its opinion the interest of justice so requires. PD 1529, Sec 56. Primary Entry Book; fees; certified copies. Each Register of Deeds shall keep a primary entry book in which, upon payment of the entry fee, he shall enter, in the order of their reception, all instruments including copies of writs and processes filed with him relating to registered land.
VOLUNTARY DEALINGS REGISTRATION OF VOLUNTARY INSTRUMENTS IN GENERAL
He shall, as a preliminary process in registration, note in such book the date, hour and minute of reception of all instruments, in the order in which they were received. They shall be regarded as registered from the time so noted, and the memorandum of each instrument, when made on the certificate of title to which it refers, shall bear the same date:
PD 1529, Sec 54. Dealings less than ownership, how registered. No new certificate shall be entered or issued pursuant to any instrument which does not divest the ownership or title from the owner or from the transferee of the registered owners. All interests in registered land less than ownership shall be registered by filing with the Register of Deeds the instrument which creates or transfers or claims such interests and by a brief memorandum thereof made by the Register of Deeds upon the certificate of title, and signed by him.
Provided, that the national government as well as the provincial and city governments shall be exempt from the payment of such fees in advance in order to be entitled to entry and registration.
A similar memorandum shall also be made on the owner's duplicate. The cancellation or extinguishment of such interests shall be registered in the same manner.
Every deed or other instrument, whether voluntary or involuntary, so filed with the Register of Deeds shall be numbered and indexed and endorsed with a reference to the proper certificate of title. All records and papers relative to registered land in the office of the Register of Deeds shall be open to the public in the same manner as court records, subject to such reasonable regulations as the Register of Deeds, under the direction of the Commissioner of Land Registration, may prescribe.
PD 1529, Sec 55. Grantee's name, nationality, etc., to be stated. Every deed or other voluntary instrument presented for registration shall contain or have endorsed upon it the full name, nationality, residence and postal address of the grantee or other person acquiring or claiming an interest under such instrument, and every deed shall also state whether the grantee is married or unmarried, and if married, the name in full of the husband or wife.
All deeds and voluntary instruments shall be presented with their respective copies and shall be attested and sealed by the Register of Deeds, endorsed with the file number, and copies may be delivered to the person presenting them.
If the grantee is a corporation or association, the instrument must contain a recital to show that such corporation or association is legally qualified to acquire private lands. Any change in the residence or postal address of such person shall be endorsed by the Register of Deeds on the original copy of the corresponding certificate of title, upon receiving a sworn statement of such change. All names and addresses shall also be entered on all certificates.
Certified copies of all instruments filed and registered may also be obtained from the Register of Deeds upon payment of the prescribed fees. Process of registration (1) File instrument creating or transferring interest and certificate of title with Register of Deeds together with: (a) Owner’s duplicate (b) Payment of fees & documentary stamp tax (c) Evidence of full payment of real estate tax (d) Document of transfer – 1 copy additional for city/provincial assessor
Notices and processed issued in relation to registered land in pursuance of this Decree may be served upon any person in interest by mailing the same to the addresses given, and shall be binding,
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(2) Register of Deeds shall make a memorandum on the certificate of title, signed by him (3) TCT shall then be issued
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If there are subsisting encumbrances and annotations They shall be carried over in the new certificate or certificates; except when they have been simultaneously discharged.
Note: (a) If the grantee is a corporation or association, it must show that it is qualified to acquire private lands. (b) PNB vs. Fernandez (1935): The issuance of a new transfer certificate without presentation of an owner’s duplicate is unwarranted and confers no right on the purchaser (c) RA 456 prohibits registration of documents affecting real property which is delinquent in the payment of real estate taxes. Further, if evidence of such payment is not presented with 15 days from the date of entry of said document in the primary entry book of the register of deeds the entry shall be deemed cancelled. (d) Pay fees and DST (government is exempt) (e) The instruments are regarded as registered from the time ROD enters them in his book.
MORTGAGES AND LEASES
PD 1529, Sec 60. Mortgage or lease of registered land. Mortgage and leases shall be registered in the manner provided in Section 54 of this Decree. The owner of registered land may mortgage or lease it by executing the deed in a form sufficient in law. Such deed of mortgage or lease and all instruments which assign, extend, discharge or otherwise deal with the mortgage or lease shall be registered, and shall take effect upon the title only from time of registration. No mortgagee's or lessee's duplicate certificate of title shall hereafter be issued by the Registers of Deeds, and those issued prior to the effectivity of this Decree are hereby deemed canceled and the holders thereof shall immediately surrender the same to the Register of Deeds concerned.
REGISTRATION OF DEEDS OF SALE AND TRANSFERS
If entire property is subject (PD 1529, Sec 57) (a) Owner executes and registers the deed which must be sufficient in form. (b) A new certificate of title is issued and Register of Deeds prepares and delivers to grantee his owner's duplicate certificate (c) Register of Deeds notes upon the OCT and the duplicate certificate the date of transfer, the volume and page of the registration book where the new certificate is registered (d) The original and the owner's duplicate of the grantor's certificate shall be stamped "canceled". (e) The deed of conveyance shall be filed and indorsed with the number and the place of registration of the certificate of title of the land conveyed.
PD 1529, Sec 61. Registration. Upon presentation for registration of the deed of mortgage or lease together with the owner's duplicate, the Register of Deeds shall enter upon the original of the certificate of title and also upon the owner's duplicate certificate a memorandum thereof, the date and time of filing and the file number assigned to the deed, and shall sign the said memorandum. He shall also note on the deed the date and time of filing and a reference to the volume and page of the registration book in which it is registered. Mortgage and leases shall be registered in the manner provided for in Section 54. When a deed of mortgage or lease is presented, ROD will enter upon the OCT and upon the owner’s duplicate a memorandum thereof and shall sign.
If only a portion of property is subject (PD 1529, Sec 58) (a) Include a plan which shows all the portions already subdivided with verified and approved technical description. (b) That plan with the certified copy of the technical descriptions shall be filed with the Register of Deeds for annotation in the TCT. (c) Register of Deeds shall issue a TCT and cancel the grantor's certificate partially OR it may be canceled totally and a new one issued describing therein the remaining portion
POWERS OF ATTORNEY; TRUSTS
PD 1529, Sec 64. Power of attorney. Any person may, by power of attorney, convey or otherwise deal with registered land and the same shall be registered with the Register of Deeds of the province or city where the land lies. Any instrument revoking such power of attorney shall be registered in like manner. PD 1529, Sec 65. Trusts in registered land. If a deed or other instrument is filed in order to transfer registered land in trust, or upon any equitable condition or limitation expressed therein, or to create
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or declare a trust or other equitable interests in such land without transfer, the particulars of the trust, condition, limitation or other equitable interest shall not be entered on the certificate; but only a memorandum thereof shall be entered by the words "in trust", or "upon condition", or other apt words, and by a reference by number to the instrument authorizing or creating the same.
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claim doesn’t affect the title of a purchaser for value and in good faith before its registration. INVOLUNTARY DEALINGS ATTACHMENT
A writ issued at the institution or during progress of an action commanding the sheriff to attach the property, rights, credits or effects of the defendant to satisfy demands of the plaintiff
A similar memorandum shall be made upon the original instrument creating or declaring the trust or other equitable interest with a reference by number to the certificate of title to which it relates and to the volume and page in the registration book in which it is registered.
Kinds (a) Preliminary (b) Garnishment (c) Levy on execution Registration of attachment/other liens (a) Copy of writ in order to preserve any lien, right or attachment upon registered land shall be filed with the Register of Deeds where the land lies, containing number of certificate of title of land to be affected or description of land (PD 1529, Sec 69) (b) Register of Deeds to index attachment in names of both plaintiff & defendant or name of person whom property is held or in whose name stands in the records (c) If duplicate of certificate of title is not presented: (1) Register of Deeds shall within 36 hours send notice to registered owner by mail stating that there has been registration & requesting him to produce duplicate so that memorandum be made (2) If owner neglects or refuses – Register of Deeds shall report matter to court. (3) Court after notice shall enter an order to owner to surrender certificate at time & place to be named therein. (d) Although notice of attachment is not noted in duplicate, notation in book of entry of Register of Deeds produces effect of registration already
PD 1529, Sec 66. Trust with power of sale, etc., how expressed. If the instrument creating or declaring a trust or other equitable interest contains an express power to sell, mortgage or deal with the land in any manner, such power shall be stated in the certificate of title by the words "with power to sell", or "power to mortgage", or by apt words of description in case of other powers. No instrument which transfers, mortgages or in any way deals with registered land in trust shall be registered, unless the enabling power thereto is expressly conferred in the trust instrument, or unless a final judgment or order of a court of competent jurisdiction has construed the instrument in favor of the power, in which case a certified copy of such judgment or order may be registered. PD 1529, Sec 68. Implied, trusts, how established. Whoever claims an interest in registered land by reason of any implied or constructive trust shall file for registration with the Register of Deeds a sworn statement thereof containing a description of the land, the name of the registered owner and a reference to the number of the certificate of title. Such claim shall not affect the title of a purchaser for value and in good faith before its registration.
Effect of registration of attachment (a) Creates real right (b) Has priority over execution sale (c) But between 2 attachments – one that is earlier in registration is preferred
(a) Powers of attorney and revocations shall be registered with the Register of Deeds of the province or city where the land lies. (b) To transfer registered land in trust without transfer, the particulars of the trust shall not be entered on the certificate. Only a memorandum shall be entered by the words "in trust", or "upon condition". (c) Power must be expressly conferred in the trust instrument. (d) If implied or constructive trust, person claiming such must execute a sworn statement. But such
Duty of Register of Deeds Ministerial but may refuse registration in the following circumstances: (1) Title to land is not in the name of defendant (2) No evidence is submitted to show that he has present or possible future interest in land Exception: If petitioner is an heir
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sale) is made: cancellation of title & issuance of a new one (e) Before cancellation, notice shall be sent to registered owner: to surrender title & show cause why it shall not be cancelled
EXECUTION AND TAX DELINQUENCY SALES
Execution sale (a) To enforce a lien of any description on registered land, any execution or affidavit to enforce such lien shall be filed with Register of Deeds where the land lies (b) Register in the registration book & memorandum upon proper certificate of title as adverse claim or as an encumbrance (c) To determine preferential rights between 2 liens: priority of registration of attachment
NOTE: Actual knowledge is equivalent to registration. NOTICE OF LIS PENDENS
PD 1529, Sec. 76. Notice of lis pendens. No action to recover possession of real estate, or to quiet title thereto, or to remove clouds upon the title thereof, or for partition, or other proceedings of any kind in court directly affecting the title to land or the use or occupation thereof or the buildings thereon, and no judgment, and no proceeding to vacate or reverse any judgment, shall have any effect upon registered land as against persons other than the parties thereto, unless a memorandum or notice stating the institution of such action or proceeding and the court wherein the same is pending, as well as the date of the institution thereof, together with a reference to the number of the certificate of title, and an adequate description of the land affected and the registered owner thereof, shall have been filed and registered.
Tax sale (a) Sale of land for collection of delinquent taxes and penalties due the Government (b) In personam (all persons interested shall be notified so that they are given opportunity to be heard) (c) Notice to be given to delinquent tax payer at last known address (d) Publication of notice must also be made in English, Spanish & local dialect & posted in a public & conspicuous place in place wherein property is situated & at the main entrance of the provincial building (e) Sale cannot affect rights of other lien holders unless they are given the right to defend their rights: due process must be strictly observed (f) Tax lien superior to attachment (g) No need to register tax lien because it is automatically registered once the tax accrues (h) But sale of registered land to foreclose a tax lien need to be registered.
Purpose To keep the subject matter within the power of the court until the entry of final judgment. It therefore creates merely a contingency & not a lien. Effect of registration (a) Impossibility of alienating the property in dispute during the pendency of the suit – may be alienated but purchaser is subject to final outcome of pending suit (b) Register of Deeds is duty bound to carry over notice of lis pendens on all new titles to be issued
PD 1529, Sec 74. Enforcement of liens on registered land. Whenever registered land is solved on execution, or taken or sold for taxes or for any assessment or to enforce a lien of any character, or for any costs and charges incident to such liens, any execution or copy of execution, any officer's return, or any deed, demand, certificate, or affidavit, or other instrument made in the course of the proceedings to enforce such liens and required by law to be recorded, shall be filed with the Register of Deeds of the province or city where the land lies and registered in the registration book, and a memorandum made upon the proper certificate of title in each case as lien or encumbrance.
Cancellation of lis pendens (PD 1529, Sec. 77) (a) Before final judgment – court may order cancellation after showing that notice is only for the purpose of molesting an adverse party or it is not necessary to protect the rights of the party who caused it to be registered (b) Register of Deeds may also cancel upon verified petition of the party who caused such registration (c) Deemed cancelled when certificate of clerk of court stating manner of disposal of proceeding is registered
Procedure of registration of tax sale (a) Officer’s return shall be submitted to Register of Deeds together with duplicate title (b) Register in the registration book (c) Memorandum shall be entered in the certificate as an adverse claim or encumbrance (d) After the period of redemption has expired & no redemption (2 years from registration of auction
Other parties who need to register Assignee in involuntary proceeding for insolvency (a) Duty of the officer serving notice to file a copy of the notice to the Register of Deeds where the property of debtor lies
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(b) Assignee elected or appointed by court shall be entitled to entry of new certificate of registered land upon presentment of copy of assignment with bankrupt’s certificate of title (duplicate) (c) New certificate shall note that it is entered to him as assignee or trustee in insolvency proceedings
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thirty days, the claimant may withdraw his adverse claim by filing with the Register of Deeds a sworn petition to that effect. When is a claim adverse? When a person claims any part or interest in registered land adverse to the registered owner, after date of the original registration
Government in eminent domain (a) Copy of judgment shall be filed in the Register of Deeds which states description of property, certificate number, interest expropriated, nature of public use (b) Memorandum shall be made or new certificate of title shall be issued
Duration of an adverse claim 30 days from the date of registration. After that the annotation of adverse claim may be cancelled upon filing of a verified petition by the party in interest. When cancelled, no second adverse claim based on the same ground may be registered by the same claimant.
ADVERSE CLAIM
Sec. 70. Adverse claim. Whoever claims any part or interest in registered land adverse to the registered owner, arising subsequent to the date of the original registration, may, if no other provision is made in this Decree for registering the same, make a statement in writing setting forth fully his alleged right or interest, and how or under whom acquired, a reference to the number of the certificate of title of the registered owner, the name of the registered owner, and a description of the land in which the right or interest is claimed.
Requisites The adverse claimant must give a statement, signed and sworn before a notary public, of the following in writing: (a) his alleged right or interest (b) how and under whom such alleged right or interest is acquired (c) the description of the land in which the right or interest is claimed and (d) the number of the certificate of title (e) his residence or the place to which all notices may be served upon him.
The statement shall be signed and sworn to, and shall state the adverse claimant's residence, and a place at which all notices may be served upon him. This statement shall be entitled to registration as an adverse claim on the certificate of title. The adverse claim shall be effective for a period of thirty days from the date of registration. After the lapse of said period, the annotation of adverse claim may be canceled upon filing of a verified petition therefor by the party in interest: Provided, however, that after cancellation, no second adverse claim based on the same ground shall be registered by the same claimant.
NOTE: Non-compliance with the above requisites renders the adverse claim non-registrable and ineffective.
Non-registrable Properties NON-REGISTRABLE LANDS 1987 Constitution, Art. XII, Sec. 2 All lands of the public domain, waters, minerals, coal, petroleum, and other mineral oils, all forces of potential energy, fisheries, forests or timber, wildlife, flora and fauna, and other natural resources are owned by the State. xxx
Before the lapse of thirty days aforesaid, any party in interest may file a petition in the Court of First Instance where the land is situated for the cancellation of the adverse claim, and the court shall grant a speedy hearing upon the question of the validity of such adverse claim, and shall render judgment as may be just and equitable. If the adverse claim is adjudged to be invalid, the registration thereof shall be ordered canceled.
Civil Code, Art. 420 The following things are property of public dominion: (1) Those intended for public use, such as roads, canals, rivers, torrents, ports and bridges constructed by the State, banks, shores, roadsteads, and others of similar character; (2) Those which belong to the State, without being for public use, and are intended for some public service or for the development of the national wealth.
If, in any case, the court, after notice and hearing, shall find that the adverse claim thus registered was frivolous, it may fine the claimant in an amount not less than one thousand pesos nor more than five thousand pesos, in its discretion. Before the lapse of
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The following lands cannot be registered: (a) Forest or timberlands (b) Lands for public use: roads, ports and bridges, etc. (c) Lands which are owned by the State for public service or development of national wealth
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the duplicate of the instrument, with appropriate annotation, certifying that he has recorded the instrument after reserving one copy thereof to be furnished the provincial or city assessor as required by existing law. (d) Tax sale, attachment and levy, notice of lis pendens, adverse claim and other instruments in the nature of involuntary dealings with respect to unregistered lands, if made in the form sufficient in law, shall likewise be admissible to record under this section.
Dealings with Unregistered Lands
(e) For the services to be rendered by the Register of Deeds under this section, he shall collect the same amount of fees prescribed for similar services for the registration of deeds or instruments concerning registered lands.
PD 1529, Sec 113. Recording of instruments relating to unregistered lands. No deed, conveyance, mortgage, lease, or other voluntary instrument affecting land not registered under the Torrens system shall be valid, except as between the parties thereto, unless such instrument shall have been recorded in the manner herein prescribed in the office of the Register of Deeds for the province or city where the land lies.
Key points (1) The system of registration for unregistered land is under the Torrens system. (2) Before: covers voluntary dealings, now includes involuntary dealings (3) Effect if prospective; binds 3rd persons after registration but yields to better rights of 3rd person prior to registration (limited effect to 3rd parties) reason: no strict investigation involved (4) Subsequent dealings – also valid if recorded (5) Register of deeds keeps day book & a register; index system is also kept
(a) The Register of Deeds for each province or city shall keep a Primary Entry Book and a Registration Book. The Primary Entry Book shall contain, among other particulars, the entry number, the names of the parties, the nature of the document, the date, hour and minute it was presented and received. The recording of the deed and other instruments relating to unregistered lands shall be effected by any of annotation on the space provided therefor in the Registration Book, after the same shall have been entered in the Primary Entry Book.
Procedure (1) Presentment of instrument dealing in unregistered land (2) If found in order – registered (3) If found defective – registration is refused writing his reason for refusal
(b) If, on the face of the instrument, it appears that it is sufficient in law, the Register of Deeds shall forthwith record the instrument in the manner provided herein. In case the Register of Deeds refuses its administration to record, said official shall advise the party in interest in writing of the ground or grounds for his refusal, and the latter may appeal the matter to the Commissioner of Land Registration in accordance with the provisions of Section 117 of this Decree. It shall be understood that any recording made under this section shall be without prejudice to a third party with a better right. (c) After recording on the Record Book, the Register of Deeds shall endorse among other things, upon the original of the recorded instruments, the file number and the date as well as the hour and minute when the document was received for recording as shown in the Primary Entry Book, returning to the registrant or person in interest
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The provision is intended to provide a remedy in cases where the law declares an act illegal but fails to provide for a relief to the party injured. (Jarencio)
ABUSE OF RIGHT Art. 19. Every person must, in the exercise of his rights and in the performance of his duties, act with justice, give everyone his due, and observe honesty and good faith.
NCC 20 does not distinguish, and the act may be done wilfully or negligently. REQUISITES
(1) The act must be wilful or negligent; (2) It must be contrary to law; (3) Damages must be suffered by the injured party.
Generally, the exercise of any right must be in accordance with the purpose for which it was established. It must not be excessive or unduly harsh; there must be no intention to injure another.
ACTS CONTRARY TO MORALS Art. 21. Any person who wilfully causes loss or injury to another in a manner that is contrary to morals, good customs or public policy shall compensate the latter for the damage.
There is abuse of right when: (a) The right is exercised for the only purpose of prejudicing or injuring another (b) The objective of the act is illegitimate (c) There is an absence of good faith
This article is designed to fill in the “countless gaps” in the statutes which would otherwise leave victims of moral wrongs helpless.
ELEMENTS:
(1) There is a legal right or duty; (2) Which is exercised in bad faith; (3) For the sole intent of prejudicing or injuring another.
ELEMENTS:
(1) Legal action; (2) Contrary to morals, public policy, good customs; (3) Intent to injure.
Velayo vs. Shell (1959): The standards in NCC 19 are implemented by NCC 21.
EXAMPLES: BREACH OF PROMISE TO MARRY, SEDUCTION AND SEXUAL ASSAULT
Globe vs. CA (1989): When a right is exercised in a manner which does not conform with the norms in NCC 19, and results in damage to another, a legal wrong is thereby committed.
Wassmer vs. Velez (1964): Mere breach of promise to marry is not an actionable wrong. But to formally set a wedding and go through all the above-described preparation and publicity, only to walk out of it when the matrimony is about to be solemnized, is quite different. This is palpably and unjustifiably contrary to good customs xxx.
University of the East vs. Jader (2000): The conscious indifference of a person to the rights or welfare of the others who may be affected by his act or omission can support a claim for damages.
Baksh vs. CA (1993): Where a man's promise to marry is in fact the proximate cause of the acceptance of his love by a woman and his representation to fulfill that promise thereafter becomes the proximate cause of the giving of herself unto him in a sexual congress, proof that he had, in reality, no intention of marrying her and that the promise was only a subtle scheme or deceptive device to entice or inveigle her to accept him and to obtain her consent to the sexual act, could justify the award of damages pursuant to Article 21 not because of such promise to marry but because of the fraud and deceit behind it and the willful injury to her honor and reputation. It is essential, however, that such injury should have been committed in a manner contrary to morals, good customs or public policy.
Nikko Hotel Manila Garden vs. Reyes (2005): Article 19, known to contain what is commonly referred to as the principle of abuse of rights, is not a panacea for all human hurts and social grievances. The object of this article is to set certain standards which must be observed not only in the exercise of one’s rights but also in the performance of one’s duties. ACTS CONTRARY TO LAW Art. 20. Every person who, contrary to law, willfully or negligently causes damage to another, shall indemnify the latter for the same.
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negligence of the defendant, the latter shall be liable for indemnity if through the act or event he was benefited.
Tanjanco v. CA (1966): However, when for one whole year, the plaintiff, a woman of legal age, maintained sexual relations with the defendant, with repeated acts of intercourse, there is here voluntariness. No case under Article 21 is made.
Art. 2142. Certain lawful, voluntary and unilateral acts give rise to the juridical relation of quasicontract to the end that no one shall be unjustly enriched or benefited at the expense of another.
MALICIOUS PROSECUTION
Malicious prosecution is the institution of any action or proceeding, either civil or criminal, maliciously and without probable cause.
Art. 2143. The provisions for quasi contracts in this Chapter do not exclude other quasi-contracts which may come within the purview of the preceding article.
ELEMENTS:
(1) The fact of the prosecution and that the defendant was himself the prosecutor, and that the action was finally terminated with an acquittal (2) The prosecutor acted without probable cause (3) The prosecutor was impelled by legal malice.
One person should not be permitted to unjustly enrich himself at the expense of another, but should be required to make restitution of, or for property or benefits received, retained, or appropriated where it is just and equitable that such restitution be made, and where much action involves no violation or frustration of law or opposition to public policy, either directly or indirectly.
Que vs. IAC (1989): To constitute malicious prosecution, there must be proof that the prosecution was prompted by a sinister design to vex and humiliate a person and that it was initiated deliberately by the defendant knowing that his charges were false and groundless. Concededly, the mere act of submitting a case to the authorities for prosecution does not make one liable for malicious prosecution.
While neither Art. 22 nor Art. 23 expressly provides for the effects of unjust enrichment, the Chapter on Quasi-Contracts (Articles 2159-2163), which complements or supplements and should be so considered in appropriate cases, does. Enrichment at the expense of another is not per se forbidden. It is such enrichment without just or legal cause that is contemplated here.
PUBLIC HUMILIATION
Grand Union vs. Espino: It is against morals, good customs and public policy to humiliate, embarrass and degrade the dignity of a person. Everyone must respect the dignity, personality, privacy and peace of mind of his neighbors and other persons (Article 26, Civil Code).
Just and legal cause is always presumed, and the plaintiff has the burden of proving its absence. The restitution must cover the loss suffered by the plaintiff but it can never exceed the amount of unjust enrichment of the defendant if it is less than the loss of the plaintiff.
UNJUSTIFIED DISMISSAL
The right of an employer to dismiss an employee is not to be confused with the manner in which this right is to be exercised.
Requisites: (1) That the defendant has been enriched; (2) That the plaintiff has suffered a loss; (3) That the enrichment of the defendant is without just or legal ground; and (4) That the plaintiff has no other action based on contract, crime or quasi-delict
When the manner in which the company exercised its right to dismiss was abusive, oppressive and malicious, it is liable for damages. UNJUST ENRICHMENT Art. 22. Every person who through an act of performance by another, or any other means, acquires or comes into possession of something at the expense of the latter without just or legal ground, shall return the same to him.
LIABILITY WITHOUT FAULT
Art. 23. Even when an act or event causing damage to another’s party was not due to the fault or negligence of the defendant, the latter shall be liable for indemnity if through the act or event he was benefited.
Art. 23. Even when an act or event causing damage to another’s property was not due to the fault or
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The Tortfeasor
BASIS OF LIABILITY
Equity. An involuntary act, because of its character, cannot generally create an obligation; but when by such act its author has been enriched, it is only just that he should indemnify for the damages caused to the extent of this enrichment.
Worcester vs. Ocampo (1958): Tortfeasor refers to all persons who command, instigate, promote, encourage, advise, countenance, cooperate in, aid or abet the commission of a tort, or who approve of it after it is done, if done for their benefit.
SCOPE OF LIABILITY
The indemnity does not include unrealized profits of the injured party, because the defendant’s enrichment is the limit of his liability.
THE DIRECT TORTFEASOR Art. 2176. Whoever by act or omission causes damage to another, there being fault or negligence, is obliged to pay for the damage done.
Classification of Torts
The tortfeasor may be a natural or juridical person. PERSONS MADE LIABLE FOR OTHERS Art. 2180 (1). The obligation imposed by Article 2176 is demandable not only for one’s own acts or omissions, but also for those of persons for whom one is responsible.
ACCORDING TO MANNER OF COMMISSION (1) Negligent Tort – consists in the failure to act according to the standard of diligence required under the attendant circumstances. It is a voluntary act or omission which results in injury to others, without intending to cause the same.
PRINCIPLE OF VICARIOUS LIABILITY; DEFINITION
A person who has not committed the act or omission which caused damage or injury to another may nevertheless be held civilly liable to the latter either directly or subsidiarily under certain circumstances.
(2) Intentional Tort – perpetrated by one who intends to do that which the law has declared to be wrong. It is conduct where the actor desires to cause the consequences of the act, or that he believes that the consequences are substantially certain to result therefrom.
This is also known as the “doctrine of imputed negligence.”
Note: Article 2176 where it refers to “fault or negligence” covers not only acts “not punishable by law” but also acts criminal in character, whether intentional and voluntary or negligent. (Elcano vs Hill (1977))
Art. 2180, par. 8. The responsibility treated of in this article shall cease when the persons herein mentioned prove that they observed all the diligence of a good father of a family to prevent damage. General Rule: proper defense is the exercise of the diligence of a good father of a family (bonus paterfamilias)
(3) Strict Liability – one is liable independent of fault or negligence. It only requires proof of a certain set of facts. Liability here is based on the breach of an absolute duty to make something safe. It most often applies to ultra-hazardous activities or in product liability cases. It is also known as “absolute liability” or liability without fault.” Strict liability is imposed by articles 1314, 1711, 1712, 1723, 2183, 2187, 2189, 2190, 2191, 2192, 2193.
Exception: common carriers, and all others subject to extraordinary diligence. BASIS OF VICARIOUS LIABILITY
The basis of vicarious liability is NOT respondeat superior; rather, it is the principle of pater familias.
ACCORDING TO SCOPE GENERAL
Respondeat superior
Tort liability is based on any of the three categories: intentional, negligent, strict liability SPECIFIC
Includes trespass, assault, battery, negligence, products liability, and intentional infliction of emotional distress
Under American jurisprudence, it means that the negligence of the servant is conclusively the negligence of the master.
Bonus pater Under the principle of pater familias, familias the basis of the “master’s” liability is the negligence in the supervision of his subordinates. The “master” will be
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(1) School (2) Administrators (3) Teachers (4) Individual, entity, or institution engaged in child care
freed from liability if he can prove that he had observed all the diligence of a good father of the family to prevent the damage.
PARENTS AND ADOPTERS
LIABILITY OF THE ACTUAL TORTFEASOR
The author of the act is not exempted from personal liability. He may be sued alone or with the person responsible for him.
BASIS OF LIABILITY
It is based on the presumption of failure on their part to properly exercise their parental authority for the good education of their children and exert adequate vigilance over them.
2 REQUISITES ACCORDING TO CHIRONI (1) The duty of supervision (2) The possibility of making such supervision effective
It is imposed only when children are living with the parents.
PRESUMPTION OF NEGLIGENCE ON PERSONS INDIRECTLY RESPONSIBLE
If there is just cause for separation, the responsibility ceases.
Liability arises by virtue of a presumption juris tantum of negligence on the part of the persons made responsible under the article, derived from their failure to exercise due care and vigilance over the acts of the subordinates to prevent them from causing damage.
Note: The responsibility of the father and mother is not simultaneous but alternate. WHEN RESPONSIBILITY CEASES
When parent is not in the position to exercise authority and supervision over the child
The non-performance of certain duties of precaution and prudence imposed upon the persons who become responsible by civil bond uniting the actor to them.
MEANING OF “MINORITY”
Par. 2 and 3 of Art. 2180 speak of minors. Minors here refer to those who are below 21 years of age, NOT below 18 years. The law reducing the majority age from 21 to 18 years old did not amend these pars.
Tamargo v. CA (1992): The basis of this vicarious, although primary, liability is, as in Article 2176, fault or negligence, which is presumed from that which accompanied the causative act or omission. The presumption is merely prima facie and may therefore be rebutted.
Art. 236, par. 3 of the FC, as amended by RA 6809, provides: “Nothing in this Code shall be construed to derogate from the duty or responsibility of parents and guardians for children and wards below 21 years of age mentioned in the second and third paragraphs of 2180 of the Civil Code.”
NATURE OF LIABILITY
The liability of the vicarious obligor is PRIMARY and DIRECT (solidarily liable with the tortfesor), not subsidiary. His responsibility is not conditioned upon the insolvency of or prior recourse against the negligent tortfeasor.
ADOPTED CHILDREN
Judicially adopted children are considered legitimate children of their adopting parents. Thus, adopters are civilly liable for their tortious/ criminal acts if the children live with them and are below 21 years of age.
PERSONS VICARIOUSLY LIABLE (ART. 2180) WHO ARE LIABLE FOR MINORS? (a) Parents (the father, and in case of his death or incapacity, the mother) (b) Adopters (c) Court-appointed guardians (d) Substitute Parental Authorities (1) Grandparents (2) Oldest qualified sibling over 21 years old (3) Child’s actual custodian, provided he is qualified and over 21 years old. (e) Special Parental Authorities
ILLEGITIMATE CHILDREN
Responsibility is with the mother whom the law vests parental authority. REASON FOR VICARIOUS LIABILITY
Exconde vs. Capuno (1957): The civil liability which the law
imposes upon the father and, in case of his death or incapacity, the mother, for any damages that may be
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caused by the minor children who live with them, is obvious. This is a necessary consequence of the parental authority they exercise over them which imposes upon the parents the 'duty of supporting them, keeping them in their company, educating them in proportion to their means', while, on the other hand, gives them the 'right to correct and punish them in moderation.'
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PARENTAL AUTHORITY OVER FOUNDLINGS, ABANDONED, NEGLECTED OR ABUSED AND OTHER SIMILARLY SITUATED CHILDREN
In case of foundlings, abandoned, neglected or abused children and other children similarly situated, parental authority shall be entrusted in summary judicial proceedings to heads of children's homes, orphanages and similar institutions duly accredited by the proper government agency. (FC Art. 217)
Tamargo vs. CA (1992): The basis of parental authority for the torts of a minor child is the relationship existing between the parents and the minor child living with them and over whom, the law presumes, the parents exercise supervision and control. To hold that parental authority had been retroactively lodged in the adoptive parents so as to burden them with the liability for a tortious act that they could not have foreseen and prevented would be unfair.
GUARDIANS LIABILITY OF GUARDIANS
Guardians are liable for damages caused by the minors or incapacitated persons who are under their authority and live in their company. [Art. 2180, par. 3] (a) The liability of guardians with respect to their wards is governed by the same rule as in the liability of parents with respect to their children below 21 years and who live with them (b) “Incompetent” includes (1) those suffering the penalty of civil interdiction, or (2) prodigals, (3) deaf and dumb who are unable to read and write (4) unsound mind, even though they have lucid intervals (5) being of sound mind, but by reason of age, disease, weak mind, and other similar causes, cannot take care of themselves or manage their property [Rule 92, ROC]
Parental liability is, in other words, anchored upon parental authority coupled with presumed parental dereliction in the discharge of the duties accompanying such authority. The parental dereliction is, of course, only presumed and the presumption can be overturned under Article 2180 of the Civil Code by proof that the parents had exercised all the diligence of a good father of a family to prevent the damage (NOTE: Art 2180, par 2 of the Civil Code which holds the father liable for damages has been modified by the Family Code and PD 603. Art. 211 of the FC declares joint parental authority of the mother and father over common children. The parent(s) exercising parental authority are liable for the torts of their children.
Liability of minor or insane tortfeasor without a parent or guardian He shall be answerable with his own property in an action against him where a guardian ad litem shall be appointed. [Art. 2182]
Libi vs. IAC (1992): The parent's liability under 2180 should be primary and not subsidiary. If it were subsidiary, the parents cannot invoke due diligence as a defense. Such interpretation reconciles 2180 with 2194 which calls for solidary liability of joint tortfeasors.
SCHOOL, TEACHERS AND ADMINISTRATORS Teachers or heads of establishments of arts and trades shall be liable for damages caused by their pupils and students or apprentices, so long as they remain in their custody. [Art. 2180, par. 7]
REQUISITES FOR LIABILITY TO ATTACH
Who are liable
(1) The child is below 21 years old (2) The child is under the parental authority of the parents The child is living in the company of the parents
Teacher-incharge (the one designated to exercise supervision over students) Head of establishment
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Requisite for Liability to Attach and Pupils and students remain in teacher’s custody regardless of the age Custody regardless of
For whose Acts Pupils students
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Who are liable of arts and trades School (generally not held liable)
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For whose Acts
conducted. Recess by its nature does not include dismissal.
Requisite for Liability to Attach the age
If the tortfeasor is a Must student of the below 18 school (Art 218 FC) If the tortfeasor is a teacher/ employee of the school, it is liable as employer under 2180 (5) of CC (St. Francis vs. CA) If the tortfeasor is a stranger, it is liable for breach of contract. (PSBA vs. CA)
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Mere fact of being enrolled or being in the premises of a school without more does not constitute “attending school” or being in the “protective and supervisory custody” of the school, as concemplated by law.
be
Ylarde vs. Aquino (1988): The principal of the school cannot be held liable for the reason that the school he leads is an academic school and not a school of arts and trades. OWNERS AND MANAGERS OF ESTABLISHMENTS AND ENTERPRISES The owners and managers of an establishment or enterprise are likewise responsible for damages caused by their employees in the service of the branches in which the latter are employed or on the occasion of their functions. (Art. 2180, par. 4)
Parental Authority of Special Parental Authorities may only be exercised while under their supervision, instruction, or custody. This attaches to all authorized activities, whether inside or outside the school, entity, or institution.
For whose acts Owners and Their managers of an employees establishment or enterprise Who are liable
Palisoc v. Brillantes: “Custody” means the protective and supervisory custody that the school, its head and teachers exercise over the pupils, for as long as they are in attendance in school, which includes recess time. There is nothing in the law that requires that for such liability to attach, the pupil or student who commits the tortious act must live and board in the school, as erroneously held by the lower court, and in the dicta in Mercado (as well as in Exconde) on which it relied, must now be deemed to have been set aside by this decision.
Requisites for liability to attach The damage was caused in the service of the branches in which the employees are employed -ORThe damage was caused on the occasion of their functions
Philippine Rabbit vs. Philam Forwarders (1975): “Owners and managers of an establishment or enterprise” does not include a manager of a corporation. (Spanish term “directores” connotes “employer.” But manager of a corporation is not an employer, but rather merely an employee of the owner.)
Amadora v. CA: As long as it is shown that the student is in the school premises pursuant to a legitimate student objective, in the exercise of a legitimate right, or the enjoyment of a legitimate student privilege, the responsibility of the school authorities over the student continues.
EMPLOYERS (in general) Employers shall be liable for the damages caused by their employees and household helpers acting within the scope of their assigned tasks, even though the former are not engaged in any business or industry. (Art 2180, par. 5)
Salvosa v. IAC (1988): A student not “at attendance in the school” cannot be in “recess” thereat. A “recess,” as the concept is embraced in the phrase “at attendance in the school,” contemplates a situation of temporary adjournment of school activities where the student still remains within call of his mentor and is not permitted to leave the school premises, or the area within which the school activity is
MEANING OF EMPLOYER:
Art. 97 (b) (Labor Code). "Employer" includes any person acting directly or indirectly in the interest of an employer in relation to an employee and shall include the government and all its branches,
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subdivisions and instrumentalities, all governmentowned or controlled corporations and institutions, as well as non-profit private institutions, or organizations.
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Basis of liability Employer’s negligence in (1) The selection of their employees (culpa in eligiendo) (2) The supervision over their employees (culpa in vigilando)
Professional Services vs. CA and Agana (2010): This Court still employs the "control test" to determine the existence of an employer-employee relationship between hospital and doctor. Under the "control test", an employment relationship exists between a physician and a hospital if the hospital controls both the means and the details of the process by which the physician is to accomplish his task.
Cuison vs. Norton & Harrison (1930): Basis for civil liability of employers is pater familias. Presumption of Negligence The presentation of proof of the negligence of its employee gives rise to the presumption that the defendant employer did not exercise the diligence of a good father of a family in the selection and supervision of its employees.
INDEPENDENT CONTRACTOR
General Rule: Master not generally liable for the fault or negligence of an independent contractor performing some work for him
Ramos vs. C.O.L. Realty Corp. (2009): For the employer to avoid the solidary liability for a tort committed by his employee, an employer must rebut the presumption by presenting adequate and convincing proof that in the selection and supervision of his employee, he or she exercised the care and diligence of a good father of a family. Employers must submit concrete proof, including documentary evidence, that they complied with everything that was incumbent on them.
Exception: One who hires an independent contractor, but controls the latter’s work is also responsible for the independent contractor’s negligence. The existence of the employer-employee relationship must first be established before an employer may be made vicariously liable under Art. 2180, CC. REQUISITES:
(1) Employee chosen by employer or through another (2) Services rendered in accordance with orders which employer has authority to give (3) Illicit act of employee was on the occasion or by reason of the functions entrusted to him (4) Presumption of negligence
Necessity of presumption of negligence It is difficult for any person injured to prove the employer’s negligence as they would be proving negative facts. EMPLOYER NEED NOT BE ENGAGED IN BUSINESS OR INDUSTRY
Castilex Industrial Corp. vs. Vasquez (1999): The phrase "even though the former are not engaged in any business or industry" found in the fifth paragraph should be interpreted to mean that it is not necessary for the employer to be engaged in any business or industry to be liable for the negligence of his employee who is acting within the scope of his assigned task.
To make the employer liable, it must be established that the injurious or tortious act was committed at the time that the employee was performing his functions. Filamer vs. IAC (1992): “Within the scope of their assigned task” in Art. 2180 includes any act done by an employee in furtherance of the interests, or for the account of the employer at the time of the infliction of the injury or damage.
A distinction must be made between the two provisions to determine what is applicable. Both provisions apply to employers: the fourth paragraph, to owners and managers of an establishment or enterprise; and the fifth paragraph, to employers in general, whether or not engaged in any business or industry. The fourth paragraph covers negligent acts of employees committed either in the service of the branches or on the occasion of their functions, while the fifth paragraph encompasses negligent acts of employees acting within the scope of their assigned task. The latter is an expansion of the former in both employer coverage and acts included. Negligent acts
De Leon Brokerage vs. CA (1962): Employer need not be riding in the vehicle to become liable for a driver’s negligence. Article 2184 mandating that the owner is only held solidarily liable if he is riding in the vehicle at the time of the mishap, only applies to those owners of vehicles, who do not come within the ambit of Article 2180 (as owners of an establishment or enterprise.)
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of employees, whether or not the employer is engaged in a business or industry, are covered so long as they were acting within the scope of their assigned task, even though committed neither in the service of the branches nor on the occasion of their functions. For, admittedly, employees oftentimes wear different hats. They perform functions which are beyond their office, title or designation but which, nevertheless, are still within the call of duty.
applicant for employment as to his qualifications, his experience and record of service. Metro Manila Transit vs. CA (1998): The responsibility of employers for the negligence of their employees in the performance of their duties is primary, that is, the injured party may recover from the employers directly, regardless of the solvency of their employees. The rationale for the rule on vicarious liability of the employer for the torts of the employees is that this is a required cost of doing business. They are placed upon the employer because, having engaged in the enterprise, which will on the basis of all past experience involve harm to others through the tort of employees, and sought to profit by it, it is just that he, rather than the innocent plaintiff, should bear them; and because he is better able to absorb them, through prices, rates or liability or insurance, and so to shift them to society, to the community at large.
Under the fifth paragraph of Article 2180, whether or not engaged in any business or industry, an employer is liable for the torts committed by employees within the scope of his assigned tasks. But it is necessary to establish the employeremployee relationship; once this is done, the plaintiff must show, to hold the employer liable, that the employee was acting within the scope of his assigned task when the tort complained of was committed. It is only then that the employer may find it necessary to interpose the defense of due diligence in the selection and supervision of the employee. th
Nature of Employer’s Liability The employer is PRIMARILY and SOLIDARILY liable for the tortious act of the employee. The employer may recover from the employee, the amount it will have to pay the offended party’s claim.
th
Distinction between 4 and 5 paragraph of 2180 4th paragraph
5th paragraph
Liable persons Owners and managers of an establishment or an enterprise
Employers in general, whether or not engaged in business or industry
Covered acts
Negligent acts of employees acting within the scope of their assigned task
Negligent acts of employees committed either in the service of the branches or on the occasion of their functions
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Such recovery, however, is NOT for the entire amount. To allow such would be as if to say that the employer was not negligent. Philtranco vs. CA (1997): The liability of the registered owner and driver is solidary, primary and direct. Criminal Negligence Fernando v. Franco: The vicarious liability of the employer for criminal negligence of his employee is governed by RPC 103. Conviction of the employee conclusively binds the employer. Defense of due diligence in the selection and supervision of the employee is NOT available. The employer cannot appeal the conviction.
DEFENSE OF DILIGENCE IN SELECTION AND SUPERVISION
Metro Manila Transit vs. CA (1993): Due diligence in the SUPERVISION of employees includes the formulation of suitable rules and regulations for the guidance of employees and the issuance of proper instructions intended for the protection of the public and persons with whom the employer has relations through his or her employees and the imposition of necessary disciplinary measures upon employees in case of breach or as may be warranted to ensure performance of acts as indispensable to the business of and beneficial to their employee.
Soliman v. Tuazon (1992): Liability for illegal or harmful acts committed by security guards attaches to the employer agency, not to the clients or customers of such agency. Registered Owner Rule (1) The registered owner of the vehicle is primarily responsible to the public for whatever damage or injury the vehicle may have caused, even if he had already sold the same to someone else. The policy is the easy identification of the owner who can be held responsible so as not to
Due diligence in the SELECTION of employees require that the employer carefully examined the
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inconvenience or prejudice the third party injured. (Cadiente v. Macas, 2008)
private corporation or individual. (Mendoza vs. De Leon, 1916)
(2) This rule applies even if the vehicle is leased to third persons.
The State agencies or subdivisions, in the pursuance of proprietary functions, are akin to any other private corporation. They may be sued for: (1) Torts committed by them (Art. 2176) or (2) Torts committed by their employees (art 2180).
Remedy of the registered owner His liability is subject to his right of recourse against the transferee or buyer.
As long as it is performing proprietary functions, it can be held liable for the acts of its employees, both regular and special.
THE STATE The State may not be sued without its consent. (Sec 3, Art XVI, 1987 Constitution)
Notes: (a) As a governmental entity: Liable only for acts of its special agents (b) As a corporate entity: May be held liable just as any other employer for the acts of its employees (c) Special Agent: One duly empowered by a definite order or commission to perform some act or one charged with some definite purpose which give rise to the claim; if he is a government employee or official, he must be acting under a definite and fixed order or commission, foreign to the exercise of the duties of his office
The State is responsible in like manner when it acts through a special agent; but not when the damage has been caused by the official to whom the task done properly pertains, in which case what is provided in Article 2176 shall be applicable. (Art 2180, par. 6) Merritt vs. Government of the Philippine Islands (1960): A special agent is one who receives a definite and fixed order or commission, foreign to the exercise of the duties of his office if he is a special official.
JOINT TORTFEASORS The responsibility of two or more persons who are liable for quasi-delict is solidary. (Art. 2194)
This concept does not apply to any executive agent who is an employee of the active administration and who on his own responsibility performs the functions which are inherent in and naturally pertain to his office.
DEFINITION OF “JOINT TORTFEASORS”
The responsibility of the state is limited to that which it contracts through a special agent, duly empowered by a definite order or commission to perform some act or charged with some definite purpose which gives rise to the claim.
Filipinas Broadcasting Network vs. AMEC-BCCM (2005): They are all persons who command, instigate, promote, encourage, advise, countenance, cooperate in, aid or abet in the commission of a tort, or who approve of it after it is done, if done for their benefit.
General Rule: The State cannot be sued.
APPLICABILITY OF THE PROVISION
Exceptions: (1) There is express legislative consent (2) The State filed the case (because here, it is deemed to have waived its immunity.)
The injury must be indivisible.
The provision applies when there are 2 or more persons who have participated in the commission of a single quasi-delict.
NATURE OF LIABILITY
INSTANCES WHERE THE STATE GIVES ITS CONSENT TO BE SUED
Solidary – The person injured may sue all of them, or any number less than all, and they are all together solidarily liable for the whole damage.
(1) Art. 2180 (6) is an example of an express legislative consent. Here, the State assumes a limited liability for the acts of its special agents. (2) Art. 2189 provides for state liability for damages caused by defective condition of public works. (3) Local Government Code provides for the liability of local government units for wrongful exercise of its proprietary (as opposed to its governmental) functions. The latter is the same as that of a
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Acts of Omission and its Modalities
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Quezon City vs. Dacara (2005): Proximate cause is determined from the facts of each case, upon a combined consideration of logic, common sense, policy or precedent.
Human conduct can be described alternatively as acts or omission. In relation to the existence of a legal duty, conduct may be described in terms of action or inaction, or “misfeasance” or “nonfeasance.”
DIFFERENTIATED FROM: REMOTE CAUSE
Manila Electric v. Remonquillo: A prior and remote cause cannot be made the basis of an action if such remote cause did nothing more than furnish the condition or give rise to the occasion by which the injury was made possible, if there intervened between such prior or remote cause and the injury a distinct, successive, unrelated, and efficient cause of the injury, even though such injury would not have happened but for such condition or occasion. Concurrent Cause – Several causes producing the injury, and each is an efficient cause without which the injury would not have happened. The injury is attributed to any or all the causes, and recovery may be had against any or all of those responsible.
Manresa; “liability for personal acts or omission is founded on that indisputable principle of justice recognized by all legislators that when a person by his act or omission causes damage or prejudice to another, a juridical relation is created by virtue of which the injured person acquires a right to be indemnified and the person causing the damage is charged with the corresponding duty of repairing the damage. The reason for this is found in the obvious truth that man should subordinate his acts to the precepts of prudence and if he fails to observe them and cause damage to another, he must repair the damage.”
Far Eastern Shipping v. CA: Where the concurrent or successive negligent acts or omissions of two or more persons, although acting independently, are in combination the direct and proximate cause of a single injury to a third person, it is impossible to determine in what proportion each contributed to the injury and either of them is responsible for the whole injury. Where their concurring negligence resulted in injury or damage to a third party, they become joint tortfeasors and are solidarily liable for the resulting damage.
Proximate Cause CONCEPT OF PROXIMATE CAUSE In order that civil liability for negligence may arise, there must be a direct causal connection between the damage suffered by the plaintiff and the act or omission of the defendant. In other words, the act or omission of the defendant must be the proximate cause of the loss or damage of the plaintiff.
INTERVENING CAUSE
DEFINITION Bataclan v. Medina: PROXIMATE CAUSE: that cause, which, in natural and continuous sequence, unbroken by any efficient intervening cause, produces the injury, and without which the result would not have occurred.
Phoenix Construction v. IAC: If the intervening cause is one which in ordinary human experience is reasonably to be anticipated, or one which the defendant has reason to anticipate under the particular circumstances. The defendant may be negligent, among other reasons, because of failure to guard against it.
PROXIMATE LEGAL CAUSE:
that acting first and producing the injury, either immediately or by setting other events in motion, all constituting a natural and continuous chain of events, each having a close causal connection with its immediate predecessor, the final event in the chain immediately effecting the injury as a natural and probable result of the cause which first acted, under such circumstances that the person responsible for the first event should, as an ordinary prudent and intelligent person, have reasonable ground to expect at the moment of his act or default that an injury to some person might probably result therefrom
There is an intervening cause combining with the defendant’s conduct to produce the result, and the defendant’s negligence consists in failure to protect the plaintiff against that very risk. Foreseeable intervening forces are within the scope of the original risk, and hence of the defendant’s negligence.
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unusual nature of the act resulting in injury to plaintiff that is the test of foreseeability, but whether the result of the act is within the ambit of the hazards covered by the duty imposed upon the defendant.
EFFICIENT INTERVENING CAUSE
Teague vs. Fernandez (1973): The test is not in the number of intervening causes, but in their character and in the natural and probable connection between the wrong done and the injurious consequence.
CAUSE V. CONDITION Many courts have sought to distinguish between the active “cause” of the harm and the existing “conditions” upon which that cause operated. If the defendant has created only a passive, static condition which made the damage possible, he is said not to be liable.
TESTS TO DETERMINE PROXIMATE CAUSE CAUSE IN FACT: The first step is to determine whether the defendant’s conduct, in point of fact, was a factor in causing plaintiff’s damage. EFFECTIVENESS OF THE CAUSE; “BUT FOR” RULE: whether
such negligent conduct is a cause without which the injury would not have taken place (sine qua non rule) or is the efficient cause which set in motion the chain of circumstances leading to the injury. (Bataclan v. Medina)
Phoenix Construction vs. IAC (1987): The distinction between cause and condition has already been almost entirely discredited. Prosser and Keeton: So far as the fact of causation is concerned, in the sense of necessary antecedents which could have played an important part in producing the result, it is quite impossible to distinguish between active forces and passive situations, particularly since the latter are the result of other active forces which have gone before. (NOTE: active force is the cause while the passive situation is the condition)
SUBSTANTIAL FACTOR TEST:
If the actor’s conduct is a substantial factor in bringing about harm to another, the fact that the actor neither foresees nor should have foreseen the harm or the manner in which it occurred, does not prevent him from being liable. (Philippine Rabit v. IAC) FORESEEABILITY TEST: Anticipation of consequence is a
necessary element in determining not only whether a particular act or omission was negligent, but also whether the injury complained of was proximately caused by such act or omission.
It is not the distinction which is important but the nature of the risk and the character of the intervening cause.
NATURAL AND PROBABLE CONSEQUENCE TEST:
A natural consequence of an act is the consequence which ordinarily follows it. A probable consequence is one that is more likely to follow than fail to follow its supposed cause but it need not be one which necessarily follows such cause.
NATURAL AND PROBABLE CONSEQUENCES
ORDINARY AND NATURAL OR DIRECT CONSEQUENCE TEST:
FORESEEABILITY
LEGAL CAUSE A natural consequence of an act is the consequence which ordinarily follows it. A probable consequence is one that is more likely to follow than fail to follow its supposed cause but it need not be one which necessarily follows such cause.
If negligence is a cause in fact of the injury, the liability of the wrongdoer extends to all the injurious consequences.
Anticipation of consequence is a necessary element in determining not only whether a particular act or omission was negligent, but also whether the injury complained of was proximately caused by such act or omission.
HINDSIGHT TEST:
A party guilty of negligence or omission of duty is responsible for all the consequences which a prudent and experienced party, fully acquainted with all the circumstances which in fact exist, whether they could have been ascertained by reasonable diligence, or not, would have thought at the time of the negligent act as reasonably possible to follow, if they had been suggested to his mind.
Jarencio: Where the particular harm sustained was reasonably foreseeable at the time of the defendant’s misconduct, his act or omission is the legal cause thereof. Foreseeability is the fundamental basis of the law of negligence. To be negligent, the defendant must have acted or failed to act in such a way that an ordinary reasonable man would have realized that certain interests of certain persons were reasonably subjected to a general but definite class of risks.
ORBIT OF THE RISK TEST:
If the foreseeable risk to plaintiff created a duty which the defendant breached, liability is imposed for any resulting injury within the orbit or scope of such injury. It is not the
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DOCTRINE OF LAST CLEAR CHANCE Also known as: "doctrine of discovered peril” or “doctrine of supervening negligence” or “humanitarian doctrine”
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Note: (a) If plaintiff is the proximate cause: NO RECOVERY can be made. (b) If plaintiff is NOT the proximate cause: Recovery can be made but such will be mitigated. (c) If negligence of parties is equal in degree, then each bears his own loss.)
The negligence of the plaintiff does not preclude a recovery for the negligence of the defendant where it appears that the defendant by exercising reasonable care and prudence, might have avoided injurious consequences to the plaintiff notwithstanding the plaintiff’s (own) negligence. (Sangco, Torts and Damages.)
Pantranco vs. Baesa (1989): Last clear chance applies only if the person who allegedly had the last opportunity to avert the accident was aware of the existence of peril or should, with exercise of due care, have been aware of it.
Consolidated Bank v. CA: The doctrine of last clear chance states that where both parties are negligent but the negligent act of one is appreciably later than that of the other, or where it is impossible to determine whose fault or negligence caused the loss, the one who had the last clear opportunity to avoid the loss but failed to do so, is chargeable with the loss. The antecedent negligence of the plaintiff does not preclude him from recovering damages caused by the supervening negligence of the defendant, who had the last fair chance to prevent the impending harm by the exercise of due diligence.
Ong vs. Metropolitan (1958): Last clear chance does not apply where the party charged is required to act instantaneously, and if the injury cannot be avoided by the application of all means at hand after the peril is or should have been discovered. Bustamante vs. CA (1991): The doctrine of last clear chance, as enunciated in Anuran v. Buno, applies in a suit between the owners and drivers of colliding vehicles. It does not arise where a passenger demands responsibility from the carrier to enforce its contractual obligations. It will be inequitable to exempt the negligent driver of the jeepney and its owners on the ground that the other driver was likewise guilty of negligence.
Picart v. Smith: If both parties are found to be negligent; but, their negligence are not contemporaneous, the person who has the last fair chance to avoid the impending harm and fails to do so is chargeable with the consequences, without reference to the prior negligence of the other party.
Phoenix vs. IAC (1987): Doctrine of last clear chance does not seem to have a role to play in a jurisdiction where the common law concept of contributory negligence as an absolute bar to recovery by the plaintiff, has itself been rejected, as it has been in 2179 of CC.
ELEMENTS:
(1) Plaintiff’s own negligence puts himself in a dangerous situation; (2) Defendant saw or discovered, by exercising reasonable care, the perilous position of plaintiff; (3) In due time to avoid injuring him (4) Despite notice and imminent peril, defendant failed to employ care to avoid injury; and (5) Injury of plaintiff resulted.
CONTRIBUTORY NEGLIGENCE Valenzuela v. CA: Conduct on the part of the injured party, which contributed as a legal cause to the harm he has suffered, which falls below the standard to which he is required to conform for his own protection.
COVERS SUCCESSIVE ACTS OF NEGLIGENCE
Primary negligence of the defendant contributory negligence of the plaintiff subsequent negligence of the defendant in failing to avoid the injury to the plaintiff
MH Rakes v. Atlantic: Contributory negligence – does not defeat an action if it can be shown that the defendant might, by the exercise of reasonable care and prudence, have avoided the consequences of the injured party's negligence. Petitioner’s negligence contributed only to his own injury and not to the principal occurrence — it was merely an element to the damage caused upon him.
INAPPLICABLE TO JOINT TORTFEASORS
However, the doctrine cannot be extended into the field of joint tortfeasors as a test of whether only one of them should be held liable to the injured person by reason of his discovery of the latter’s peril, and it cannot be invoked as between defendants concurrently negligent.
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WHEN IS IT A BAR TO RECOVERY?
CLASSES OF INJURY
Only when the proximate cause is on the part of the plaintiff. Where the plaintiff contributes to the principal occurrence, as one of its determining factors, he cannot recover. Where, in conjunction with the occurrence, he contributes only to his own injury, he may recover the amount that the defendant responsible for the event should pay for such injury, less a sum deemed a suitable equivalent for his own imprudence.
INJURY TO PERSONS
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Art. 19. Every person must, in the exercise of his rights and in the performance of his duties, act with justice, give everyone his due, and observe honesty and good faith. Art. 20. Every person who, contrary to law, willfully or negligently causes damage to another shall indemnify the latter for the same.
Injury is the illegal invasion of a legal right.
Art. 21. Any person who willfully causes loss or injury to another in a manner that is contrary to morals, good customs or public policy shall compensate the latter for the damage.
Legal Right – A legal claim enforced by sanctions
INJURY TO PROPERTY
Legal Injury
Art. 23. Even when an act or event causing damage to another’s property was not due to the fault or negligence of the defendant, the latter shall be liable for indemnity if through the act or event he was benefited.
Legal Duty – That which the law requires to be done to a determinate person ELEMENTS: (1) Legal right in favor of a person (2) Correlative legal duty on the part of another (3) Wrong in the form of an act or omission or violation of said legal right and duty with consequent injury or damage
INJURY TO RELATIONS
Art. 26. Every person shall respect the dignity, personality, privacy and peace of mind of his neighbors and other persons. The following and similar acts, though they may not constitute a criminal offense, shall produce a cause of action for damages, prevention and other relief; (1) Prying into the privacy of another’s residence; (2) Meddling with or disturbing the private life or family relations of another; (3) Intriguing to cause another to be alienated from his friends; (4) Vexing or humiliating another on account of his religious beliefs, lowly station in life, place of birth, physical defect, or other personal condition.
Custodio vs. CA (1996): To warrant recovery of damages, there must be both a right of action for a legal wrong inflicted by the defendant, and damage resulting to the plaintiff therefrom. The underlying basis for the award of tort damages is the premise that an individual was injured in contemplation of law. The law affords no remedy for damages resulting from an act which does not amount to a legal injury or wrong. The act must not only be hurtful, but wrongful (damnum et injuria). Amonoy vs. Gutierrez (2001): The exercise of a right ends when the right disappears, and it disappears when it is abused, especially to the prejudice of others. The mask of a right without the spirit of justice which gives it life, is repugnant to the modern concept of social law. It cannot be said that a person exercises a right when he unnecessarily prejudices another xxx. Over and above the specific precepts of positive law are the supreme norms of justice; and he who violates them violates the law. For this reason it is not permissible to abuse our rights to prejudice others.
Art. 33. In cases of defamation, fraud, and physical injuries, a civil action for damages, entirely separate and distinct from the criminal action, may be brought by the injured party. Such civil action shall proceed independently of the criminal prosecution, and shall require only a preponderance of evidence.
Intentional Torts CONCEPT Under Article 2176, a person is also held liable for intentional and malicious acts. The liability is
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founded on the indisputable principle of justice recognized by all legislations that when a person, by his act or omission, causes damage or prejudice to another, a juridical relation is created by virtue of which the injured person acquires a right to be indemnified and the person causing the damage is charged with the corresponding duty of repairing the damage.
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ASSAULT (GRAVE THREAT)
An intentional, unlawful offer of physical injury to another by force unlawfully directed toward the person of another, under such circumstances as to create a well-founded fear of imminent peril, coupled with the apparent present ability to effectuate the attempt if not prevented. The wrong is committed when unreasonable fear is inspired in the plaintiff by threatening gestures, especially when these are connected with unlawful, sinister, and wicked conduct on the part of the defendant.
PNB v. CA, 1978: (NCC 21-36) serve as catch all provisions or dragnet clauses. They cover any imaginable tort action, because these articles were intended to expand the concept of torts in out jurisdiction. It grants adequate legal remedies for the (otherwise) untold number of moral wrongs, which is impossible for human foresight to provide in our statutes.
FALSE IMPRISONMENT (ILLEGAL DETENTION)
Art. 32. Any public officer or employee, or any private individual, who directly or indirectly obstructs, defeats, violates or in any manner impedes or impairs any of the following rights and liberties of another person shall be liable to the latter for damages: (1) Freedom from arbitrary or illegal detention xxx
VIOLATIONS OF A PERSON’S SECURITY AND PHYSICAL INJURIES (NCC 33) BATTERY (PHYSICAL INJURY) The actual infliction of any unlawful or unauthorized violence on the person of another, irrespective of its degree.
INTERFERENCE WITH PERSONAL PROPERTY
The least touching of another in anger, or in any manner which amounts to an unlawful setting upon his person,” may subject one to an action for battery.
TRESPASS TO LAND
Any intentional use of another’s real property, without authorization and without a privilege by law to do so, is actionable as a trespass without regard to harm. (Prosser and Keeton, p. 70)
INTERESTS PROTECTED BY LAW:
(1) Interest of the individual in freedom from bodily harm or any impairment whatever of the physical integrity of the body (2) Interest in freedom from offensive bodily touching although no actual harm is done.
Elements An invasion (1) which interfered with the right of exclusive possession of the land, and (2) which was a direct result of some act committed by the defendant. (Prosser and Keeton, p. 67)
Carandang vs. Santiago and Valenton (1955): Defamation and fraud (in Art. 33) are used in their ordinary sense because there are no specific provisions in the Revised Penal Code using these terms as names of offenses defined therein, so that these two terms defamation and fraud must have been used not to impart to them any technical meaning in the laws of the Philippines, but in their generic sense. With these apparent circumstances in mind, it is evident that the term “physical injuries” could not have been used in its specific sense as a crime defined in the Revised Penal Code, for it is difficult to believe that the Code Commission would have used terms in same article—some in this general and others in its technical sense. In other words, the term “physical injuries” should be understood to mean bodily injury, not the crime of physical injuries, because the terms used with the latter are general terms.
TRESPASS TO CHATTELS
Any direct and immediate intentional interference with a chattel in the possession of another. (Prosser and Keeton, p. 85) CONVERSION
Major interferences with the chattel, or with the plaintiff’s rights in it, which are so serious, and so important, as to justify the forced judicial sale to the defendant. (Prosser and Keeton, p. 90) INTENTIONAL NON-PHYSICAL HARMS
Art. 26. Every person shall respect the dignity, personality, privacy and peace of mind of his neighbors and other persons. The following and similar acts, though they may not constitute a criminal offense, shall produce a cause of action for damages, prevention and other relief;
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In intentional infliction of mental distress, the gravamen of the tort is not the injury to plaintiff's reputation, but the harm to plaintiff's mental and emotional state. In libel, the gist of the action is the injury to plaintiff's reputation. Reputation is the community's opinion of what a person is. In intentional infliction of mental distress, the opinion of the community is immaterial to the existence of the action although the court can consider it in awarding damages. What is material is the disturbance on the mental or emotional state of the plaintiff who is entitled to peace of mind.
(1) Prying into the privacy of another’s residence; (2) Meddling with or disturbing the private life or family relations of another; (3) Intriguing to cause another to be alienated from his friends; (4) Vexing or humiliating another on account of his religious beliefs, lowly station in life, place of birth, physical defect, or other personal condition. The principal rights protected under this provision are the following: (1) The right to personal dignity (2) The right to personal security (3) The right to family relations (4) The right to social intercourse (5) The right to privacy (6) The right to peace of mind
VIOLATION OF PRIVACY
It is the right to be let alone, or to be free from unwarranted publicity, or to live without unwarranted interference by the public in matters in which the public is not necessarily concerned. Reasonableness of Expectation of Privacy (The 2-prong test) (1) Whether by one’s conduct, the individual has exhibited an expectation of privacy (2) Whether this expectation is one that society recognizes and accepts as reasonable
VIOLATION OF PERSONAL DIGNITY
In order to be actionable it is not necessary that the act constitutes a criminal offense. The remedy afforded by the law is not only the recovery of damages. “Prevention and other relief” is also available. In other words, injunction and other appropriate reliefs may also be obtained by the aggrieved party.
Note: Coverage of Art. 26 is not limited to those enumerated therein, the enumeration being merely examples of acts violative of a person’s rights to dignity, personality, privacy and peace of mind. Other “similar acts” are also covered within the scope of the article.
St. Louis Realty Corporation vs. CA (Illustration of a “similar act”): The acts and omissions of the firm fall under Article 26. Persons who know the residence of Doctor Aramil were confused by the distorted, lingering impression that he was renting his residence from Arcadio or that Arcadio had leased it from him. Either way, his private life was mistakenly and unnecessarily exposed.
Persons who can invoke privacy General Rule: The right to privacy may only be invoked by natural persons. Juridical persons cannot invoke this because the basis to this right is an injury to the feelings and sensibilities of the injured party, and a corporation has none of those
INFLICTION OF EMOTIONAL DISTRESS
MVRS Publications vs. Islamic Da'wah Council (2003): Article 26 specifically applies to intentional acts which fall short of being criminal offenses. It itself expressly refers to tortious conduct which "may not constitute criminal offenses." The purpose is precisely to fill a gap or lacuna in the law where a person who suffers injury because of a wrongful act not constituting a crime is left without any redress. Under Article 26, the person responsible for such act becomes liable for "damages, prevention and other relief." In short, to preserve peace and harmony in the family and in the community, Article 26 seeks to eliminate cases of damnum absque injuria in human relations.
Exception: The right to privacy may be invoked along with the right against unreasonable searches and seizures. General Rule: The right to privacy is purely personal in nature: (1) It can be invoked only by the person actually injured (2) It is subject to a proper waiver (3) It ceases upon death Exception: The privilege may be given to the heirs of a deceased to protect his memory, but this privilege exists for the benefit of the living. It enables the protection of their feelings, and prevents the
Consequently, the elements that qualify the same acts as criminal offenses do not apply in determining responsibility for tortious conduct under Article 26.
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violation of their own rights regarding the character and memory of the deceased.
DISTURBANCE OF PEACE OF MIND
The disturbance of the mental and emotional tranquility of the plaintiff by the defendant is a legal injury in itself and, therefore, a sufficient cause of action for damages, injunction, and other relief.
Invasion of Privacy Types: (1) Publication of embarrassing private facts – The interest here is the right to be free from unwarranted publicity, wrongful publicizing of private affairs and activities, as these are outside the ambit of legitimate public concern.
A person, however, cannot be held liable for damages for the mental or emotional disturbance of the plaintiff which was due to the latter’s susceptibility to such disturbance, where the defendant had no knowledge of such peculiar susceptibility. The tendency of the law is to secure an interest in mental comfort only to the extent of the ordinary sensibilities of men.
Ayer v. Capulong (1988): Public figures enjoy a limited right to privacy as compared to ordinary individuals. (2) Intrusion upon plaintiff’s private affairs – This is not limited to situations where the wrongdoer physically trespasses into one’s property. (a) Generally, there is no invasion of privacy when journalists report something that occurs in the public realm, except when the acts of the journalist are to an extent that it constitutes harassment. (b) RA 4200: it is illegal for any person not authorized by both parties to any private communication to secretly record such communication. (c) Limitations to Right to Information v. Right to Privacy: (i) Must be of public interest (ii) Must not be excluded by law
MALICIOUS PROSECUTION
Art. 2219. Moral damages may be recovered in the following and analogous cases: xxx (8) Malicious prosecution Art. 21. Any person who wilfully causes loss or injury to another in manner that is contrary to morals, good customs or public policy shall compensate the latter for the damage. Malicious prosecution is the institution of any action or proceeding either civil or criminal against another, maliciously and without probable cause. Elements: (1) That the defendant was himself the prosecutor or that he instigated its commencement (2) That the action was finally terminated with an acquittal (3) That in bringing the action, the prosecutor acted without probable cause (4) That he was actuated or impelled by legal malice, that is, by improper and sinister motives. (Lao v. CA)
(3) Publicity which puts one in a false light in the public eye – To protect the interest of one in not being made or forced to appear before the public in an objectionable false light or position. Tort of putting in false light
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Defamation
The embarrassment of a Concerns the reputational person being portrayed harm to a person as something he is not
Drilon vs. CA (1997): Malicious Prosecution defined: An action for damages brought by one against whom a criminal prosecution, civil suit, or other legal proceeding has been instituted maliciously and without probable cause, after the termination of such prosecution, suit or other proceeding in favor of the defendant herein. The gist of the action is the putting of legal process in force, regularly, for the mere purpose of vexation or injury.
Statement should be Publication is satisfied actually made in public even if communicated to only one specific third person (4) Commercial appropriation of likeness of image It consists of appropriation, for the defendant’s benefit or advantage (ex. It was used in the defendant’s advertisement), of the plaintiff’s name or likeness (picture or portrait).
Buenaventura vs. Domingo and Ignacio (1958): The provisions of the Civil Code in taking reference to malicious prosecutions must necessarily imply that the person to be held liable to pay moral damages should have acted deliberately and with knowledge
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that his accusation of the person subject to such malicious prosecution, was false and groundless.
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FRAUD OR MISREPRESENTATION (FORMERLY DECEIT)
Salta vs. De Veyra (1982): Independent civil actions are permitted to be filed separately regardless of the result of the criminal action.
xxx Proof and motive that the prosecution or institution of the action was prompted by a sinister design to vex and humiliate a person and to cast dishonor and disgrace must be clearly and preponderantly established to entitle the victims to damages and other rights granted by law; otherwise, there would always be a civil action for damages after every prosecution's failure to prove its cause resulting in the consequent, acquittal of the accused therein.
Samson vs. Daway (2004): Unfair competition under the Intellectual Property Code and fraud under Art. 33 are independent actions. Art. 33 does not operate as a prejudicial question to justify the suspension of the criminal cases at bar. SEDUCTION
Sangco: Seduction is sexual intercourse with an unmarried woman of chaste character whose consent was obtained through abuse of confidence or through deceit.
DEFAMATION, FRAUD AND PHYSICAL INJURIES Art. 33. In case of defamation, fraud, and physical injuries, a civil action for damages, entirely separate and distinct from the criminal action, may be brought by the injured party. Such civil action shall proceed independently of the criminal prosecution, and shall require only a preponderance of evidence.
Seduction under the RPC (criminal seduction) is different from seduction under the NCC (civil seduction, Art. 21) (a) In criminal seduction, either qualified or simple, the offended woman must be less than 18 years of age. (b) In civil seduction, the offended woman may be over 18 years of age.
DEFAMATION
Cojuangco vs. CA (1991): Separate civil action may be consolidated with the criminal action.
Tanjanco vs. CA (1966): The essential feature is seduction, that in law is more than mere sexual intercourse, or a breach of a promise of marriage; it connotes essentially the idea of deceit, enticement, superior power or abuse of confidence on the part of the seducer to which the woman has yielded.
MVRS vs. Islamic Da'wah (2003): Defamation is that which tends to injure reputation or diminish esteem, respect, good will, or confidence of the plaintiff, or excite derogatory feelings about him. It must be personal. (What is definitive is not the level of hurt, but the effect of the statement on the reputation or standing of the person.)
To constitute seduction there must in all cases be some sufficient promise or inducement and the woman must yield because of the promise or other inducement. If she consents merely from carnal lust and the intercourse is from mutual desire, there is no seduction.
Arafiles vs. Philippine Journalists (2004): In actions for damages for libel, it is axiomatic that the published work alleged to contain libelous material must be examined and viewed as a whole.
UNJUST DISMISSAL
The article must be construed in its entirety including the headlines, as they may enlarge, explain, or restrict or be enlarged, explained or strengthened or restricted by the context. Whether or not it is libelous, depends upon the scope, spirit and motive of the publication taken in its entirety.
The employer’s right to dismiss his employee differs from, and should not be confused with the manner in which the right is exercised. When the manner in which the company exercised its right to dismiss was abusive, oppressive or malicious, it is liable for damages.
A publication claimed to be defamatory must be read and construed in the sense in which the readers to whom it is addressed would ordinarily understand it.
Quisaba vs. Sta. Ines-Melale Veneer & Plywood (1974): Although the acts complained of seemingly appear to constitute "matters involving employee-employer relations" as Quisaba's dismissal was the severance of a pre-existing employee-employer relation, his complaint is grounded not on his dismissal per se as in fact he does not ask for reinstatement or
DEFENSES:
(1) Absence of elements (2) Privilege
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backwages, but on the manner of his dismissal and the consequent effects of such dismissal.
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and not by reason of the wrongful conduct of the defendant, there is no liability on the defendant. However, if the defendant interferes and by his wrongful conduct prevents a reconciliation between the spouses, or destroys the possibility thereof, the defendant is liable for alienation of affection.
The case at bar is intrinsically concerned with a civil (not a labor) dispute; it has to do with an alleged violation of Quisaba's rights as a member of society, and does not involve an existing employee-employer relation within the meaning of section 2(1) of Presidential Decree No. 21. The complaint is thus properly and exclusively cognizable by the regular courts of justice, not by the National Labor Relations Commission.
(2) Loss of affection or consortium Note: Complete absence of affection between the spouses is not a defense. (3) Causal connection between such conduct and loss
Note: The foregoing decision thus states that where the employee does not seek reinstatement or expressly or impliedly accepts the employer’s right to terminate the contract of employment but questions the manner in which said right was exercised and predicates thereon his claim for moral and exemplary damages, the claim is one for tort under the Civil Code and not one arising from employeremployee relation under the Labor Code even if he also demands in the action therefor payment of termination pay which unquestionably derives from their prior employer-employee relation.
Tenchavez vs. Escaño (1965): There is no evidence that the parents of Vicenta, out of improper motives, aided and abetted her original suit for annulment, or her subsequent divorce; she appears to have acted independently, and being of age, she was entitled to judge what was best for her and ask that her decisions be respected. Her parents, in so doing, certainly cannot be charged with alienation of affections in the absence of malice or unworthy motives, which have not been shown, good faith being always presumed until the contrary is proved.
INTERFERENCE WITH RELATIONS An interference with the continuance of unimpaired interests founded upon the relation in which the plaintiff stands toward one or more third persons. (Prosser and Keeton, p. 915)
LIABILITY OF PARENTS, GUARDIANS OR KIN
The law distinguishes between the right of a parent to interest himself in the marital affairs of his child and the absence of rights in a stranger to intermeddle in such affairs. However, such distinction between the liability of parents and that of strangers is only in regard to what will justify interference. A parent is liable for alienation of affections resulting from his own malicious conduct, as where he wrongfully entices his son or daughter to leave his or her spouse, but he is not liable unless he acts maliciously, without justification and from unworthy motives. He is not liable where he acts and advises his child in good faith with respect to his child's marital relations in the interest of his child as he sees it, the marriage of his child not terminating his right and liberty to interest himself in, and be extremely solicitous for, his child's welfare and happiness even where his conduct and advice suggest or result in the separation of the spouses or the obtaining of a divorce or annulment, or where he acts under mistake or misinformation, or where his advice or interference are indiscreet or unfortunate, although it has been held that the parent is liable for consequences resulting from recklessness. He may in good faith take his child into his home and afford him or her protection and support, so long as he has not maliciously enticed his child away, or does not maliciously entice or cause him or her to stay away,
KINDS
(1) Family relations (2) Social relations (3) Economic relations (4) Political relations FAMILY RELATIONS The three causes of action enumerated below are offenses against marital relations. ALIENATION OF AFFECTION
This is a cause of action in favor of a husband against one who wrongfully alienates the affection of his wife, depriving him of his conjugal rights to her consortium, that is, her society, affection, and assistance. Elements: (1) Wrongful conduct of the defendant: intentional and malicious enticing of a spouse away from the other spouse Note: Where the alienation or separation of the spouses is caused by the plaintiff’s own conduct
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from his or her spouse. This rule has more frequently been applied in the case of advice given to a married daughter, but it is equally applicable in the case of advice given to a son.
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who seeks to collect indemnity for damages resulting from deprivation of her domestic services must prove such services. Furthermore, inasmuch as a wife's domestic assistance and conjugal companionship are purely personal and voluntary acts which neither of the spouses may be compelled to render, it is necessary for the party claiming indemnity for the loss of such services to prove that the person obliged to render them had done so before he was injured and that he would be willing to continue rendering them had he not been prevented from so doing.
LOSS OF CONSORTIUM
Lilius vs. Manila Railroad Company (1934): The plaintiff Aleko E. Lilius also seeks to recover the sum of P2,500 for the loss of what is called Anglo-Saxon common law "consortium" of his wife, that is, "her services, society and conjugal companionship", as a result of personal injuries which she had received from the accident now under consideration. In the case of Goitia vs. Campos Rueda, this court, interpreting the provisions of the Civil Marriage Law of 1870, in force in these Islands with reference to the mutual rights and obligations of the spouses, contained in articles 44-48 thereof, said as follows:
CRIMINAL CONVERSATION (ADULTERY)
Interference with the marital relations by committing adultery with one of the spouses. This is obvious enough in the case of rape but also applies where the adulterous spouse consented to or initiated the intercourse. (Prosser and Keeton, p. 917)
The above quoted provisions of the Law of Civil Marriage and the Civil Code fix the duties and obligations of the spouses. The spouses must be faithful to, assist, and support each other. The husband must live with and protect his wife. The wife must obey and live with her husband and follow him when he changes his domicile or residence, except when he removes to a foreign country. . . .
SOCIAL RELATIONS MEDDLING WITH OR DISTURBING FAMILY RELATIONS
Art. 26. Every person shall respect the dignity, personality, privacy and peace of mind of his neighbors and other persons. The following and similar acts, though they may not constitute a criminal offense, shall produce a cause of action for damages, prevention and other relief; xxx 2) Meddling with or disturbing the private life or family relations of another;
Therefore, under the law and the doctrine of this court, one of the husband's rights is to count on his wife's assistance. This assistance comprises the management of the home and the performance of household duties, including the care and education of the children and attention to the husband upon whom primarily devolves the duty of supporting the family of which he is the head. When the wife's mission was circumscribed to the home, it was not difficult to assume, by virtue of the marriage alone, that she performed all the said tasks and her physical incapacity always redounded to the husband's prejudice inasmuch as it deprived him of her assistance. However, nowadays when women, in their desire to be more useful to society and to the nation, are demanding greater civil rights and are aspiring to become man's equal in all the activities of life, commercial and industrial, professional and political, many of them spending their time outside the home, engaged in their businesses, industry, profession and within a short time, in politics, and entrusting the care of their home to a housekeeper, and their children, if not to a nursemaid, to public or private institutions which take charge of young children while their mothers are at work, marriage has ceased to create the presumption that a woman complies with the duties to her husband and children, which the law imposes upon her, and he
Developed as an offshoot of the action for enticing away a servant and depriving the master of the proprietary interest in [the servant’s] services until there has been a gradual shift of emphasis away from “services” and toward a recognition of more intangible elements in the domestic relations, such as companionship and affection. (Prosser and Keeton, p. 916) INTRIGUING TO CAUSE ANOTHER TO BE ALIENATED FROM HIS FRIENDS
A person who committed affirmative acts intended to alienate the existing friendship of one with his friends is liable for damages. A man is a social being and for being so, he needs friends to socialize with and to depend upon in case of need. To alienate him wrongfully or with malice from his friends is to cause him suffering for which he is entitled to damages.
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ECONOMIC RELATIONS
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Permissible competition There is a privilege to interfere with prospects of advantageous economic relations of others when: (1) The defendant’s purpose is justifiable, and (2) He employs no means which may be regarded as unfair.
INTERFERENCE WITH CONTRACTUAL RELATIONS
Art 1314. Any third person who induces another to violate his contract shall be liable for damages to the other contracting party.
Prohibited competition In order to qualify as “unfair,” it must have 2 characteristics: (1) It must involve an injury to a trade or rival (2) It must involve acts which are characterized as “contrary to good conscience,” or “shocking to judicial sensibilities,” or otherwise unlawful
Gilchrist vs. Cuddy (1915): Everyone has a right to enjoy the fruits of his enterprise. He has no right to be protected from competition, but he has the right to be free from malicious and wanton interference. If the injury is a result of competition, it is a case of damnum absque injuria, unless superior right by contract is interfered with.
Note: Jarencio: Unfair competition dealt with in Art. 28 is different from the unfair competition under Sec. 29 of RA 166. Unfair competition under Sec. 29 of Rep. Act 166 consists in giving the same general appearance to the goods manufactured or dealt in or the services rendered by one person as the goods or services of another who has already acquired a public goodwill for such goods or services. Unfair competition under Art. 28 of the Civil Code refers to unfair competition in agricultural, commercial or industrial enterprises or in labor through the use of force, intimidation, deceit, machination or any other unjust, oppressive or high- handed method. Unfair competition under the Civil Code covers a broader area than Rep. Act 166.
Injunction is the proper remedy to prevent wrongful interference with contracts by strangers, where other legal remedies are insufficient and the resulting injury is irreparable. So Ping Bun vs. CA (1999): Bad faith/Malice is required to make the defendant liable for DAMAGES in cases of tortuous interference. Elements of Interference (1) Existence of a valid contract; (2) Knowledge of the third person of the existence of such contract; and (3) Interference without legal justification or excuse. Lagon vs. CA (2005): If there is no bad faith, there is no tortious interference; Actual knowledge of the contract is not required so long as there are facts leading one to investigate.
POLITICAL RELATIONS VIOLATION OF RIGHT TO SUFFRAGE (NCC, ART. 32)
Art 32. Any public officer or employee, or any private individual, who directly or indirectly obstructs, defeats, violates or in any manner impedes or impairs any of the following rights and liberties of another person shall be liable to the latter for damages: (1) Freedom of religion (2) Freedom of speech (3) Freedom to write for the press or to maintain a periodical publication (4) Freedom from arbitrary or illegal detention (5) Freedom of suffrage (6) The right against deprivation of property without due process of law (7) The right to just compensation when property is taken for public use (8) The right to equal protection of the laws (9) The right to be secure in one’s person, house, papers and effects against unreasonable searches and seizures (10) The liberty of abode and of changing the same
Proper business interest provides a legal justification to negate the presence of the third element. UNFAIR COMPETITION
Art. 28. Unfair competition in agricultural, commercial or industrial enterprises or in labor through the use of force, intimidation, deceit, machination or any other unjust, oppressive or highhanded method shall give rise to a right of action by the person who thereby suffers damage. Free competition in agricultural, commercial or industrial enterprises and in labor is essential in a democracy and should be encouraged. Monopolies, generally speaking, are prejudicial to public interest. However, the right of free competition is not unlimited.
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required. If the violation of the civil or political rights constitutes a crime and a criminal action is instituted the civil action is also deemed instituted with the criminal action unless the same is reserved.
(11) The right to privacy of communication and correspondence (12) The right to become a member of associations and societies for purposes not contrary to law (13) The right to take part in a peaceable assembly and petition the government for redress of grievances (14) The right to be free from involuntary servitude in any form (15) The right of the accused against excessive bail (16) The right of the accused to be heard by himself and counsel, to be informed of the nature and the cause of the accusation against him, to have a speedy and public trial, to meet the witnesses face to face, to have compulsory process to secure the attendance of witnesses on is behalf; (17) Freedom form being compelled to be a witness against one’s self, or from being forced to confess his guilt, or from being induced by a promise of immunity or reward to make such confession, except when the person confessing becomes a State witness. (18) Freedom from excessive fines, or cruel and unusual punishment, unless the same is imposed or inflicted in accordance with a statute which has not been judicially declared unconstitutional; (19) Freedom of access to the courts
Cojuangco vs. CA (1999): The purpose of article 32 is to remind us that basic rights are immutable. Thus, absence of bad faith or malice is not a defense. Vinzons-Chato vs. Fortune (2007): A public officer may be sued under Art. 32 even if his acts were not so tainted with malice, as long as there is a violation of a constitutional right. Its precise object is to put an end to official abuse, done on the plea of good faith.
Negligence Art. 1173. The fault or negligence of the obligor consists in the omission of that diligence which is required by the nature of the obligation and corresponds with the circumstances of the persons, of the time and of the place. When negligence shows bad faith, the provisions of Articles 1171 and 2201, paragraph 2, shall apply. If the law or contract does not state the diligence which is to be observed in the performance, that which is expected of a good father of a family shall be required.
In any of the cases referred to in this article, whether or not the defendant’s act or omission constitutes a criminal offense, the aggrieved party has a right to commence an entirely separate and distinct civil action for damages, and for other relief. Such civil action shall proceed independently of any criminal prosecution (if the latter be instituted) and may be proved by a preponderance of evidence.
ELEMENTS (1) Legal duty (2) Breach (3) Causation (4) Damages
The indemnity shall include moral damages. Exemplary damages may also be adjudicated.
Layugan vs. IAC (1988): Negligence is the omission to do something which a reasonable man, guided by those considerations which ordinarily regulate the conduct of human affairs, would do, or the doing of something which a prudent and reasonable man would not do.
The responsibility herein set forth is not demandable from a judge unless his act or omission constitutes a violation of the Penal code or any other penal statute.
TEST OF NEGLIGENCE Philippine National Railways vs. Brunty (2006): Did defendant, in doing the alleged negligent act, use that reasonable care and caution which an ordinarily prudent person would have used in the same situation? If not, the person is guilty of negligence. The law, in effect, adopts the standard supposed to be supplied by the imaginary conduct of the discreet pater familias of the Roman law.
VIOLATION OF OTHER POLITICAL RIGHTS (FREEDOM OF SPEECH, PRESS, ASSEMBLY AND PETITION, ETC.)
Jarencio: Article 32 of the Civil Code holds any public officer, employee or private individual civilly liable for the violation of civil liberties, political liberties and other basic rights under the Constitution. The aggrieved party may recover actual, moral and exemplary damages and other relief. The civil action is separate and distinct and shall proceed independently of a criminal prosecution if one is instituted. Only a preponderance of evidence is
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embarrassment if not financial loss and perhaps even civil and criminal litigation.
GOOD FATHER OF A FAMILY (BONUS PATER FAMILIAS) A standard man does not mean an ideal or perfect man, but an ordinary member of the community. He is usually spoken of as an ordinarily reasonable, careful, and prudent man.
The point is that as a business affected with public interest and because of the nature of its functions, the bank is under obligation to treat the accounts of its depositors with meticulous care, always having in mind the fiduciary nature of their relationship.
WHAT CONSTITUTES THE CONDUCT OF A PRUDENT MAN IN A GIVEN SITUATION?
STANDARD OF CARE OF CHILDREN
Picart vs. Smith (1918): Conduct determined in the light of human experience and in view of the facts involved in the particular case. Abstract speculations cannot be of much value here; instead, reasonable men govern their conduct by the circumstances which are known before them. They are not supposed to be omniscient of the future.
Taylor vs. Manila Railroad (1910): Children must be expected to act upon childlike instincts and impulses and others chargeable with a duty of care and caution toward them must take precautions accordingly. If they leave exposed to the observation of children anything which would be tempting to them, and which they in their immature judgment might naturally suppose they were at liberty to play with, they should expect that liberty to be taken. (But the child in this case was still negligent because of his experience).
STANDARD OF CARE Picart vs. Smith (1918): Test: Did the defendant in doing the alleged negligent act use that reasonable care and caution which an ordinarily prudent man would have used in the same situation? If not, then he is negligent. Negligence in a given case is not determined by reference to the personal judgment of the actor in the situation before him, but is determined in the light of human experience and the facts involved in the particular case.
Jarco v. CA (1999): The rule, therefore, is that a child under nine years of age must be conclusively presumed incapable of contributory negligence as a matter of law. The presumption of lack of discernment or incapacity for negligence in the case of a child over nine but under fifteen years of age is a rebuttable one.
Conduct is said to be negligent when a prudent man in the position of the tortfeasor would have foreseen that an effect harmful to another was sufficiently probable to warrant his foregoing the conduct or guarding against its consequences.
Ylarde vs. Aquino (1988): The degree of care required to be exercised must vary with the capacity of the person endangered to care for himself. A minor should not be held to the same degree of care as an adult, but his conduct should be judged according to the average conduct of persons of his age and experience: that degree of care ordinarily exercised by children of the same age, capacity, discretion, knowledge and experience under the same or similar circumstances.
Note: Only the KIND of injury needs to be foreseen, NOT the actual specific injury. STANDARD OF CARE REQUIRED OF BANKS
Philippine Bank of Commerce vs. CA (1997): In the case of banks, however, the degree of diligence required is more than that of a good father of a family. Considering the fiduciary nature of their relationship with their depositors, banks are duty bound to treat the accounts of their clients with the highest degree of care.
STANDARD OF CARE OF EXPERTS/PROFESSIONALS
Culion vs. Philippine (1930): When a person holds himself out as being competent to do things requiring professional skill, he will be held liable for negligence if he fails to exhibit the care and skill of one ordinarily skilled in the particular work which he attempts to do.
Simex International (Manila), Inc. v. CA: In every case, the depositor expects the bank to treat his account with the utmost fidelity, whether such account consists only of a few hundred pesos or of millions. xxx A blunder on the part of the bank, such as the failure to duly credit him his deposits as soon as they are made, can cause the depositor not a little
Cruz vs. CA (1997): Whether or not a physician has committed an "inexcusable lack of precaution" in the treatment of his patient is to be determined according to the standard of care observed by other members of the profession in good standing under similar circumstances bearing in mind the advanced
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state of the profession at the time of treatment or the present state of medical science.
selection or supervision of the plaintiff’s fellowworker.
IN CASE OF INSANE PERSONS
Amedo vs. Rio (1954): By jumping into the sea, the employee failed to exercise even slight care and diligence and displayed a reckless disregard of the safety of his person. His death was caused by his notorious negligence. Notorious negligence has been held to be tantamount to gross negligence which is want of even slight care and diligence.
Art. 2180. …Guardians are liable for damages caused by the minors or incapacitated persons who are under their authority and live in their company… Art. 2182. If the minor or insane person causing damage has no parents or guardian, the minor or insane person shall be answerable with his own property in an action against him where a guardian ad litem shall be appointed.
EVIDENCE QUANTUM OF PROOF IN QUASI-DELICT VS. QUANTUM OF PROOF IN BREACH OF CONTRACT
Calalas vs. CA: In quasi-delict, the negligence or fault should be clearly established because it is the basis of action, whereas in breach of contract, the action can be prosecuted merely by proving the existence of a contract and the fact that the obligor, in this case a common carrier, failed to transport his passenger safely to his destination.
US vs. Baggay (1911): A lunatic or insane person who, in spite of his irresponsibility on account of the deplorable condition of his deranged mind, is still reasonably and justly liable with his property for the consequences of his acts. EMERGENCY RULE OR SUDDEN PERIL DOCTRINE
Valenzuela vs. CA (1996): An individual, who suddenly finds himself in a situation of danger and is required to act without much time to consider the best means that may be adopted to avoid the impending danger, is not guilty of negligence if he fails to undertake what subsequently and upon reflection may appear to be a better solution, unless the emergency was brought by his own negligence.
PRESUMPTION OF NEGLIGENCE Art. 2184. In motor vehicle mishaps, the owner is solidarily liable with his driver, if the former, who was in the vehicle, could have, by the use of due diligence, prevented the misfortune. It is disputable presumed that the driver was negligent, if he had been found guilty of reckless driving or violating traffic regulations at least twice within the next preceding two months.
UNREASONABLE RISK OR HARM
Art 1711. Owners of enterprises and other employers are obliged to pay compensation for the death of or injuries to their laborers, workmen, mechanics or other employees even though the event may have been purely accidental or entirely due to fortuitous cause, if the death or personal injury arose out of and in the course of employment. The employer is also liable for compensation if the employee contracts any illness or disease caused by such employment or as a result of the nature of the employment. If the mishap was due to the employee’s own notorious negligence, or voluntary act, or drunkenness, the employer shall not be liable for compensation. When the employee’s lack of due care contributed to his death or injury, the compensation shall be equitably reduced
Art. 2185. Unless there is proof to the contrary, it is presumed that a person driving a motor vehicle has been negligent if at the time of the mishap, he was violating any traffic regulation. Art. 2188. There is prima facie presumption of negligence if the death or injury results from his possession of dangerous weapons or substances, such as firearms and poison, except when the use or possession thereof is indispensable in his occupation or business. Art. 1735. In all cases other than those mentioned in Nos. 1, 2, 3, 4, and 5 of the preceding article (calamity, act of public enemy in war, act of owner of the goods, character of the goods, order of competent public authority), if the goods are lost destroyed or deteriorated, common carriers are presumed to have been at fault or to have acted negligently, unless they prove that they observed extraordinary diligence as required under Art. 1733.
Art. 1712. If the death or injury is due to the negligence of a fellow-worker, the latter and the employer shall be solidarily liable for compensation. If a fellow-worker’s intentional or malicious act is the only cause of the death or injury, the employer shall not be answerable, unless it should be shown that the latter did not exercise due diligence in the
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accident or has the best opportunity of ascertaining it and that the plaintiff has no such knowledge, and therefore is compelled to allege negligence in general terms and to rely upon the proof of the happening of the accident in order to establish negligence.
PRESUMED NEGLIGENCE OR NEGLIGENCE PER SE
Teague vs. Fernandez (1973): Violation of a statute or ordinance constitutes negligence as a matter of law or negligence per se because non-observance of what the law provides as a suitable precaution is failure to observe that care which an ordinarily prudent man would observe.
Note: For the res ipsa loquitur doctrine to apply, it must appear that the injured party had no knowledge as to the cause of the accident, or that the party to be charged with negligence has superior knowledge or opportunity for explanation of the accident.
When the standard of care is fixed by law, failure conform to such standard is negligence, negligence per se or negligence in and of itself, in the absence of a legal excuse. RES IPSA LOQUITUR
The doctrine of res ipsa loquitur (“the thing speaks for itself”) is a rule of evidence (not of substantive law) peculiar to the law of negligence.
DEFENSES DUE DILIGENCE
Art. 2180. The obligation imposed by Article 2176 is demandable not only for one’s own acts or omissions, but also for those of persons for whom one is responsible. xxx Par. 8. The responsibility treated of in this article shall cease when the persons herein mentioned prove that they observed all the diligence of a good father of a family to prevent damage.
3 conditions for applicability: F.F. Cruz vs. CA (1988): Res ipsa loquitur is applicable when: (1) The thing causing the injury is under the control of the defendant or his servant; (2) In the ordinary cause of things, the accident does not happen if those who have control used proper care; (3) In the absence of explanation from the defendant, a presumption of negligence results.
Ramos vs. PEPSI (1967): The presumption of negligence on the part of the master or employer, either in the selection of servant/employee or in the supervision, when an injury is caused by the negligence of a servant/employee may be rebutted if the employer shows to the satisfaction of the court that in the selection and supervision, he has exercised the care and diligence of a good father of a family
Layugan vs. IAC 1988): Where the thing which causes injury is shown to be under the management of the defendant, and the accident is such as in the ordinary course of things does not happen if those who have the management use proper care, it affords reasonable evidence, in the absence of an explanation by the defendant, that the accident arose from want of care.
Metro Manila vs. CA (1993): The defense of due diligence is plausible when defendant has presented enough evidence to overcome the presumption of negligence. It is not enough that it is alleged.
Ramos vs. CA (1999): The injury itself, taken together with the circumstances, raises the presumption of negligence that the defendant must meet with an explanation.
ACTS OF PUBLIC OFFICERS
Vinzons-Chato vs. Fortune (2008): When what is involved is a duty owing to the public in general, an individual cannot have a cause of action against the public officer although he may have been injured by the action or inaction of the officer, except when the individual suffers a particular or special injury.
Elements (1) The accident is such that it would not have happened in the ordinary course of events without the negligence of someone; (2) The defendant exercises control and management. (3) There is no contributory negligence on the part of the plaintiff.
ACCIDENT OR FORTUITOUS EVENT
Art. 1174. Except in cases expressly specified by the law, or when it is otherwise declared by stipulation, or when the nature of the obligation requires the assumption of risk, no person shall be seen
DM Consunji vs. CA (2001): The res ipsa loquitur doctrine is based in part upon the theory that the defendant in charge of the instrumentality which causes the injury either knows the cause of the
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responsible for those events which, could not foreseen, or which, though foreseen, were inevitable.
injury, the damage is regarded as damnum absque injuria.
Elements Juntilla vs. Fontanar (1985): The elements of caso fortuito are: (1) The cause of the unforeseen and unexpected occurrence, or of the failure of the debtor to comply with his obligation, must be independent of the human will; (2) It must be impossible to foresee the event or if it can be foreseen, it must be impossible to avoid; (3) The occurrence must be such as to render it impossible for the debtor to fulfill his obligation in a normal manner; and (4) The obligor must be free from any participation in the aggravation of the injury resulting to the creditor.
AUTHORITY OF LAW
Art. 5. Acts executed against the provisions of mandatory or prohibitory laws shall be void, except when the law itself authorizes their validity. Art. 11. (RPC) The following do not incur any criminal liability: (5) Any person who acts in the fulfillment of a duty or in the lawful exercise of a right or office (8) Any person who acts in obedience to an order issued by a superior for some lawful purpose ASSUMPTION OF RISK (VOLENTI NON FIT INJURA)
General rule: One who voluntarily assumed the risk of injury from a known danger is debarred from recovery. A plaintiff who, by his conduct, brought himself within the operation of the maxim, “volenti non fit injuria” (that to which a person assents is not presumed in law an injury), cannot recover on the basis of the defendant’s negligence.
Hernandez vs. COA (1984): The robbery that happened to him cannot be said to be the result of his imprudence and negligence. This was undoubtedly a fortuitous event covered by the said provisions, something that could not have been reasonably foreseen although it could have happened.
One who knows, appreciates, and deliberately exposes himself to a danger assumes the risk thereof.
DAMNUM ABSQUE INJURIA
Custodio vs. CA (1996): Right to recover damages does not arise from the mere fact that the plaintiff suffered losses. To warrant the recovery of damages, there must be both a right of action for a legal wrong inflicted by the defendant, and damage resulting to the plaintiff therefrom. Wrong without damage, or damage without wrong, does not constitute a cause of action, since damages are merely part of the remedy allowed for the injury caused by a breach or wrong. Injury
Damage
Where the defense of assumption of risk is based on this principle, it negates negligence or liability on the part of the defendant, even though his conduct would otherwise have constituted actionable negligence, and without regard to the fact that the plaintiff may have acted with due care. The defense bars recovery without regard to whether the plaintiff’s conduct was reasonable, because, in theory, the plaintiff’s acceptance of the risk has wiped out the defendant’s duty, and as to the plaintiff the defendant’s negligence is not a legal wrong.
Damages
Illegal Loss, hurt, harm Recompense invasion of a resulting from compensation legal right the injury awarded
or
Afialda vs. Hisole (1958): It is the caretaker's business to try to prevent the animal from causing injury or damage to anyone, including himself. It was a risk he voluntarily assumed.
Damnum absque injuria. There can be damage without injury in those instances in which the loss or harm was not the result of a violation of a legal duty.
Requisites (1) That the plaintiff had actual knowledge of the danger; (2) That he understood and appreciated the risk from the danger (3) That he voluntarily exposed himself to such risk
In order that the law will give redress for an act causing damage, that act must be not only hurtful, but wrongful. There must be damnum et injuria. If, as may happen in many cases, a person sustains actual damage, that is, harm or loss to his person or property, without sustaining any legal injury, that is, an act or omission which the law does not deem an
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Exception: Ilocos Norte vs. CA (1989): A person is excused from the force of the rule (volenti non fit injuria), that when he voluntarily assents to a known danger he must abide by the consequences, if an emergency is found to exist or if the life or property of another is in peril or when he seeks to rescue his endangered property.
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Martial Law including the arrest, detention and/or trial of the plaintiff, the same must be brought within one (1) year. Art. 1150. The time for prescription for all kinds of actions, when there is no special provision which ordains otherwise, shall be counted from the day they may be brought.
LAST CLEAR CHANCE
Prescription periods: (a) years for QD (b) 1 year for defamation
The doctrine is also known as: (1) The doctrine of discovered peril; (2) The doctrine of supervening negligence; (3) Humanitarian doctrine
Kramer vs. CA (1989): It is clear that the prescriptive period must be counted from the time of the commission of an act or omission violative of the right of the plaintiff, which is the time when the cause of action arises.
A negligent defendant is liable to a negligent plaintiff, or even to a plaintiff who has been grossly negligent in placing himself in peril, if the defendant, aware of the plaintiff’s peril, had in fact a later opportunity than the plaintiff to avoid the accident.
Allied Banking vs. CA (1989): Relations Back Doctrine (footnote 17 of Allied Banking case): That principle of law by which an act done at one time is considered by a fiction of law to have been done at some antecedent period.
Picart vs. Smith (1918): The person who has the last fair chance to avoid the impending harm and fails to do so is chargeable with the consequences, without reference to the prior negligence of the other party. Bustamante vs. CA (1991): Negligence of the plaintiff does not preclude a recovery for the negligence of the defendant where it appears that the defendant, by exercising reasonable care and prudence, might have avoided injurious consequences to the plaintiff notwithstanding the plaintiff’s negligence.
WAIVER
Art. 6. Rights may be waived, unless the waiver is contrary to law, public order, public policy, morals, or good customs or prejudicial to a third person with a right recognized by law.
Consolidated Bank vs. CA (2003): This is a case of culpa contractual where neither contributory negligence nor last clear chance will exonerate defendant from liability. (NOTE: This means that Last Clear Chance is not a defense in culpa contractual.)
Art. 1171. Responsibility arising from fraud is demandable in all obligations. Any waiver of an action for future fraud is void. DOUBLE RECOVERY – NCC ART. 2177
Art. 2177. Responsibility for fault or negligence under the preceding article is entirely separate and distinct from the civil liability arising from negligence under the Penal Code. But the plaintiff cannot recover damages twice for the same act or omission of the defendant.
PRESCRIPTION – NCC, ART. 1144, 1146, AND 1150
Art. 1144. The following actions must be brought within ten 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.
Art. 100 (RPC). Civil liability of a person guilty of felony. - Every person criminally liable for a felony is also civilly liable.
Art. 1146. The following actions must be instituted within four years: (1) Upon an injury to the rights of the plaintiff; (2) Upon a quasi-delict;
Art. 2177 distinguishes 2 kinds of negligence: (1) Civil and (2) Criminal. The same negligence causing damage may produce liability arising from crime, if the act or omission is punished by the RPC, or may create an action for quasi-delict under the NCC.
However, when the action arises from or out of any act, activity, or conduct of any public officer involving the exercise of powers or authority arising from
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Question As a result of a collision between a taxicab owned by A and another taxicab owned by B, X, a passenger of the first taxicab, was seriously injured. X later filed a criminal action against both drivers.
ACTIONS AVAILABLE TO VICTIMS OF NEGLIGENCE
(1) An action to enforce the civil liability arising from culpa criminal under Art. 100 of the RPC (2) An action for quasi-delict under Art. 2176-2194 of the NCC. The only limitation is that the injured party cannot recover twice for the same act or omission.
(a) Is it necessary for X to reserve his right to institute a civil action for damages against both taxicab owners before he can file a civil action for damages against them? Why?
EFFECT OF ACQUITTAL OF THE ACCUSED ON HIS CIVIL LIABILITY
(b) May both taxicab owners raise the defense of due diligence in the selection and supervision of their drivers to be absolved from liability for damages to X? Reason.
Art. 29. When the accused in a criminal prosecution is acquitted on the ground that his guilt has not been proved beyond reasonable doubt, a civil action for damages for the same act or omission may be instituted. Such action requires only a preponderance of evidence. Upon motion of the defendant, the court may require the plaintiff to file a bond to answer for damages in case the complaint should be found to be malicious.
Suggested Answer: It depends. If the separate civil action is to recover damages arising from the criminal act, reservation is necessary. If the civil action against the taxicab owners is based on culpa contractual or on quasidelict, there is no need for reservation.
The acquittal of the accused in the criminal case will not necessarily exonerate him from civil liability.
It depends. If the civil action is based on quasi-delict, the taxicab owners may raise the defense of diligence of a good father of a family in the selection and supervision of the driver; if the action against them is based on culpa contractual or civil liability arising from a crime, they cannot raise the defense.
The judgment of acquittal does not necessarily extinguish the civil liability of the accused EXCEPT: (1) When it declares that the facts from which the civil liability might arise did not exist; (2) When it declares that the accused is not the author of the crime; (3) When the judgment expressly declares that the liability is only civil in nature; (4) Where the civil liability is not derived or based on the criminal act of which the accused was acquitted; (5) Where the acquittal is based on reasonable doubt; (6) Where the civil action has prescribed.
Alternative Answer: No such reservation is necessary. Under Section 1 Rule 111 of the 2000 Rules on Criminal Procedure, what is “deemed instituted” with the criminal action is only the action to recover civil liability arising from the crime or ex delicto. All the other civil actions under Articles 32, 33, 34, 2176 of the New Civil Code are no longer “deemed instituted,” and may be filed separately and prosecuted independently even without any reservation in the criminal action (Section 3, Rule 111, 2000 Rules on Criminal Procedure). The failure to make a reservation of the criminal action is not a waiver of the right to file a separate and independent civil action based on these articles of the New Civil Code (Casupanan vs. Laroya, G.R. No. 145391, August 26, 2002)
NO RESERVATION IS REQUIRED IN THE CRIMINAL CASE FOR THE FILING OF CIVIL ACTION ARISING FROM QUASI-DELICT
Rule 111, Sec. 3, ROC. When civil action may proceeded independently. — In the cases provided for in Articles 32, 33, 34 and 2176 of the Civil Code of the Philippines, the independent civil action may be brought by the offended party. It shall proceed independently of the criminal action and shall require only a preponderance of evidence. In no case, however, may the offended party recover damages twice for the same act or omission charged in the criminal action.
Special Liability in Particular Cases In some cases tort law imposes liability on defendants who are neither negligent nor guilty of intentional wrongdoing. Known as Strict Liability, or liability without fault, this branch of torts seeks to
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regulate those activities that are useful and necessary but that create abnormally dangerous risks to society.
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(n) "Consumer" means a natural person who is a purchaser, lessee, recipient or prospective purchaser, lessor or recipient of consumer products, services or credit.
PRODUCTS LIABILITY Art. 2187. Manufacturers and processors of foodstuffs, drinks, toilet articles and similar goods shall be liable for death or injuries caused by any noxious or harmful substances used, although no contractual relation exists between them and the consumers.
(as) "Manufacturer" means any person who manufactures, assembles or processes consumer products, except that if the goods are manufactured, assembled or processed for another person who attaches his own brand name to the consumer products, the latter shall be deemed the manufacturer. In case of imported products, the manufacturer's representatives or, in his absence, the importer, shall be deemed the manufacturer.
Under the foregoing provision, liability is not made to depend upon fault or negligence of the manufacturer or processor. The provision likewise dispensed with any contractual relation between the manufacturer and the consumer, thereby clearly implying that liability is imposed by law as a matter of PUBLIC POLICY.
Article 92. Exemptions. – If the concerned department finds that for good or sufficient reasons, full compliance with the labeling requirements otherwise applicable under this Act is impracticable or is not necessary for the adequate protection of public health and safety, it shall promulgate regulations exempting such substances from these requirements to the extent it deems consistent with the objective of adequately safeguarding public health and safety, and any hazardous substance which does not bear a label in accordance with such regulations shall be deemed mislabeled hazardous substance.
Proof of negligence under this provision is not necessary; as such, traditional contract and warranty defenses as (1) lack of privity; (2) lack of reliance on a warranty; (3) lack of notice to the defendant of the breach of warranty; and (4) disclaimer of implied warranties are INAPPLICABLE. REQUISITES OF LIABILITY
(1) Defendant is a manufacturer or possessor of foodstuff, drinks, toilet articles and similar goods; (2) He used noxious or harmful substances in the manufacture or processing of the foodstuff, drinks or toilet articles consumed or used by the plaintiff; (3) Plaintiff’s death or injury was caused by the product so consumed or used; and (4) The damages sustained and claimed by the plaintiff and the amount thereof.
Article 93. Grounds for Seizure and Condemnation of Mislabeled Hazardous Substances. – (a) Any mislabeled hazardous substance when introduced into commerce or while held for sale shall be liable to be proceeded against and condemned upon order of the concerned department in accordance with existing procedure for seizure and condemnation of articles in commerce: Provided, That this Article shall not apply to a hazardous substance intended for export to any foreign country if: (1) it is in a package labeled in accordance with the specifications of the foreign purchaser; (2) it is labeled in accordance with the laws of the foreign country; (3) it is labeled on the outside of the shipping package to show that it is intended for export; and (4) it is so exported,
BURDEN OF PROOF
The burden of proof that the product was in a defective condition at the time it left the hands of the manufacturer and particular seller is upon the INJURED PLAINTIFF. WHO MAY RECOVER
Although the article used the term “consumer”, such term includes a “user” and “purchaser” of the injuriously defective food product or toilet article. The person who may recover NEED NOT BE THE PURCHASER of the foodstuff or toilet article.
(b) any hazardous substance condemned under this Article shall after entry of order of condemnation be disposed of by destruction or sale as the concerned department may direct, and the proceeds thereof, if sold, less the legal cost and charges, shall be paid into the treasury of the Philippines; but such hazardous substance shall not be sold under any order which is contrary to
CONSUMER ACT –RA 7394, SECS. 92-107 (CH. 1)
Consumer Act Provisions Article 4. Definition of Terms.
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the provisions of this Act; Provided, That, after entry of the order and upon the payment of the costs of such proceedings and the execution of a good and sufficient bond conditioned that such hazardous substance shall not be sold or disposed of contrary to the provisions of this Act, the concerned department may direct that such hazardous substance be delivered to or retained by the owner thereof for destruction or for alteration to comply with the provisions of this Act under the supervision of an officer or employee duly designated by the concerned department. The expenses for such supervision shall be paid by the person obtaining release of the hazardous substance under bond.
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(b) Any person who violates the provisions of Article 81 to 83 for the first time shall be subject to a fine of not less than Two hundred pesos (P200.00) but not more than Five thousand pesos (P5,000.00) or by imprisonment of not less than one (1) month but not more than six (6) months or both, at the discretion of the court. A second conviction under this paragraph shall also carry with it the penalty of revocation of business permit and license. Article 96. Implementing Agency. – The Department of Trade and Industry shall enforce the provisions of this Chapter and its implementing rules and regulations.
(c) all expenses in connection with the destruction provided for in paragraphs (a) and (b) of this Article and all expenses in connection with the storage and labor with respect to such hazardous substance shall be paid by the owner or consignee, and default in such payment shall constitute a lien against any importation by such owner or consignee.
Article 97. Liability for the Defective Products. – Any Filipino or foreign manufacturer, producer, and any importer, shall be liable for redress, independently of fault, for damages caused to consumers by defects resulting from design, manufacture, construction, assembly and erection, formulas and handling and making up, presentation or packing of their products, as well as for the insufficient or inadequate information on the use and hazards thereof.
Article 94. Labeling Requirements of Cigarettes. – All cigarettes for sale or distribution within the country shall be contained in a package which shall bear the following statement or its equivalent in Filipino: "Warning" Cigarette Smoking is Dangerous to Your Health". Such statement shall be located in conspicuous place on every cigarette package and shall appear in conspicuous and legible type in contrast by typography, layout or color with other printed matter on the package. Any advertisement of cigarette shall contain the name warning as indicated in the label.
A product is defective when it does not offer the safety rightfully expected of it, taking relevant circumstances into consideration, including but not limited to: (a) presentation of product (b) use and hazards reasonably expected of it; (c) the time it was put into circulation. A product is not considered defective because another better quality product has been placed in the market. The manufacturer, builder, producer or importer shall not be held liable when it evidences: (a) that it did not place the product on the market; (b) that although it did place the product on the market such product has no defect; (c) that the consumer or a third party is solely at fault.
Article 95. Penalties. – (a) Any person who shall violate the provisions of Title III, Chapter IV of this Act, or its implementing rules and regulations, except Articles 81 to 83 of the same Chapter, shall be subject to a fine of not less than Five hundred pesos (P500.00) but not more than Twenty thousand pesos (P20,000.00) or imprisonment of not less than three (3) months but not more than two (2) years or both, at the discretion of the court: Provided, That, if the consumer product is one which is not a food, cosmetic, drug, device or hazardous substance, the penalty shall be a fine of not less than Two hundred pesos (P200.00) but not more than Five thousand pesos (P5,000.00) or imprisonment of not less than one (1) month but not more than one (1) year or both, at the discretion of the court.
Article 98. Liability of Tradesman or Seller. – The tradesman/seller is likewise liable, pursuant to the preceding article when: (a) it is not possible to identify the manufacturer, builder, producer or importer; (b) the product is supplied, without clear identification of the manufacturer, producer, builder or importer; (c) he does not adequately preserve perishable goods. The party making payment to the damaged party may exercise the right to recover a part of the whole of the payment made
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against the other responsible parties, in accordance with their part or responsibility in the cause of the damage effected.
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The consumer may make immediate use of the alternatives under the second paragraph of this Article when by virtue of the extent of the imperfection, the replacement of the imperfect parts may jeopardize the product quality or characteristics, thus decreasing its value.
Article 99. Liability for Defective Services. – The service supplier is liable for redress, independently of fault, for damages caused to consumers by defects relating to the rendering of the services, as well as for insufficient or inadequate information on the fruition and hazards thereof.
If the consumer opts for the alternative under subparagraph (a) of the second paragraph of this Article, and replacement of the product is not possible, it may be replaced by another of a different kind, mark or model: Provided, That any difference in price may result thereof shall be supplemented or reimbursed by the party which caused the damage, without prejudice to the provisions of the second, third and fourth paragraphs of this Article.
The service is defective when it does not provide the safety the consumer may rightfully expect of it, taking the relevant circumstances into consideration, including but not limited to: (a) the manner in which it is provided; (b) the result of hazards which may reasonably be expected of it; (c) the time when it was provided.
Article 101. Liability for Product Quantity Imperfection. – Suppliers are jointly liable for imperfections in the quantity of the product when, in due regard for variations inherent thereto, their net content is less than that indicated on the container, packaging, labeling or advertisement, the consumer having powers to demand, alternatively, at his own option: a) the proportionate price b) the supplementing of weight or measure differential; c) the replacement of the product by another of the same kind, mark or model, without said imperfections; d) the immediate reimbursement of the amount paid, with monetary updating without prejudice to losses and damages if any.
A service is not considered defective because of the use or introduction of new techniques. The supplier of the services shall not be held liable when it is proven: (a) that there is no defect in the service rendered; (b) that the consumer or third party is solely at fault. Article 100. Liability for Product and Service Imperfection. – The suppliers of durable or nondurable consumer products are jointly liable for imperfections in quality that render the products unfit or inadequate for consumption for which they are designed or decrease their value, and for those resulting from inconsistency with the information provided on the container, packaging, labels or publicity messages/advertisement, with due regard to the variations resulting from their nature, the consumer being able to demand replacement to the imperfect parts.
The provisions of the fifth paragraph of Article 99 shall apply to this Article. The immediate supplier shall be liable if the instrument used for weighing or measuring is not gauged in accordance with official standards.
If the imperfection is not corrected within thirty (30) days, the consumer may alternatively demand at his option: a) the replacement of the product by another of the same kind, in a perfect state of use; b) the immediate reimbursement of the amount paid, with monetary updating, without prejudice to any losses and damages; c) a proportionate price reduction.
Article 102. Liability for Service Quality Imperfection. – The service supplier is liable for any quality imperfections that render the services improper for consumption or decrease their value, and for those resulting from inconsistency with the information contained in the offer or advertisement, the consumer being entitled to demand alternatively at his option: a) the performance of the services, without any additional cost and when applicable; b) the immediate reimbursement of the amount paid, with monetary updating without prejudice to losses and damages, if any; c) a proportionate price reduction.
The parties may agree to reduce or increase the term specified in the immediately preceding paragraph; but such shall not be less than seven (7) nor more than one hundred and eighty (180) days.
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NUISANCE Art. 694. A nuisance is any act, omission, establishment, business, condition of property, or anything else which: (1) Injures or endangers the health or safety of others; or (2) Annoys or offends the senses; or (3) Shocks, defies or disregards decency or morality; or (4) Obstructs or interferes with the free passage of any public highway or street, or any body of water; or (5) Hinders or impairs the use of property.
Reperformance of services may be entrusted to duly qualified third parties, at the supplier's risk and cost. Improper services are those which prove to be inadequate for purposes reasonably expected of them and those that fail to meet the provisions of this Act regulating service rendering. Article 103. Repair Service Obligation. – When services are provided for the repair of any product, the supplier shall be considered implicitly bound to use adequate, new, original replacement parts, or those that maintain the manufacturer's technical specifications unless, otherwise authorized, as regards to the latter by the consumer.
Art. 696. Every successive owner or possessor of property who fails or refuses to abate a nuisance in that property started by a former owner or possessor is liable therefor in the same manner as the one who created it.
Article 104. Ignorance of Quality Imperfection. – The supplier's ignorance of the quality imperfections due to inadequacy of the products and services does not exempt him from any liability.
Art. 697. The abatement of a nuisance does not preclude the right of any person injured to recover damages for its past existence.
Article 105. Legal Guarantee of Adequacy. – The legal guarantee of product or service adequacy does not require an express instrument or contractual exoneration of the supplier being forbidden.
Art. 698. Lapse of time cannot legalize any nuisance, whether public or private.
Article 106. Prohibition in Contractual Stipulation. – The stipulation in a contract of a clause preventing, exonerating or reducing the obligation to indemnify for damages effected, as provided for in this and in the preceding Articles, is hereby prohibited, if there is more than one person responsible for the cause of the damage, they shall be jointly liable for the redress established in the pertinent provisions of this Act. However, if the damage is caused by a component or part incorporated in the product or service, its manufacturer, builder or importer and the person who incorporated the component or part are jointly liable. Article 107. Penalties. – Any person who shall violate any provision of this Chapter or its implementing rules and regulations with respect to any consumer product which is not food, cosmetic, or hazardous substance shall upon conviction, be subject to a fine of not less than Five thousand pesos (P5,000.00) and by imprisonment of not more than one (1) year or both upon the discretion of the court.
LIABILITY FOR NEGLIGENCE VS. LIABILITY FOR NUISANCE
Negligence
Nuisance Basis Liability is based on lack Liability attaches of proper care and regardless of the skill diligence exercised to avoid the injury Condition of the Act Act complained of is There is continuing harm already done which being suffered by the caused injury to the aggrieved party by the plaintiff maintenance of the act or thing which constitutes the nuisance Remedy Action for damages Abatement NUISANCE PER SE
It is recognized as a nuisance under any and all circumstances because it constitutes a direct menace to public health and safety and, for that reason, may be abated summarily under the undefined law of necessity.
In case of juridical persons, the penalty shall be imposed upon its president, manager or head. If the offender is an alien, he shall, after payment of fine and service of sentence, be deported without further deportation proceedings.
To become a nuisance per se, the thing must, of itself, because of its inherent qualities, without complement, be productive of injury, or, by reason of
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the matter of its use or exposure, threaten or be dangerous to life or property.
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It becomes a nuisance depending upon certain conditions and circumstances, and its existence being a question of fact, it cannot be abated without due hearing thereon in a tribunal authorized to decide whether such a thing does in law constitute a nuisance.
breach of the peace, or doing unnecessary injury. But it is necessary: (1) That demand be first made upon the owner or possessor of the property to abate the nuisance; (2) That such demand has been rejected; (3) That the abatement be approved by the district health officer and executed with the assistance of the local police; and (4) That the value of the destruction does not exceed three thousand pesos.
PUBLIC NUISANCE
PRIVATE NUISANCE
Art. 695. Nuisance is either public or private. A public nuisance affects a community or neighborhood or any considerable number of persons, although the extent of the annoyance, danger or damage upon individuals may be unequal. A private nuisance is one that is not included in the foregoing definition.
It is one which violates only private rights and produces damage to but one or a few persons, and cannot be said to be public.
NUISANCE PER ACCIDENCE
Art. 705. The remedies against a private nuisance are: (1) A civil action; or (2) Abatement, without judicial proceedings.
A public nuisance is the doing of or the failure to do something that injuriously affects safety, health, or morals of the public, or works some substantial annoyance, inconvenience or injury to the public. It causes hurt, inconvenience, or damage to the public generally, or such part of the public as necessarily comes in contact with it in the exercise of a public or common right.
Art. 706. Any person injured by a private nuisance may abate it by removing, or if necessary, by destroying the thing which constitutes the nuisance, without committing a breach of the peace or doing unnecessary injury. However, it is indispensable that the procedure for extrajudicial abatement of a public nuisance by a private person be followed.
Art. 699. The remedies against a public nuisance are: (1) A prosecution under the Penal Code or any local ordinance: or (2) A civil action; or (3) Abatement, without judicial proceedings.
Art. 707. A private person or a public official extrajudicially abating a nuisance shall be liable for damages: (1) If he causes unnecessary injury; or (2) If an alleged nuisance is later declared by the courts to be not a real nuisance.
Art. 700. The district health officer shall take care that one or all of the remedies against a public nuisance are availed of.
ATTRACTIVE NUISANCE
Contributory negligence of a minor does not bar recovery, where his immaturity and natural curiosity impelled him to act to his injury; but discretion shown by the child is the decisive factor.
Art. 701. If a civil action is brought by reason of the maintenance of a public nuisance, such action shall be commenced by the city or municipal mayor.
Del Rosario vs. Manila Electric Co. (1932): It is doubtful whether contributory negligence can properly be imputed to the deceased, owing to his immature years and the natural curiosity which a child would feel to do something out of the ordinary, and the mere fact that the deceased ignored the caution of a companion of the age of 8 years does not, in our opinion, alter the case.
Art. 702. The district health officer shall determine whether or not abatement, without judicial proceedings, is the best remedy against a public nuisance. Art. 703. A private person may file an action on account of a public nuisance, if it is specially injurious to himself.
Hidalgo Enterprises vs. Balandan (1952): One who maintains on his premises dangerous instrumentalities or appliances of a character likely to attract children in play, and who fails to exercise ordinary care to prevent children from playing
Art. 704. Any private person may abate a public nuisance which is specially injurious to him by removing, or if necessary, by destroying the thing which constitutes the same, without committing a
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therewith or resorting thereto, is liable to a child of tender years who is injured thereby, even if the child is technically a trespasser in the premises.
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(18) Freedom from excessive fines, or cruel and unusual punishment, unless the same is imposed or inflicted in accordance with a statute which has not been judicially declared unconstitutional; (19) Freedom of access to the courts
The principle reason for the doctrine 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
In any of the cases referred to in this article, whether or not the defendant’s act or omission constitutes a criminal offense, the aggrieved party has a right to commence an entirely separate and distinct civil action for damages, and for other relief. Such civil action shall proceed independently of any criminal prosecution (if the latter be instituted) and may be proved by a preponderance of evidence.
VIOLATION OF CONSTITUTIONAL RIGHTS VIOLATION OF CIVIL LIBERTIES
Art 32. Any public officer or employee, or any private individual, who directly or indirectly obstructs, defeats, violates or in any manner impedes or impairs any of the following rights and liberties of another person shall be liable to the latter for damages: (1) Freedom of religion (2) Freedom of speech (3) Freedom to write for the press or to maintain a periodical publication (4) Freedom from arbitrary or illegal detention (5) Freedom of suffrage (6) The right against deprivation of property without due process of law (7) The right to just compensation when property is taken for public use (8) The right to equal protection of the laws (9) The right to be secure in one’s person, house, papers and effects against unreasonable searches and seizures (10) The liberty of abode and of changing the same (11) The right to privacy of communication and correspondence (12) The right to become a member of associations and societies for purposes not contrary to law (13) The right to take part in a peaceable assembly and petition the government for redress of grievances (14) The right to be free from involuntary servitude in any form (15) The right of the accused against excessive bail (16) The right of the accused to be heard by himself and counsel, to be informed of the nature and the cause of the accusation against him, to have a speedy and public trial, to meet the witnesses face to face, to have compulsory process to secure the attendance of witnesses on is behalf; (17) Freedom form being compelled to be a witness against one’s self, or from being forced to confess his guilt, or from being induced by a promise of immunity or reward to make such confession, except when the person confessing becomes a State witness.
The indemnity shall include moral damages. Exemplary damages may also be adjudicated. The responsibility herein set forth is not demandable from a judge unless his act or omission constitutes a violation of the Penal code or any other penal statute. Aberca, et al. vs. Ver, et al. (1988): It is obvious that the purpose of the above codal provision (Art. 32) is to provide a sanction to the deeply cherished rights and freedoms enshrined in the Constitution. Its message is clear; no man may seek to violate those sacred rights with impunity. In times of great upheaval or of social and political stress, when the temptation is strongest to yield — borrowing the words of Chief Justice Claudio Teehankee — to the law of force rather than the force of law, it is necessary to remind ourselves that certain basic rights and liberties are immutable and cannot be sacrificed to the transient needs or imperious demands of the ruling power. The rule of law must prevail, or else liberty will perish. VIOLATIONS OF RIGHTS COMMITTED BY PUBLIC OFFICERS
Art. 27. Any person suffering material or moral loss because a public servant or employee refuses or neglects, without just cause, to perform his official duty may file an action for damages and other relief against the latter, without prejudice to any disciplinary administrative action that may be taken. Art. 32, supra. Dereliction of Duty Amaro vs. Samanguit: Requisites: (1) Defendant is a public officer charged with a performance of a duty in favor of the plaintiff; (2) He refused or neglected without just cause to perform the duty;
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(3) Plaintiff sustained material or moral loss as a consequence of such non-performance; (4) The amount of such damages, if material.
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defective roads or streets belong to the province, city or municipality. What said article requires is that the province, city or municipality have either "control or supervision" over said street or road.
Coverage Applies only to acts of nonfeasance or the nonperformance of some acts which a person is obliged or has responsibility to perform.
OWNERS OF MOTOR VEHICLES
Art. 2184. In motor vehicle mishaps, the owner is solidarily liable with his driver, if the former, who was in the vehicle, could have, by the use of the due diligence, prevented the misfortune. It is disputably presumed that a driver was negligent, if he had been found guilty of reckless driving or violating traffic regulations at least twice within the next preceding two months.
The duty of the public servant must be ministerial in character. If the duty is discretionary, he is not liable unless he acted in a notoriously arbitrary manner. Defense of Good Faith is not available The reason of its unavailability is that an officer is under constant obligation to discharge the duties of his office, and it is not necessary to show that his failure to act was due to malice or willfulness.
If the owner was not in the motor vehicle, the provisions of article 2180 are applicable. Art. 2185. Unless there is proof to the contrary, it is presumed that a person driving a motor vehicle has been negligent if at the time of the mishap, he was violating any traffic regulation.
Art. 34. When a member of a city or municipal police force refuses or fails to render aid or protection to any person in case of danger to life or property, such peace officer shall be primarily liable for damages, and the city or municipality shall be subsidiarily responsible therefor. The civil action herein recognized shall be independent of any criminal proceedings, and a preponderance of evidence shall suffice to support such action.
Art. 2186. Every owner of a motor vehicle shall file with the proper government office a bond executed by a government-controlled corporation or office, to answer for damages to third persons. The amount of the bond and other terms shall be fixed by the competent public official.
Art. 34 covers a situation where: (a) There is danger to the life or property of person; (b) A member of a city or municipal police force who is present in the scene refused or failed to render aid or protection to the person; and (c) Damages are caused wither to the person and/or property of the victim.
The owner is SOLIDARILY liable with the driver for motor vehicle mishaps when: (1) The owner was IN the vehicle at the time, AND (2) The owner could have, by the use of due diligence, prevented the misfortune. Owner of the vehicle “Owner” shall mean the actual legal owner of the motor vehicle, in whose name such vehicle is duly registered with the LTO.
Nature of liability (1) Of the police officer – Primary (2) City or municipality - Susidiary The defense of having observed the diligence of a good father of a family to prevent the damage is not available to the city/municipality.
Registration of motor vehicles is required not because it is the operative act which transfers ownership in vehicles, but because it is the means by which the owner can be identified so that if any accident occurs, or damage or injury is caused in the operation of the vehicle, responsibility can be fixed.
PROVINCES, CITIES, AND MUNICIPALITIES
Art. 2189. Provinces, cities and municipalities shall be liable for damages for the death of, or injuries suffered by, any person by reason of the defective condition of roads, streets, bridges, public buildings, and other public works under their control or supervision.
As held in Vargas vs. Langcay, “the registered owner/operator of a passenger vehicle is jointly and severally liable with the driver for damages incurred by passengers or third persons as a consequence of injuries or death sustained in the operation of said vehicles. Regardless of who the actual owner of a vehicle is, the operator of record continues to be the operator of the vehicle as regards the public and
Ownership of Roads, etc. is not required City of Manila vs. Teotico (1968): It is not necessary for the liability therein established to attach that the
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third persons and as such is directly and primarily responsible for the consequences incident to its operation, so that in contemplation of law, such owner/operator of record is the employer of the driver, the actual operator and employer being considered merely as his agent.”
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accident. And as far as perception is concerned, absent a minimum level imposed by law, a maneuver that appears to be fraught with danger to one passenger may appear to be entirely safe and commonplace to another. Were the law to require a uniform standard of perceptiveness, employment of professional drivers by car owners who, by their very inadequacies, have real need of drivers' services, would be effectively proscribed.
The registered owner of a motor vehicle is primarily liable for the damage or injury caused to another, but he has a right to be indemnified by the real owner of the amount he was required to pay (Tamayo vs, Aquino) This rule applies both to private and to common carriers with respect to their passengers.
Duavit vs. CA (1989): An owner of a vehicle cannot be held liable for an accident involving the said vehicle if the same was driven without his consent or knowledge and by a person not employed by him.
Note: If the owner was NOT inside the vehicle, Art. 2180 applies.
PROPRIETOR OF BUILDING OR STRUCTURE
Art. 2190. The proprietor of a building or structure is responsible for the damages resulting from its total or partial collapse, if it should be due to the lack of necessary repairs.
The presumption is AGAINST the owner of the motor vehicle. He has the burden of proving due diligence. Thus, once a driver is proven negligent in causing damage, the law presumes the vehicle owner equally negligent and imposes upon the latter the burden of proving proper selection of employee as a defense.
Art. 2191. Proprietors shall also be responsible for damages caused: (1) By the explosion of machinery which has not been taken care of with due diligence, and the inflammation of explosive substances which have not been kept in a safe and adequate place; (2) By excessive smoke, which may be harmful to persons or property; (3) By the falling of trees situated at or near highways or lanes, if not caused by force majeure; (4) By emanations from tubes, canals, sewers or deposits of infectious matter, constructed without precautions suitable to the place.
Summary: Owner PRESENT in the Owner NOT PRESENT in Vehicle the Vehicle Owner is liable if he could Owner may be held have prevented the liable under Art. 2180, mishap by the exercise of par. 5. due diligence. Caedo vs. Yu Khe Tai (1968): Car owners are not held to a uniform and inflexible standard of diligence as are professional drivers. In many cases they refrain from driving their own cars and instead hire other persons to drive for them precisely because they are not trained or endowed with sufficient discernment to know the rules of traffic or to appreciate the relative dangers posed by the different situations that are continually encountered on the road. What would be a negligent omission under aforesaid Article on the part of a car owner who is in the prime of age and knows how to handle a motor vehicle is not necessarily so on the part, say, of an old and infirm person who is not similarly equipped.
Art. 2192. If damage referred to in the two preceding articles should be the result of any defect in the construction mentioned in article 1723, the third person suffering damages may proceed only against the engineer or architect or contractor in accordance with said article, within the period therein fixed. Ownership of a building imposes on the proprietor thereof the duty to maintain it in good condition at all times to the end that it may not collapse either totally or partially as to cause damage or injury to another’s person or property.
The law does not require that a person must possess a certain measure of skill or proficiency either in the mechanics of driving or in the observance of traffic rules before he may own a motor vehicle. The test of his negligence, within the meaning of Article 2184, is his omission to do that which the evidence of his own senses tells him he should do in order to avoid the
This duty obtains whether the building is leased or held in usufruct. Considering, however, that the lessee or usufructuary has direct and immediate control of the building, the law imposes on him the duty to notify the proprietor
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of such urgent or extra-ordinary repairs AND where the proprietor’s failure to make the necessary repairs was due to the failure of the lessee or usufructuary to notify him, the proprietor is entitled to indemnification for damages he may have been required to pay to the parties.
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based on the negligence or on the presumed lack of vigilance of the possessor or user of the animal causing damage. It is based on natural equity and on the principle of social interest that he who possesses animals for his utility, pleasure, or service, must answer for any damage which such animal may cause.
Gotesco Investment Corp. vs. Chatto (1992): The owner or proprietor of a place of public amusement impliedly warrants that the premises, appliances and amusement devices are safe for the purpose for which they are designed, the doctrine being subject to no other exception or qualification than that he does not contract against unknown defects not discoverable by ordinary or reasonable means.
POSSIBLE DEFENSES AGAINST THIS LIABILITY
(1) Force Majeure (2) Fault of person suffering damage (3) Act of third persons SCOPE OF PROVISION
Contention that the defendant could not be expected to exercise remote control of the animal is not acceptable. In fact, Art. 2183 holds the possessor liable even if the animal should “escape or be lost” and so be removed from his control.
HEAD OF FAMILY
Art 2193. The head of a family that lives in a building or a part thereof, is responsible for damages caused by things thrown or falling from the same.
It is likewise immaterial that the animal was tame and was merely provoked by the victim. The law does not speak only of vicious animals but covers even tame ones as long as they cause injury.
Purpose of the law To relieve the injured party of the difficulty of determining and proving who threw the thing or what caused it to fall, or that either was due to the fault or negligence of any particular individual. Dingcong vs. Kanaan (1941): Lessee is considered as the head of the family. It is enough that he lives in and has control over it.
NUISANCE Sangco: A person who creates or maintains a nuisance is liable for the resulting injury to others regardless of the degree of care or skill exercised to avoid the injury. The creation or maintenance of a nuisance is a violation of an absolute duty.
Strict Liability
Nuisance is a condition and not an act or failure to act, so that if a wrongful condition exists, the person responsible for its existence is responsible for the resulting damages to others.
POSSESSOR AND USER OF AN ANIMAL Art. 2183. The possessor of an animal or whoever may make use of the same is responsible for the damage which it may cause, although it may escape or be lost. This responsibility shall cease only in case the damage should come from force majeure or from the fault of the person who has suffered damage.
CLASSES
(1) Nuisance per se; Nuisance per accidence (2) Public nuisance; private nuisance Iloilo Ice and Cold Storage Co. vs. Municipal Council (1913): A nuisance is, according to Blackstone, "Any thing that worketh hurt, inconvenience, or damages." They arise from pursuing particular trades or industries in populous neighborhoods; from acts of public indecency, keeping disorderly houses, and houses of ill fame, gambling houses, etc. Nuisances have been divided into two classes: Nuisances per se, and nuisances per accidens. To the first belong those which are unquestionably and under all circumstances nuisances, such as gambling houses, houses of ill fame, etc. The number of such nuisances is necessarily limited, and by far the greater number of nuisances are such because of particular facts and circumstances surrounding the otherwise harmless cause of the nuisance. For this
APPLICABILITY OF PROVISION
Since the law makes no distinction, this is applicable to both wild (in case the wild animal is kept) and domestic animals. It is enough that defendant is the possessor, owner, or user of the animal at the time it caused the damage complained of, to hold him liable therefor. BASIS
Vestil vs. IAC (1989): Possession of the animal, not ownership, is determinative of liability under Art. 2183. The obligation imposed by said article is not
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reason, it will readily be seen that whether a particular thing is a nuisance is generally a question of fact, to be determined in the first instance before the term nuisance can be applied to it.
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There can be no doubt that commercial and industrial activities which are lawful in themselves may become nuisances if they are so offensive to the senses that they render the enjoyment of life and property uncomfortable. It is no defense that skill and care have been exercised and the most improved methods and appliances employed to prevent such result.
Salao and Lucas vs. Santos (1939): Nuisances are of two kinds: nuisance per se and nuisance per accidens. The first is recognized as a nuisance under any and all circumstances because it constitutes a direct menace to public health or safety and, for that reason, may ‘be abated summarily under the undefined law of necessity. The second is that which depends upon certain conditions and circumstances, and its existence being a question of fact, it cannot be abated without due hearing thereon in a tribunal authorized to decide whether such a thing does in law constitute a nuisance.
PRODUCTS LIABILITY (SUPRA) Art 2187. Manufacturers and processors of foodstuffs, drinks, toilet articles and similar goods shall be liable for death or injuries caused by any noxious or harmful substances used, although no contractual relation exists between them and the consumers. CONSUMER ACT Consumer Act Provisions (supra)
EASEMENT AGAINST NUISANCE
Art. 682. Every building or piece of land is subject to the easement which prohibits the proprietor or possessor from committing nuisance through noise, jarring, offensive odor, smoke, heat, dust, water, glare and other causes.
Coca-Cola v. CA (1993): While it may be true that the pre-existing contract between the parties may, as a general rule, bar the applicability of the law on quasi-delict, the liability may itself be deemed to arise from quasi-delict if the act which breaks the contract is also a quasi-delict.
Art. 683. Subject to zoning, health, police and other laws and regulations, factories and shops may be maintained provided the least possible annoyance is caused to the neighborhood.
Summary: Person Strictly Liable Possessor of an animal or whoever makes use of them even if the animal is lost or escaped Owner of Motor Vehicle
The provisions impose a prohibition upon owners of buildings of land from committing therein a nuisance or using such buildings or lands in a manner as will constitute a nuisance. It is based on the maxim sic utere tuo ut alienum non laedas (so use your own as not to injure another’s property). Velasco vs. Manila Electric Co. (1971): The general rule is that everyone is bound to bear the habitual or customary inconveniences that result from the proximity of others, and so long as this level is not surpassed, he may not complain against them. But if the prejudice exceeds the inconveniences that such proximity habitually brings, the neighbor who causes such disturbances is held responsible for the resulting damage, being guilty of causing nuisance.
Manufacturers and Processors of foodstuffs, drinks, toilet articles and similar goods (FDTAS) Defendant in possession of dangerous
While no previous adjudications on the specific issue have been made in the Philippines, our law of nuisances is of American origin, and a review of authorities clearly indicates the rule to be that the causing or maintenance of disturbing noise or sound may constitute an actionable nuisance.
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For What For the damage it may cause
Motor vehicle mishaps
Death and injuries caused by any noxious or harmful substances used Death or injury results from such possession
Defenses or Exceptions Force majeure Fault of the person who suffered damage Solidary liability only if the owner was in the vehicle and if he could have prevented it thru due diligence If not in vehicle 2180 Absence on contractual relation NOT a defense
possession or use thereof is indispensable in
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Person Strictly For What Liable weapons/ substances such as firearms and poison Provinces, Cities The death or and injuries suffered Municipalities by any person by reason of the defective condition of roads, streets, bridges, public buildings, and other public works Proprietor ofa) Total or partial building/ collapse of structure building or structure if due to lack of necessary repair s b) Explosion of machinery which has not been taken cared of with due diligence, and the inflammation of explosive substances which have not been kept in a safe and adequate place c) By excessive smoke, which may be harmful to persons or property d) By falling of trees situated at or near highways or lanes, if not caused by force majeure e) By emanations from tubes, canals, sewers or deposits of infectious matter, constructed
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Defenses or Exceptions his occupation or business
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Person Strictly Liable
Public works must be under their supervisions
Engineer, Architect Contractor
Responsibility for collapse should be due to the lack of necessary repairs
or
Head of the Family that lives in a building or any part thereof
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For What without precautions suitable to the place if damage of building or structure is caused by defect in construction which happens within 15 years from construction; action must be brought within 10 years from collapse Liable for damages caused by things thrown or falling from the same
Defenses or Exceptions
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DAMAGES
Damages
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foundation of liability, and include those which follow as a conclusion of law from the statement of the facts of the injury.
DEFINITION People vs. Ballesteros: Damages may be defined as the pecuniary compensation, recompense, or satisfaction for an injury sustained, or as otherwise expressed, the pecuniary consequences which the law imposes for the breach of some duty or the violation of some right.
Special damages Damages that arise from the special circumstance of the case, which, if properly pleaded, may be added to the general damages which the law presumes or implies from the mere invasion of the plaintiff’s rights. Special damages are the natural, but NOT the necessary result of an injury. These are not implied by law.
DAMAGES VS. INJURY Custodio v. CA (1996): Injury is the illegal invasion of a legal right. Damage is the loss, hurt, or harm which results from the injury. Damages are the recompense or compensation awarded for the damage suffered.
Actual and Compensatory Damages
Ocena vs. Icamina: The obligation to repair the damages exists whether done intentionally or negligently and whether or not punishable by law.
Compensatory damages are damages in satisfaction of, or in recompense for, loss or injury sustained. The phrase “actual damages” is sometimes used as synonymous with compensatory damages.
ELEMENTS FOR RECOVERY OF DAMAGES (1) Right of action (2) For a wrong inflicted by the defendant (3) Damage resulting to the plaintiff
REQUISITES Asilio, Jr. v. People and Sps. Bombasi (2011): To seek recovery of actual damages, it is necessary to prove the actual amount of loss with a reasonable degree of certainty, premised upon competent proof and on the best evidence obtainable.
CLASSIFICATION Art. 2197. Damages may be: (1) Actual or compensatory; (2) Moral; (3) Nominal; (4) Temperate or moderate; (5) Liquidated; or (6) Exemplary or corrective.
WHEN IS A PERSON ENTITLED? (1) When there is a pecuniary loss suffered by him; (2) When he has alleged and prayed for such relief (Manchester Dev’t Corp vs. CA); (3) When he has duly proved it; (4) When provided by law or by stipulation.
ACCORDING TO PURPOSE
(1) For adequate reparation of the injury a) Compensatory (reparation of pecuniary losses) b) Moral (reparation for non-pecuniary losses: injury to feelings; physical suffering, etc.) (2) For vindication of the right violated: Nominal (3) For less than adequate reparation: Moderate (4) For deterring future violations: Exemplary or corrective
No proof of pecuniary loss is necessary for: moral, nominal, temperate, liquidated or exemplary damages. The assessment of such damages is discretionary upon the court, except liquidated ones. (Art. 2216) ALLEGED AND PROVED WITH CERTAINTY Art. 2199. Except as provided by law or by stipulation, one is entitled to an adequate compensation only for such pecuniary loss suffered by him as he has duly proved. Such compensation is referred to as actual or compensatory damages.
ACCORDING TO MANNER OF DETERMINATION
(1) Conventional (or liquidated) (2) Non-conventional, which may either be: (a) Statutory (fixed by law, as in moratory interest) (b) Judicial (determined by the courts)
THE DAMAGES MUST BE PROVEN BY COMPETENT EVIDENCE (ADMISSIBLE OR PROBATIVE) Integrated Packaging Corp. vs. CA; Fuentes vs. CA: It is necessary to prove with a reasonable degree of certainty, premised upon competent proof and on
SPECIAL AND ORDINARY
General damages Those which are the natural and necessary result of the wrongful act or omission asserted as the
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the best evidence obtainable by the injured party, the actual amount of loss.
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VALUE OF LOSS; UNREALIZED PROFIT Art. 2200. Indemnification for damages shall comprehend not only the value of the loss suffered, but also that of the profits which the obligee failed to obtain.
Damages must be proved and cannot be presumed. It must be established by clear evidence. Valencia vs. Tantoco (1956): Damages must be proved with reasonable accuracy, even when not denied.
In other words, indemnification for damages is not limited to damnum emergens (actual loss) but extends to lucrum cessans (a cession of gain or amount of profit lost).
DEGREE OF CERTAINTY REQUIRED AS TO: FACT, CAUSE AND AMOUNT OF DAMAGES Damages are not rendered uncertain just because they cannot be calculated with absolute exactness or because the consequences of the wrong are not precisely definite in pecuniary amount.
ATTORNEY’S FEES AND EXPENSES OF LITIGATION Art. 2208. In the absence of stipulation, attorney's fees and expenses of litigation, other than judicial costs, cannot be recovered, except: (1) When exemplary damages are awarded; (2) When the defendant's act or omission has compelled the plaintiff to litigate with third persons or to incur expenses to protect his interest; (3) In criminal cases of malicious prosecution against the plaintiff; (4) In case of a clearly unfounded civil action or proceeding against the plaintiff; (5) Where the defendant acted in gross and evident bad faith in refusing to satisfy the plaintiff's plainly valid, just and demandable claim; (6) In actions for legal support; (7) In actions for the recovery of wages of household helpers, laborers and skilled workers; (8) In actions for indemnity under workmen's compensation and employer's liability laws; (9) In a separate civil action to recover civil liability arising from a crime; (10) When at least double judicial costs are awarded; (11) In any other case where the court deems it just and equitable that attorney's fees and expenses of litigation should be recovered.
The principle which will disallow recovery of damages when their existence rests solely on speculation applies both to the fact and cause of damages. (1) The requirement of certainty does not prevent the drawing of reasonable inferences from the fact and circumstance in evidence. (2) Events which occur after the wrong complained of may serve to render the damage sufficiently certain. (3) The damages must be susceptible of ascertainment in some manner other than by mere speculation, conjecture or surmise and by reference to some fairly definite standard, such as market value, established experience or direct inference from known circumstances. Talisay-Silay vs. Associacion: Where, however, it is reasonably certain that injury consisting of failure to realize otherwise reasonably expected profits had been incurred, uncertainty as to the precise amount of such unrealized profits will not prevent recovery or the award of damages.
In all cases, the attorney's fees and expenses of litigation must be reasonable.
NOT SPECULATIVE Actual damages to be compensable must be proved by clear evidence, a court cannot rely on speculation, conjectures or guesswork as to the fact and amount of damages, but must depend on actual proof that damages has been suffered and on evidence of the actual amount.
General Rule Attorney’s fees and costs of litigation are recoverable IF stipulated. Exceptions If there is no stipulation, they are recoverable only in the following cases: (1) By reason of malice or bad faith (a) When exemplary damages are awarded (b) In case of a clearly unfounded civil action (c) Where defendant acted in gross and evident bad faith
COMPONENTS Actual damage covers the following: (1) Value of loss; unrealized profit (2) Attorney’s fees and expenses of litigation (3) Interest
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(d) When at least double judicial costs are awarded (2) By reason of plaintiff’s indigence in (a) Actions for legal support (b) Actions for recovery of wages of laborers, etc. (c) Actions for workmen’s compensation (3) By reason of crimes in (a) Criminal cases of malicious prosecution (b) Separate actions to recover civil liability arising from crime (4) By reason of equity (a) Where the defendant’s act compelled plaintiff to litigate with third persons (b) Where the Court deems it just and equitable
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No interest may be recovered on unliquidated (not fixed in amount) claims or damages, except when the demand can be established with reasonable certainty at the Court’s discretion. COMPOUNDING OF INTEREST
Interest due shall earn legal interest from the time it is judicially demanded, although the obligation may be silent on the point. Note that interest due can earn only at 6%, whether the rate of interest of the principal is greater than 6%. DETERMINATION OF LEGAL INTEREST
(1) When an obligation, regardless of its source (i.e., law, contracts, quasi-contracts, delicts or quasidelicts) is breached, the contravenor can be held liable for damages. (2) With regard particularly to an AWARD OF INTEREST in the concept of actual and compensatory damages, the RATE of interest, as well as the ACCRUAL thereof, is imposed, as follows (Eastern Shipping Lines vs. CA, 1994):
Note: In all cases, attorney’s fees and costs of litigation must be reasonable. Even if expressly stipulated, attorney’s fees are subject to control by the Courts. INTEREST Art. 2209. If the obligation consists in the payment of a sum of money, and the debtor incurs in delay, the indemnity for damages, there being no stipulation to the contrary, shall be the payment of the interest agreed upon, and in the absence of stipulation, the legal interest, which is six per cent per annum.
Base (a) When the obligation is breached, and it consists in the PAYMENT OF A SUM OF MONEY, i.e., a loan or forbearance of money, the interest due should be
Rate
(a) That which may have been stipulated in writing. b) In the absence of stipulation, the rate of interest shall be 12% per annum (legal interest) (b) Furthermore, legal interest the INTEREST DUE shall itself earn (c) When an at the rate of obligation, NOT 6% per constituting a annum. loan or forbearance of money, is breached, an interest on the AMOUNT OF DAMAGES awarded may be imposed at
Art. 2210. Interest may, in the discretion of the court, be allowed upon damages awarded for breach of contract. Art. 2211. In crimes and quasi-delicts, interest as a part of the damages may, in a proper case, be adjudicated in the discretion of the court. Art. 2212. Interest due shall earn legal interest from the time it is judicially demanded, although the obligation may be silent upon this point. Art. 2213. Interest cannot be recovered upon unliquidated claims or damages, except when the demand can be established with reasonable certainty. INTEREST ACCRUES WHEN:
(1) The obligation consists in the payment of a sum of money (2) Debtor incurs in delay (3) There being no stipulation to the contrary
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Accrual to be computed from default, i.e., from JUDICIAL or EXTRAJUDICIAL demand under and subject to the provisions of Article 1169 of the Civil Code.
from the time it is JUDICIALLY demanded. If claim or damages are LIQUIDATED, from default, i.e., from judicial or extrajudicial demand. (Art. 1169, Civil Code) If UNLIQUIDATED, from the time the demand can be
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Rate
Accrual
the rate of legal interest, whether the case falls under a,b, or c, above, shall be 12% per annum
established with reasonable certainty. Hence, the interest shall begin to run only FROM THE DATE THE JUDGMENT OF THE COURT IS MADE (at which time the quantification of damages may be deemed to have been reasonably ascertained). from FINALITY UNTIL ITS SATISFACTION, this period being deemed to be an equivalent to a forbearance of credit.
the discretion of the court. The actual base for the computation of legal interest shall be on the amount finally adjudged.
(d) When the JUDGMENT of the court awarding a sum of money becomes final and executory,
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IN CONTRACTS AND QUASI-CONTRACTS Art. 2201. In contracts and quasi-contracts, the damages for which the obligor who acted in good faith is liable shall be those that are the natural and probable consequences of the breach of the obligation, and which the parties have foreseen or could have reasonably foreseen at the time the obligation was constituted. In case of fraud, bad faith, malice or wanton attitude, the obligor shall be responsible for all damages which may be reasonably attributed to the nonperformance of the obligation. Art. 2214. In quasi-delicts, the contributory negligence of the plaintiff shall reduce the damages that he may recover. Art. 2215. In contracts, quasi-contracts, and quasidelicts, the court may equitably mitigate the damages under circumstances other than the case referred to in the preceding article, as in the following instances: (1) That the plaintiff himself has contravened the terms of the contract; (2) That the plaintiff has derived some benefit as a result of the contract; (3) In cases where exemplary damages are to be awarded, that the defendant acted upon the advice of counsel; (4) That the loss would have resulted in any event; (5) That since the filing of the action, the defendant has done his best to lessen the plaintiff's loss or injury.
START OF DELAY (1) Extrajudicial: demand letter (2) Judicial: Filing of complaint (3) Award EXTENT OR SCOPE OF ACTUAL DAMAGES Art. Liability extends Note: 2201 to those: Liability (1) natural and extends to probable all damages consequences which may of the breach be (2) those that reasonably have been attributed to Contracts foreseen the nonand quasi (3) those that performance contracts could have of the been obligation in reasonably case of foreseen fraud, bad Provided: obligor faith, malice in good faith or wanton attitude (FBM-WA). Art. Liability extends Note: 2202 Crimes to all damages WON and which are the damage is quasinatural and foreseen is delicts probable irrelevant consequence
(a) The obligor IN GOOD FAITH is liable for such damages (1) That are the natural and probable consequences of the breach of the obligation; and (2) That the parties have foreseen (or could have reasonably foreseen) such damages at the time the obligation was constituted “Natural and probable” consequence requires: (1) Causality: That the damage would not have resulted without fault or negligence of the defendant (but for rule) (2) Adequacy: That the fault of the obligor would normally (ordinarily) result in the damage suffered by the obligee (b) In case of FRAUD, BAD FAITH, MALICE OR WANT OF ATTITUDE, the obligor answers for
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(1) All damages which may be reasonably attributed to the non-performance of the obligation, whether foreseen or not (2) Exemplary or corrective damages
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damages were foreseen, or reasonably foreseeable by the defendant. Algarra vs. Sandejas: Actual damages for a negligent act or omission are confined to those which "were foreseen or might have been foreseen," or those which were "the natural and probable consequences" or "the direct and immediate consequences" of the act or omission.
Note: Interest may be allowed on damages awarded, in the discretion of the court. Daywalt vs. Recoletos et al.: The damages recoverable upon breach of contract are, primarily, the ordinary, natural and in a sense the necessary damages resulting from the breach. Other damages, known as special damages, are recoverable where it appears that the particular conditions which made such damages a probable consequence of the breach were known to the delinquent party at the time the contract was made.
Note: Damages are to be increased or decreased (in case of crimes only) according to aggravating or mitigating circumstances present. Interest, as part of damages, may be adjudicated in a proper case, in the Court’s discretion. Contributory negligence of the plaintiff, in case of quasi-delicts, shall reduce the damages to which he may be entitled.
IN CRIMES AND QUASI-DELICTS Art. 2202. In crimes and quasi-delicts, the defendant shall be liable for all damages which are the natural and probable consequences of the act or omission complained of. It is not necessary that such damages have been foreseen or could have reasonably been foreseen by the defendant.
Note: In crimes, no mitigation for contributory negligence.
Moral Damages
Art. 2206. The amount of damages for death caused by a crime or quasi-delict shall be at least three thousand pesos, even though there may have been mitigating circumstances. In addition: (1) The defendant shall be liable for the loss of the earning capacity of the deceased, and the indemnity shall be paid to the heirs of the latter; such indemnity shall in every case be assessed and awarded by the court, unless the deceased on account of permanent physical disability not caused by the defendant, had no earning capacity at the time of his death; (2) If the deceased was obliged to give support according to the provisions of article 291, the recipient who is not an heir called to the decedent's inheritance by the law of testate or intestate succession, may demand support from the person causing the death, for a period not exceeding five years, the exact duration to be fixed by the court; (3) The spouse, legitimate and illegitimate descendants and ascendants of the deceased may demand moral damages for mental anguish by reason of the death of the deceased.
Art. 2217. Moral damages include physical suffering, mental anguish, fright, serious anxiety, besmirched reputation, wounded feelings, moral shock, social humiliation, and similar injury. Though incapable of pecuniary computation, moral damages may be recovered if they are the proximate result of the defendant's wrongful act for omission. Art. 2218. In the adjudication of moral damages, the sentimental value of property, real or personal, may be considered. Visayan Sawmill vs. CA: Moral damages are emphatically not intended to enrich a complainant at the expense of the defendant. Its award is aimed at the restoration, within the limits of the possible, of the spiritual status quo ante, and it must be proportional to the suffering inflicted. Bagumbayan Corp. vs. IAC (1984): Mental suffering means distress or serious pain as distinguished from annoyance, regret or vexation.
Defendant is liable for all damages which are the natural and probable consequences of the act or omission complained of; it is not necessary that such
Mental anguish is intense mental suffering. Generally, damages for mental anguish are limited to cases in which there has been a personal physical injury or where the defendant willfully, wantonly,
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recklessly, or intentionally caused the mental anguish.
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contracts when breached by tort. (5) In culpa criminal, moral damages could be lawfully due when the accused is found guilty of physical injuries, lascivious acts, adultery or concubinage, illegal or arbitrary detention, illegal arrest, illegal search, or defamation.
WHEN AWARDED Awarded when injury consists of: (PBMF-MWSSS) (a) Physical suffering (b) Besmirched reputation (c) Mental anguish (d) Fright (e) Moral shock (f) Wounded feelings (g) Social humiliation (h) Serious anxiety (i) Similar injury
(6) Malicious prosecution can also give rise to a claim for moral damages. The term "analogous cases," referred to in Article 2219, following the ejusdem generis rule, must be held similar to those expressly enumerated by the law. (7) Although the institution of a clearly unfounded civil suit can at times be a legal justification for an award of attorney's fees, such filing, however, has almost invariably been held not to be a ground for an award of moral damages. (Expertravel& Tours vs. CA, 1 to 7)
(1) Though incapable of pecuniary computation (2) If such is the proximate result of defendant’s act or omission. REQUISITES FOR AWARDING MORAL DAMAGES Villanueva vs. Salvador: Requisites for awarding moral damages: (1) there must be an injury, whether physical, mental or psychological, clearly sustained by the claimant; (2) there must be a culpable act or omission factually established; (3) the wrongful act or omission of the defendant must be the proximate cause of the injury sustained by the claimant; and (4) the award of damages is predicated on any of the cases stated in ART. 2219 NCC.
(8) The burden rests on the person claiming moral damages to show convincing evidence for good faith is presumed. In a case involving simple negligence, moral damages cannot be recovered. (Villanueva vs. Salvador) (9) Failure to use the precise legal terms or "sacramental phrases" of "mental anguish, fright, serious anxiety, wounded feelings or moral shock" does not justify the denial of the claim for damages. It is sufficient that these exact terms have been pleaded in the complaint and evidence has been adduced (MirandaRibaya vs. Bautista)
GENERAL PRINCIPLES OF RECOVERY: (1) Moral damages must somehow be proportional to the suffering inflicted.
(10) Even if the allegations regarding the amount of damages in the complaint are not specifically denied in the answer, such damages are not deemed admitted. (Raagas, et al. vs. Traya et al).
(2) In culpa contractual or breach of contract, moral damages may be recovered when the defendant acted in bad faith or was guilty of gross negligence (amounting to bad faith) or in wanton disregard of his contractual obligation and, exceptionally, when the act of breach of contract itself is constitutive of tort resulting in physical injuries.
(11) An appeal in a criminal case opens the whole case for review and this 'includes the review of the penalty, indemnity and damages. Even if the offended party had not appealed from said award, and the only party who sought a review of the decision of said court was the accused, the court can increase damages awarded. (Sumalpong vs. CA)
(3) By special rule in Article 1764, in relation to Article 2206, moral damages may also be awarded in case the death of a passenger results from a breach of carriage.
(12) It can only be awarded to natural persons.
(4) In culpa aquiliana or quasi-delict, (a) when an act or omission causes physical injuries, or (b) where the defendant is guilty of intentional tort, moral damages may aptly be recovered. This rule also applies to
ABS-CBN vs. CA: The award of moral damages cannot be granted in favor of a corporation because, being an artificial person and having existence only in legal contemplation, it has no feelings, no emotions, no senses, It cannot, therefore, experience
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physical suffering and mental anguish, which can be experienced only by one having a nervous system. The statement in People vs. Manero and Mambulao Lumber Co. vs. PNB that a corporation may recover moral damages if it "has a good reputation that is debased, resulting in social humiliation" is an obiter dictum.
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(1) A criminal offense resulting in physical injuries; (2) Quasi-delicts causing physical injuries; (3) Seduction, abduction, rape, or other lascivious acts; (4) Adultery or concubinage; (5) Illegal or arbitrary detention or arrest; (6) Illegal search; (7) Libel, slander or any other form of defamation; (8) Malicious prosecution; (9) Acts mentioned in article 309; (10) Acts and actions referred to in articles 21, 26, 27, 28, 29, 30, 32, 34, and 35.
NAPOCOR vs. Philipp Brothers: While it is true that besmirched reputation is included in moral damages, it cannot cause mental anguish to a corporation, unlike in the case of a natural person, for a corporation has no reputation in the sense that an individual has, and besides, it is inherently impossible for a corporation to suffer mental anguish.
The parents of the female seduced, abducted, raped, or abused, referred to in No. 3 of this article, may also recover moral damages. The spouse, descendants, ascendants, and brothers and sisters may bring the action mentioned in No. 9 of this article, in the order named.
Question Ortillo contracts Fabricato, Inc. to supply and install tile materials in a building he is donating to his province. Ortillo pays 50% of the contract price as per agreement. It is also agreed that the balance would be payable periodically after every 10% performance until completed. After performing about 93% of the contract, for which it has been paid an additional 40% as per agreement, Fabricato, Inc. did not complete the project due to its sudden cessation of operations. Instead, Fabricato, Inc. demands payment of the last 10% of the contract despite its non-completion of the project. Ortillo refuses to pay, invoking the stipulation that payment of the last amount of 10% shall be upon completion. Fabricato, Inc. brings suit for the entire 10% plus damages. Ortillo counters with claims for (a) moral damages for Fabricato, Inc.’s unfounded suit which has damaged his reputation as a philanthropist and respected businessman in his community, and (b) attorney’s fees.
Art. 2220. Willful injury to property may be a legal ground for awarding moral damages if the court should find that, under the circumstances, such damages are justly due. The same rule applies to breaches of contract where the defendant acted fraudulently or in bad faith. IN SEDUCTION, ABDUCTION, RAPE AND OTHER LASCIVIOUS ACTS
People vs. Calongui: Anent the award of damages, civil indemnity ex delicto is mandatory upon finding of the fact of rape while moral damages is awarded upon such finding without need of further proof because it is assumed that a rape victim has actually suffered moral injuries entitling the victim to such award. If without factual and legal bases, no award of exemplary damages should be allowed.
(a) Does Ortillo have a legal basis for his claim for moral damages? (b) How about his claim for attorney’s fees, having hired a lawyer to defend him?
Note: Recovery may be had by the offended party and also by her parents. IN ACTS REFERRED TO IN ARTS. 21, 26, 27, 28, 29, 32, 34 &35, NCC
Suggested Answer: (a) There is no legal basis to Ortillo’s claim for moral damages. It does not fall under the coverage of Article 2219 of the New Civil Code. (b) Ortillo is entitled to attorney’s fees because Fabricato’s complaint is a case of malicious prosecution or a clearly unfounded civil action (Art. 2208 [4] and [11], NCC).
Art. 21. Any person who wilfully causes loss or injury to another in a manner that is contrary to morals, good customs or public policy shall compensate the latter for the damage. Art. 26. Every person shall respect the dignity, personality, privacy and peace of mind of his neighbors and other persons. The following and similar acts, though they may not constitute a criminal offense, shall produce a cause of action for damages, prevention and other relief:
WHEN RECOVERABLE Art. 2219. Moral damages may be recovered in the following and analogous cases:
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(1) Prying into the privacy of another's residence: (2) Meddling with or disturbing the private life or family relations of another; (3) Intriguing to cause another to be alienated from his friends; (4) Vexing or humiliating another on account of his religious beliefs, lowly station in life, place of birth, physical defect, or other personal condition.
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(7) The right to a just compensation when private property is taken for public use; (8) The right to the equal protection of the laws; (9) The right to be secure in one's person, house, papers, and effects against unreasonable searches and seizures; (10) The liberty of abode and of changing the same; (11) The privacy of communication and correspondence; (12) The right to become a member of associations or societies for purposes not contrary to law; (13) The right to take part in a peaceable assembly to petition the government for redress of grievances; (14) The right to be free from involuntary servitude in any form; (15) The right of the accused against excessive bail; (16) The right of the accused to be heard by himself and counsel, to be informed of the nature and cause of the accusation against him, to have a speedy and public trial, to meet the witnesses face to face, and to have compulsory process to secure the attendance of witness in his behalf; (17) Freedom from being compelled to be a witness against one's self, or from being forced to confess guilt, or from being induced by a promise of immunity or reward to make such confession, except when the person confessing becomes a State witness; (18) Freedom from excessive fines, or cruel and unusual punishment, unless the same is imposed or inflicted in accordance with a statute which has not been judicially declared unconstitutional; and (19) Freedom of access to the courts.
Art. 27. Any person suffering material or moral loss because a public servant or employee refuses or neglects, without just cause, to perform his official duty may file an action for damages and other relief against he latter, without prejudice to any disciplinary administrative action that may be taken. Art. 28. Unfair competition in agricultural, commercial or industrial enterprises or in labor through the use of force, intimidation, deceit, machination or any other unjust, oppressive or highhanded method shall give rise to a right of action by the person who thereby suffers damage. Art. 29. When the accused in a criminal prosecution is acquitted on the ground that his guilt has not been proved beyond reasonable doubt, a civil action for damages for the same act or omission may be instituted. Such action requires only a preponderance of evidence. Upon motion of the defendant, the court may require the plaintiff to file a bond to answer for damages in case the complaint should be found to be malicious. If in a criminal case the judgment of acquittal is based upon reasonable doubt, the court shall so declare. In the absence of any declaration to that effect, it may be inferred from the text of the decision whether or not the acquittal is due to that ground.
In any of the cases referred to in this article, whether or not the defendant's act or omission constitutes a criminal offense, the aggrieved party has a right to commence an entirely separate and distinct civil action for damages, and for other relief. Such civil action shall proceed independently of any criminal prosecution (if the latter be instituted), and mat be proved by a preponderance of evidence.
Art. 32. Any public officer or employee, or any private individual, who directly or indirectly obstructs, defeats, violates or in any manner impedes or impairs any of the following rights and liberties of another person shall be liable to the latter for damages: (1) Freedom of religion; (2) Freedom of speech; (3) Freedom to write for the press or to maintain a periodical publication; (4) Freedom from arbitrary or illegal detention; (5) Freedom of suffrage; (6) The right against deprivation of property without due process of law;
The indemnity shall include moral damages. Exemplary damages may also be adjudicated. The responsibility herein set forth is not demandable from a judge unless his act or omission constitutes a violation of the Penal Code or other penal statute. Art. 34. When a member of a city or municipal police force refuses or fails to render aid or protection to any person in case of danger to life or property, such peace officer shall be primarily liable for damages, and the city or municipality shall be subsidiarily responsible therefor. The civil action herein
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recognized shall be independent of any criminal proceedings, and a preponderance of evidence shall suffice to support such action.
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Art. 2221. Nominal damages are adjudicated in order that a right of the plaintiff, which has been violated or invaded by the defendant, may be vindicated or recognized, and not for the purpose of indemnifying the plaintiff for any loss suffered by him.
Art. 35. When a person, claiming to be injured by a criminal offense, charges another with the same, for which no independent civil action is granted in this Code or any special law, but the justice of the peace finds no reasonable grounds to believe that a crime has been committed, or the prosecuting attorney refuses or fails to institute criminal proceedings, the complaint may bring a civil action for damages against the alleged offender. Such civil action may be supported by a preponderance of evidence. Upon the defendant's motion, the court may require the plaintiff to file a bond to indemnify the defendant in case the complaint should be found to be malicious.
Art. 2222. The court may award nominal damages in every obligation arising from any source enumerated in article 1157, or in every case where any property right has been invaded. Art. 2223. The adjudication of nominal damages shall preclude further contest upon the right involved and all accessory questions, as between the parties to the suit, or their respective heirs and assigns. General Rule: One does not ask for nominal damages, and it is in lieu of the actual, moral, temperate, or liquidated damages.
If during the pendency of the civil action, an information should be presented by the prosecuting attorney, the civil action shall be suspended until the termination of the criminal proceedings.
Nominal damages are incompatible with: actual, temperate and exemplary damages.
Please refer to previous discussions on the provisions.
Armovit vs. CA: Nominal damages cannot co-exist with actual or compensatory damages.
IN CASES OF MALICIOUS PROSECUTION
Mijares vs. CA: Moral damages cannot be recovered from a person who has filed a complaint against another in good faith, or without malice or bad faith. If damage results from the filing of the complaint, it is damnum absque injuria.
Francisco v. Ferrer: No moral or exemplary damages was awarded. Nevertheless, when confronted with their failure to deliver on the wedding day the wedding cake ordered and paid for, petitioners gave the lame excuse that delivery was probably delayed because of the traffic, when in truth, no cake could be delivered because the order slip got lost. For such prevarication, petitioners must be held liable for nominal damages for insensitivity, inadvertence or inattention to their customer's anxiety and need of the hour.
Castillo vs. Castillo: The adverse result of an action does not per se make the act wrongful and subject the actor to the payment of moral damages. The law could not have meant to impose a penalty on the right to litigate; such right is so precious that moral damages may not be charged on those who may exercise it erroneously.
Temperate Damages Nominal Damages
Art. 2224. Temperate or moderate damages, which are more than nominal but less than compensatory damages, may be recovered when the court finds that some pecuniary loss has been suffered but its amount cannot, from the nature of the case, be provided with certainty.
Nominal damages consist in damages awarded, not for purposes of indemnifying the plaintiff for any loss suffered, but for the vindication or recognition of a right violated by the defendant. REQUISITES AND CHARACTERISTICS (1) Invasion or violation of any legal or property right. (2) No proof of loss is required. (3) The award is to vindicate the right violated. WHEN AWARDED
Art. 2225. Temperate damages must be reasonable under the circumstances.
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These damages are awarded for pecuniary loss, in an amount that, from the nature of the case, cannot be proved with certainty.
Liquidated damages are those damages agreed upon by the parties to a contract to be paid in case of breach thereof.
REQUISITES (1) Actual existence of pecuniary loss (2) The nature and circumstances of the loss prevents proof of the exact amount (3) They are more than nominal and less than compensatory. (4) Causal connection between the loss and the defendant’s act or omission. (5) Amount must be reasonable.
It differs from a penal clause in that in the latter case the amount agreed to be paid may bear no relation to the probable damages resulting from the breach. Basically, a penalty is “ad terrorem,” while liquidated damages are “ad reparationem.” REQUISITES AND CHARACTERISTICS (1) Liquidated damages must be validly stipulated. (2) There is no need to prove the amount of actual damages. (3) Breach of the principal contract must be proved.
In cases where the resulting injury might be continuing and possible future complications directly arising from the injury, while certain to occur are difficult to predict, temperate damages can and should be awarded on top of actual or compensatory damages; in such cases there is no incompatibility between actual and temperate damages.
RULES GOVERNING BREACH OF CONTRACT Art. 2228. When the breach of the contract committed by the defendant is not the one contemplated by the parties in agreeing upon the liquidated damages, the law shall determine the measure of damages, and not the stipulation.
Citytrust Bank vs. IAC: Temperate damages are incompatible with nominal damages hence, cannot be granted concurrently.
(a) These damages are agreed upon in a contract in case of breach thereof. (b) There is no need to prove the amount, only the fact of the breach. (c) The amount can be reduced if: (1) unconscionable as determined by the court (2) partial or irregular performance.
Pleno vs. CA: Temperate damages are included within the context of compensatory damages (RCPI vs. CA). There are cases where from the nature of the case, definite proof of pecuniary loss cannot be offered, although the court is convinced that there has been such loss. For instance, injury to one's commercial credit or to the goodwill of a business firm is often hard to show certainty in terms of money. (NOTE: In this case actual and temperate damages were awarded. It is postulated that the actual damages is for the car while the temperate damages is for the lost actual income not sufficiently proved.)
General Rule: The penalty shall substitute the indemnity for damages and the payment of the interests in case or breach. Exceptions (1) When there is a stipulation to the contrary. (2) When the obligor is sued for refusal to pay the agreed penalty. (3) When the obligor is guilty of fraud.
Exemplary Or Corrective Damages
Liquidated Damages Art. 2226. Liquidated damages are those agreed upon by the parties to a contract, to be paid in case of breach thereof.
Art. 2229. Exemplary or corrective damages are imposed, by way of example or correction for the public good, in addition to the moral, temperate, liquidated or compensatory damages.
Art. 2227. Liquidated damages, whether intended as an indemnity or a penalty, shall be equitably reduced if they are iniquitous or unconscionable.
In common law, these damages were termed “punitive.”
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PNB vs. CA: However, the award of P1,000,000 exemplary damages is also far too excessive and should likewise be reduced to an equitable level. Exemplary damages are imposed not to enrich one party or impoverish another but to serve as a deterrent against or as a negative incentive to curb socially deleterious actions.
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plaintiff must show that he would be entitled to moral, temperate or compensatory damages were it not for the stipulation for liquidated damages. Art. 2235. A stipulation whereby exemplary damages are renounced in advance shall be null and void. Requisites to recover exemplary damages and liquidated damages agreed upon The plaintiff must show that he/she is entitled to moral, temperate or compensatory damages:
WHEN RECOVERABLE IN CRIMINAL OFFENSES; NCC ART. 2230
When exemplary damages are granted the crime was committed with an Crimes aggravating circumstance/s defendant acted with Quasi-delicts gross negligence defendant acted in a wanton, fraudulent, Contracts and reckless, oppressive, or Quasi- contracts malevolent manner (WFROMM) If arising from
Art. 2230. In criminal offenses, exemplary damages as a part of the civil liability may be imposed when the crime was committed with one or more aggravating circumstances. Such damages are separate and distinct from fines and shall be paid to the offended party.
Art. 2230 Art. 2231
Award of exemplary damages is part of the civil liability, not of the penalty.
Art. 2232
Damages are paid to the offended party separately from the fines.
General Principles (1) Exemplary damages cannot be awarded alone: they must be awarded IN ADDITION to moral, temperate, liquidated or compensatory damages. (2) The purpose of the award is to deter the defendant (and others in a similar condition) from a repetition of the acts for which exemplary damages were awarded; hence, they are not recoverable as a matter of right. (3) The defendant must be guilty of other malice or else negligence above the ordinary. (4) Plaintiff is not required to prove the amount of exemplary damages. a. But plaintiff must show that he is entitled to moral, temperate, or compensatory damage; that is, substantial damages, not purely nominal ones. This requirement applies even if the contract stipulates liquidated damages. b. The amount of exemplary damage need not be pleaded in the complaint because the same cannot be proved. It is merely incidental or dependent upon what the court may award as compensatory damages.
IN QUASI-DELICTS; NCC ART. 2231
Art. 2231. In quasi-delicts, exemplary damages may be granted if the defendant acted with gross negligence. IN CONTRACTS AND QUASI-CONTRACTS; NCC ART. 2232
Art. 2232. In contracts and quasi-contracts, the court may award exemplary damages if the defendant acted in a wanton, fraudulent, reckless, oppressive, or malevolent manner. REQUISITES ARTS. 2233, 2234
Art. 2233. Exemplary damages cannot be recovered as a matter of right; the court will decide whether or not they should be adjudicated. Art. 2234. While the amount of the exemplary damages need not be proved, the plaintiff must show that he is entitled to moral, temperate or compensatory damages before the court may consider the question of whether or not exemplary damages should be awarded. In case liquidated damages have been agreed upon, although no proof of loss is necessary in order that such liquidated damages may be recovered, nevertheless, before the court may consider the question of granting exemplary in addition to the liquidated damages, the
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(4) As exemplary damages, when the crime is attended by one or more aggravating circumstances, — an amount to be fixed in the discretion of the court, the same to be considered separate from fines. (5) As attorney's fees and expresses of litigation, — the actual amount thereof, (but only when a separate civil action to recover civil liability has been filed or when exemplary damages are awarded). (6) Interests in the proper cases. (7) It must be emphasized that the indemnities for loss of earning capacity of the deceased and for moral damages are recoverable separately from and in addition to the fixed sum of P12,000.00 corresponding to the indemnity for the sole fact of death, and that these damages may, however, be respectively increased or lessened according to the mitigating or aggravating circumstances, except items 1 and 4 above, for obvious reasons.
DAMAGES IN CASE OF DEATH RE. CRIMES AND QUASI-DELICTS
Art. 2206. The amount of damages for death caused by a crime or quasi-delict shall be at least three thousand pesos, even though there may have been mitigating circumstances. In addition: (1) The defendant shall be liable for the loss of the earning capacity of the deceased, and the indemnity shall be paid to the heirs of the latter; such indemnity shall in every case be assessed and awarded by the court, unless the deceased on account of permanent physical disability not caused by the defendant, had no earning capacity at the time of his death; (2) If the deceased was obliged to give support according to the provisions of article 291, the recipient who is not an heir called to the decedent's inheritance by the law of testate or intestate succession, may demand support from the person causing the death, for a period not exceeding five years, the exact duration to be fixed by the court; (3) The spouse, legitimate and illegitimate descendants and ascendants of the deceased may demand moral damages for mental anguish by reason of the death of the deceased.
Formula for the net earning capacity People vs. Aringue (1997): Net earning capacity = Life expectancy * (Gross annual income – Reasonable living expenses) Where: Life expectancy = 2/3 * (80 – age of victim at the time of death) Tan, et al. vs. OMC Carriers, Inc. (2011): As a rule, documentary evidence should be presented to substantiate the claim for loss of earning capacity.
In death caused by breach of conduct by a common crime Heirs of Raymundo Castro vs. Bustos (1969): when death occurs as a result of a crime, the heirs of the deceased are entitled to the following items of damages: (1) As indemnity for the death of the victim of the offense — P12,000.00, without the need of any evidence or proof of damages, and even though there may have been mitigating circumstances attending the commission of the offense. (2) As indemnity for loss of earning capacity of the deceased — an amount to be fixed by the Court according to the circumstances of the deceased related to his actual income at the time of death and his probable life expectancy, the said indemnity to be assessed and awarded by the court as a matter of duty, unless the deceased had no earning capacity at said time on account of permanent disability not caused by the accused. If the deceased was obliged to give support, under Art. 291, Civil Code, the recipient who is not an heir, may demand support from the accused for not more than five years, the exact duration to be fixed by the court. (3) As moral damages for mental anguish, — an amount to be fixed by the court. This may be recovered even by the illegitimate descendants and ascendants of the deceased.
By way of exception, damages for loss of earning capacity may be awarded despite the absence of documentary evidence when: (1) the deceased is selfemployed and earning less than the minimum wage under current labor laws, in which case, judicial notice may be taken of the fact that in the deceased's line of work, no documentary evidence is available; or (2) the deceased is employed as a daily wage worker earning less than the minimum wage under current labor laws.
Graduation of Damages DUTY OF THE INJURED PARTY Art. 2203. The party suffering loss or injury must exercise the diligence of a good father of a family to minimize the damages resulting from the act or omission in question. Lim and Gunnaban vs. CA (2002): Article 2203 of the Civil Code exhorts parties suffering from loss or injury
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to exercise the diligence of a good father of a family to minimize the damages resulting from the act or omission in question. One who is injured then by the wrongful or negligent act of another should exercise reasonable care and diligence to minimize the resulting damage. Anyway, he can recover from the wrongdoer money lost in reasonable efforts to preserve the property injured and for injuries incurred in attempting to prevent damage to it.
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Cangco vs. Manila Railroad Co. (1918): In determining the question of contributory negligence in performing such act — that is to say, whether the passenger acted prudently or recklessly — the age, sex, and physical condition of the passenger are circumstances necessarily affecting the safety of the passenger, and should be considered. PLAINTIFF’S NEGLIGENCE
Manila Electric vs. Remonquillo (1956): Even if Manila Electric is negligent, in order that it may be held liable, its negligence must be the proximate and direct cause of the accident.
BURDEN OF PROOF The DEFENDANT has the burden of proof to establish that the victim, by the exercise of the diligence of a good father of a family, could have mitigated the damages. In the absence of such proof, the amount of damages cannot be reduced.
Bernardo vs. Legaspi (1914): Both of the parties contributed to the proximate cause; hence, they cannot recover from one another.
Note: The victim is required only to take such steps as an ordinary prudent man would reasonably adopt for his own interest.
IN CONTRACTS, QUASI-CONTRACTS AND QUASI-DELICTS
Art. 2215 In contracts, quasi-contracts, and quasidelicts, the court may equitably mitigate the damages under circumstances other than the case referred to in the preceding article, as in the following instances: (1) That the plaintiff himself has contravened the terms of the contract; (2) That the plaintiff has derived some benefit as a result of the contract; (3) In cases where exemplary damages are to be awarded, that the defendant acted upon the advice of counsel; (4) That the loss would have resulted in any event; (5) That since the filing of the action, the defendant has done his best to lessen the plaintiff's loss or injury.
RULES IN CRIMES
Art. 2204. In crimes, the damages to be adjudicated may be respectively increased or lessened according to the aggravating or mitigating circumstances. IN QUASI-DELICTS
Art. 2214. In quasi-delicts, the contributory negligence of the plaintiff shall reduce the damages that he may recover. CONTRIBUTORY NEGLIGENCE
INSTANCES OF GROUNDS FOR MITIGATION OF DAMAGES
Genobiagon vs. CA (1989): The alleged contributory negligence of the victim, if any, does not exonerate the accused in criminal cases committed through reckless imprudence, since one cannot allege the negligence of another to evade the effects of his own negligence.
(a) For Contracts: (1) Violation of terms of the contract by the plaintiff himself; (2) Obtention or enjoyment of benefit under the contract by the plaintiff himself; (3) Defendant acted upon advice of counsel in cases where exemplary damages are to be awarded such as under Articles 2230, 2231, and 2232; (4) Defendant has done his best to lessen the plaintiff’s injury or loss.
Rakes vs. Atlantic (1907): If so, the disobedience of the plaintiff in placing himself in danger contributed in some degree to the injury as a proximate, although not as its primary cause. (Supreme Court in this case cited numerous foreign precedents, mostly leaning towards the doctrine that contributory negligence on the part of the plaintiff did not exonerate defendant from liability, but it led to the reduction of damages awarded to the plantiff.)
(b) For Quasi-Contracts: (1) In cases where exemplary damages are to be awarded such as in Art. 2232; (2) Defendant has done his best to lessen the plaintiff’s injury or loss. (c) For Quasi-Delicts:
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Miscellaneous Rules
(1) That the loss would have resulted in any event because of the negligence or omission of another, and where such negligence or omission is the immediate and proximate cause of the damage or injury; (2) Defendant has done his best to lessen the plaintiff’s injury or loss.
DAMAGES THAT CANNOT CO-EXIST NOMINAL WITH OTHER DAMAGES
Art. 2223. The adjudication of nominal damages shall preclude further contest upon the right involved and all accessory questions, as between the parties to the suit, or their respective heirs and assigns.
RULE WHEN CONTRACTING PARTIES ARE IN PARI DELICTO
Generally, parties to a void agreement cannot expect the aid of the law; the courts leave them as they are, because they are deemed in pari delicto or "in equal fault." In pari delicto is "a universal doctrine which holds that no action arises, in equity or at law, from an illegal contract; no suit can be maintained for its specific performance, or to recover the property agreed to be sold or delivered, or the money agreed to be paid, or damages for its violation; and where the parties are in pari delicto, no affirmative relief of any kind will be given to one against the other."
Vda. De Medina vs. Cresencia (1956): The propriety of the damages awarded has not been questioned, Nevertheless, it is patent upon the record that the award of P10,000 by way of nominal damages is untenable as a matter of law, since nominal damages cannot co-exist with compensatory damages. The purpose of nominal damages is to vindicate or recognize a right that has been violated, in order to preclude further contest thereon; “and not for the purpose of indemnifying the Plaintiff for any loss suffered by him” (Articles 2221, 2223, new Civil Code.) Since the court below has already awarded compensatory and exemplary damages that are in themselves a judicial recognition that Plaintiff’s right was violated, the award of nominal damages is unnecessary and improper. Anyway, ten thousand pesos cannot, in common sense, be deemed “nominal”.
This rule, however, is subject to exceptions that permit the return of that which may have been given under a void contract to: (a) the innocent party (Arts. 1411-1412, Civil Code); (b) the debtor who pays usurious interest (Art. 1413, Civil Code); (c) the party repudiating the void contract before the illegal purpose is accomplished or before damage is caused to a third person and if public interest is subserved by allowing recovery (Art. 1414, Civil Code); (d) the incapacitated party if the interest of justice so demands (Art. 1415, Civil Code); (e) the party for whose protection the prohibition by law is intended if the agreement is not illegal per se but merely prohibited and if public policy would be enhanced by permitting recovery (Art. 1416, Civil Code); and (f) the party for whose benefit the law has been intended such as in price ceiling laws (Art. 1417, Civil Code) and labor laws (Arts. 1418-1419, Civil Code).
ACTUAL AND LIQUIDATED
Art. 2226. Liquidated damages are those agreed upon by the parties to a contract, to be paid in case of breach thereof. DAMAGES THAT MUST CO-EXIST EXEMPLARY WITH MORAL, TEMPERATE, LIQUIDATED OR COMPENSATORY
Francisco vs. GSIS (1963): There is no basis for awarding exemplary damages either, because this species of damages is only allowed in addition to moral, temperate, liquidated, or compensatory damages, none of which have been allowed in this case, for reasons herein before discussed.
LIQUIDATED DAMAGES Art. 2227. Liquidated damages, whether intended as an indemnity or a penalty, shall be equitably reduced if they are iniquitous or unconscionable.
Scott Consultants & Resource Development Corp. vs. CA (1995): There was, therefore, no legal basis for the award of exemplary damages since the private respondent was not entitled to moral, temperate, or compensatory damages and there was no agreement on stipulated damages.
COMPROMISE Art. 2031. The courts may mitigate the damages to be paid by the losing party who has shown a sincere desire for a compromise.
DAMAGES THAT MUST STAND ALONE
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NOMINAL DAMAGES
Art. 2223. The adjudication of nominal damages shall preclude further contest upon the right involved and all accessory questions, as between the parties to the suit, or their respective heirs and assigns.
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