2012 civil law reviewer

I. Effect and Application of Laws – New Civil Code A. When law takes effect After 15 days following the completion of its publication in the Official Gazette, or in a newspaper of general circulation, unless it is otherwise provided.1 B. Ignorance of the Law Excuses no one from compliance therewith.2 C. Retroactivity of Laws Laws shall have no retroactive effect, unless the contrary is provided.3 D. Mandatory or Prohibitory Laws Acts which are contrary to mandatory or prohibitory laws are void, except when the law itself authorizes its validity.4

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Art. 2 This refers to the 15-day period and not to the requirement of publication. (Tanada vs. Tuvera, G.R.No. L-63915, Dec. 29, 1986) Administrative rules and regulations must also be published if their purpose is to enforce or implement existing laws pursuant to a valid delegation. The publication must be in full or it is no publication at all since its purpose is to inform the public of the contents of the law. (Phil. Int’l Trading Corp. vs .Angeles) 2 Art. 3 Considered a conclusive presumption and applies only to mandatory and prohibitory laws. (Consunji vs. CA) Philippine laws are covered. There is no conclusive presumption of knowledge of foreign laws. Even our courts cannot take judicial notice of them. Ignorance of a foreign law will not be a mistake of law but a mistake of fact. Ignorance may either be of law or of fact. Ignorance of fact (ignorantia facti) may excuse a party from the legal consequences of his conduct; but not ignorance of law, for ignorantia juris neminem excusat. In specific instances provided by law, mistake as to difficult legal questions has been given the same effect as a mistake of fact, e.g., Art. 526, par. 3 which provides: "Mistake upon a doubtful or difficult question of law may be the basis of good faith." 3 Art. 4 4 Art. 5

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E. Waiver of Rights 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morals, or good customs, or prejudicial to a third person with a right recognized by law.5 F. Repeal of Laws Laws are repealed only by subsequent ones, either expressly or impliedly. Their violation or non-observance shall not be excused by disuse, 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.6 G. Judicial Decisions Judicial decisions applying or interpreting the laws or the Constitution shall form a part of the legal system of the Philippines.7 H. Duty to Render Judgment No judge or court shall decline to render judgment by reason of the silence, obscurity or insufficiency of laws.8

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Art. 6 Art. 7 7 Art. 8 Only Supreme Court decisions establish jurisprudence; decisions of other judicial or quasi-judicial bodies are merely persuasive. This principle, however, does not mean blind adherence. The duty of the Court is to abandon any doctrine found to be in violation of the law in force. 8 Art. 9 This article does not apply to criminal prosecutions, bec. when there is no law punishing an act, the case must be dismissed, however, reprehensible the act may seem to the judge (Tolentino). If the law is vague or obscure, the court should clarify it in the light of the rules of statutory construction; it is silent or insufficient, the court should fill the deficiency by resorting to customs or general principles of law. 6

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I. Presumption and Applicability of Custom In case of doubt in the interpretation or application of laws, it is presumed that the lawmaking body intended right and justice to prevail.9 Customs which are contrary to law, public order or public policy shall not be countenanced.10 A custom must be proved as a fact, according to the rules of evidence.11 J. Legal Periods 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. If months are designated by their name, they shall be computed by the number of days which they respectively have. In computing a period, the first day shall be excluded, and the last day included12 K. Applicability of Penal Laws Penal laws and those of public security and safety shall be obligatory upon all who live or sojourn in Philippine territory, subject to the principles of public international law and to treaty stipulations.13

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Art. 10 Art. 11 11 Art. 12 Custom is defined as "a rule of conduct formed by repetition of acts, uniformly observed (practiced) as a social rule, legally binding and obligatory." The law requires that "a custom must be proved as a fact, according to the rules of evidence." On this score the Court had occasion to state that "a local custom as a source of right cannot be considered by a court of justice unless such custom is properly established by competent evidence like any other fact." The same evidence, if not one of a higher degree, should be required of a foreign custom 12 Art. 13 Superseded by Sec. 31, Book I of EO 292 (Administrative Code of 1987) w/c provides that Sec. 31. Legal Periods.-- "Year" shall be understood to be twelve (12) calendar months; "months" of thirty (30) days, unless it refers to a specific calendar month in which case it shall be computed according to the number of days the specific month contains; "day," to a day of twenty four (24) hours; and "nights," from sunset to sunrise. This article applies only to legal provisions and not to contracts, where the parties may stipulate on the manner of computing years, months and days (Baviera). 13 Art. 14 10

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L. Conflict of Laws 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.14 Real property as well as personal property is subject to the law of the country where it is situated.15 However, intestate and testamentary successions, both with respect to the order of succession and to the amount of successional rights and to the intrinsic validity of testamentary provisions, shall be regulated by the national law of the person whose succession is under consideration, whatever may be the nature of the property and regardless of the country wherein said property may be found.16 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.17 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.18

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Art. 15 Theories on Personal Law.-Domiciliary theory, followed in the US, according to w/c the personal laws of a person are determined by his domicile. Nationality theory w/c makes nationality or citizenship as the basis for determining the personal laws of an individual. (Tolentino) The question of how a citizen may strip himself of the status as such citizen is governed by his national law. 15 Art. 16, 1st par. The lex situs or lex rei sitae governs real or personal property. 16 id., 2nd par. Can be invoked only when the deceased was vested w/ a descendible interest in prop. w/in the jurisdiction of the Phils. The intrinsic validity of the provisions of the will of a foreigner who dies in the Phils. is to be determined by the laws of his own state or country, and not by those of the Phils. Thus, a condition in a will of a foreigner that his legatee respect his order that his prop. be distributed according to the laws of the Phils. instead of the laws of his own country, was held illegal and considered as not written. The law governing succession may be considered from the point of view of (a) the execution of wills, and (b) the distribution of property. The formalities of execution of will are generally governed by the law of the place of execution (Art. 17, par. 1.) But the distribution of the estate is governed by the law of the nation of the deceased. 17 Art. 17, 1st par., known as the lex loci celebrationis 18 id, 2nd par.

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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.19 In matters which are governed by the Code of Commerce and special laws, their deficiency shall be supplied by the provisions of the Civil Code.20

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Id., 3rd par. Art. 18

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II. Human Relations – New Civil Code Every person must, in the exercise of his rights and in the performance of his duties, act with justice, give everyone his due, and observe honesty and good faith.21 Every person who, contrary to law, wilfully or negligently causes damage to another, shall indemnify the latter for the same.22 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.23 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.24 PERSONS I. Persons and Personality25 A. Capacity to Act 1. Civil Personality26 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.27

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Art. 19 Principle of abuse of rights 22 Art. 20 23 Art. 21 24 Art. 22 25 Civil Code 26 Aptitude of being the subject, active or passive, of rights and obligations 27 Art. 37 Capacity may be (1) juridical capacity, and (2) capacity to act. The union of these 2 forms the full civil capacity. Juridical capacity is synonymous to legal capacity and to personality. They all refer to the aptitude for the holding and enjoyment of rights. On the other hand, capacity to act refers to the aptitude for the exercise of rights, and is often referred to merely as "capacity."

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2. Restrictions on Capacity to Act 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.28 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. Capacity to act is not limited on account of religious belief or political opinion. A married woman, eighteen (18) years of age or over, is qualified for all acts of civil life, except in cases specified by law.29 3. Birth Determines personality; but the conceived child shall be considered born for all purposes that are favorable to it, provided it be born later with certain conditions.30 For civil purposes, the foetus is considered born if it is alive at the time it is completely delivered from the mother's womb. However, if the foetus had an intrauterine life of less than seven months, it is not deemed born if it dies within twenty-four hours after its complete delivery from the maternal womb.31 4. Death 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.32

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Art. 38 Art. 39 30 Art. 40 Personality from Birth - Birth means the removal of the foetus from the mother's womb. Conceived Child.-- The personality of the conceived child has 2 characteristics: (1) it is essentially limited, bec. it is only for purposes favorable to the child, and (2) it is provisional or conditional, bec. it depends upon the child being born alive later, such that if it is not born alive, its personality disappears as if it had never existed. For civil personality to be acquired, one must be born.-- A foetus is born after it is completely separated from the mother's womb w/c is produced by the cutting of the umbilical cord; after the separation, the child now survives by itself. 31 Art. 41 Once birth occurs, personality for favorable purposes retroacts from the moment of conception.-The retroactivity rule is qualified-- only for purposes favorable to the child. 32 Art. 42 Physical death and legal death are the same. (Balane) 29

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a. Compare Art. 43 with Rule 131, Sec. 3 (jj) presumption of Survivorship Art. 4333

Rule 131, Sec. 3 (jj)

Two or more persons, called to succeed each other, shall be presumed to have died at the same time, subject to the following conditions:

When two persons perish in the same calamity34 and it is not shown who died first, and there are no particular circumstances from which it can be inferred, the survivorship35 is determined from the probabilities resulting from the strength and the age of the sexes, according to the following rules:

1. parties are heirs to one another 2. no proof as to who died first 3. with doubt as to who died first

1. If both were under the age of fifteen years, the older is deemed to have survived; 2. If both were above the age sixty, the younger is deemed to have survived; 3. If one is under fifteen and the other above sixty, the former is deemed to have survived; 4. If both be over fifteen and under sixty, and the sex be different, the male is deemed to have survived, if the sex be the same, the older; 5. If one be under fifteen or over sixty, and the other between those ages, the latter is deemed to have survived.

Article 43 applies when the parties are called to succeed each other. But if the parties are not called to succeed each other, Rule 131, Sec. 3 (jj) of the Rules of Court applies. Both are to be applied only in the absence of facts.

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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. 34 such as wreck, battle, or conflagration 35 except for purposes of succession

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5. Juridical Persons (1) The State and its political subdivisions; (2) Other corporations, institutions and entities for public interest or purpose, created by law; their personality begins as soon as they have been constituted according to law; (3) Corporations, partnerships and associations for private interest or purpose to which the law grants a juridical personality, separate and distinct from that of each shareholder, partner or member.36 Juridical persons mentioned in Nos. 1 and 2 are governed by the laws creating or recognizing them. Private corporations are regulated by laws of general application37 on the subject. Partnerships and associations for private interest or purpose are governed by the provisions of this Code concerning partnerships.38 Juridical persons may acquire and possess property of all kinds, as well as incur obligations and bring civil or criminal actions, in conformity with the laws and regulations of their organization.39 B. Domicile and residence For the exercise of civil rights and the fulfillment of civil obligations, the domicile of natural persons is the place of their habitual residence.40 36

Art. 44. B.P. 68 38 Art. 45 39 Art. 46 40 Art. 50. Requisites of Domicile: (1) physical presence; (2) animus manendi (intent to remain) (Gallego v. Vera, 73 P 453.) Three kinds of Domicile: (1) Domicile of Origin.-- Domicile of the parents of a person at the time he was born (2) Domicile of Choice.-- Domicile chosen by a person to change his original domicile. Aside from the 2 requisites mentioned above, a third requisite must be present in domicile of choice, animus non revertendi (intention not to return to one's old domicile as his permanent place.) (3) Domicile by Operation of Law.-- e.g., Art. 69, FC. Domicile is not the same as residence. Domicile is residence plus habituality. Importance of Understanding Domicile.-- In case of revocation of wills (Art. 829), place of performance of obligation (Art. 1251, par. 3), renvoi (Aznar v. Garcia) 37

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When the law creating or recognizing them, or any other provision does not fix the domicile of juridical persons, the same shall be understood to be the place where their legal representation is established or where they exercise their principal functions.41 Domicile More or less permanent

Residence More or less temporary

Denotes a fixed permanent residence, which Used to indicate a place of abode, whether when absent, one has the intention of permanent or temporary returning There can be several places of residence There can only be one place of domicile Not domicile Residence coupled with the intention to remain for an unlimited time

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Art. 51.

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II. Marriage – Family Code42 A. Nature of Marriage 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.43 B. Requisites 1. Kinds of Requisites Essential

Formal

(1) Legal capacity of the contracting (1) Authority of the solemnizing officer; parties;44 and (2) A valid marriage license;46 and (2) Consent freely given in the presence of the solemnizing officer.45 (3) A marriage ceremony47 1. Effect of absence of requisites The marriage is void ab initio.48 2. Essential requisites a. Age49 Any male or female of the age of eighteen (18) years or upwards, not under any of the impediments mentioned in Articles 37 and 38. 50 42

Aug. 3, 1988 Art. 1 44 Must be a male and a female 45 Art. 2 46 Except Marriages Exempted from License Requirement, infra 47 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 (Art. 3) 48 Art. 4, except those 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 (Art. 35 (2) 49 Art. 5 43

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b. Consent Freely given51 in the presence of the solemnizing officer. 3. Formal Marriage may be solemnized by:52 (1) Any incumbent member of the judiciary within the court's jurisdiction; (2) Any priest, rabbi, imam, or minister of any church or religious sect duly authorized by his church or religious sect and registered with the civil registrar general, acting within the limits of the written authority granted by his church or religious sect and provided that at least one of the contracting parties belongs to the solemnizing officer's church or religious sect; (3) Any ship captain or airplane chief only in the case mentioned in Article 31;53 (4) Any military commander of a unit to which a chaplain is assigned, in the absence of the latter, during a military operation, likewise only in the cases mentioned in Article 32;54 (5) Any consul-general, consul or vice-consul in the case provided in Article 10.55 4. Ceremony No prescribed form or religious rite for the solemnization of the marriage is required. It shall be necessary, however, for the contracting parties to appear personally before the solemnizing officer and declare in the presence of not less than two (2) witnesses of legal age that they take each other as husband and wife. This declaration shall be contained in the marriage certificate which shall be signed by the contracting parties and their witnesses and attested by the solemnizing officer.

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See Reference The consent is real and not vitiated or rendered defective by any of the vices of consent. Hence, the marriage may be annulled if the consent of either party was obtained by fraud, (Art. 45, par. 3), or if the consent of either party was obtained by force, intimidation or undue influence (Art. 45, par. 4). 52 Art. 7 53 infra 54 Ibid. 51

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In case of a marriage in articulo mortis, when the party at the point of death is unable to sign the marriage certificate, it shall be sufficient for one of the witnesses to the marriage to write the name of said party, which fact shall be attested by the solemnizing officer56 5. Solemnizing authority The marriage shall be solemnized publicly in the chambers of the judge or in open court, in the church, chapel or temple, or in the office the consul-general, consul or viceconsul, and not elsewhere, except in cases of marriages contracted on the point of death or in remote places in accordance with Article 2957 of this Code, or where both of the parties request the solemnizing officer in writing in which case the marriage may be solemnized at a house or place designated by them in a sworn statement to that effect.58 Marriages between Filipino citizens abroad may be solemnized by a consul-general, consul or vice-consul of the Republic of the Philippines. The issuance of the marriage license and the duties of the local civil registrar and of the solemnizing officer with regard to the celebration of marriage shall be performed by said consular official.59 a. Exceptions60 6. License Required A valid marriage license.61 A marriage license shall be issued by the local civil registrar of the city or municipality where either contracting party habitually resides, except in marriages where no license is required.62 The license shall be valid in any part of the Philippines for a period of one hundred twenty (120) days from the date of issue, and shall be deemed automatically cancelled at the expiration of the said period if the contracting parties have not made use of it. The expiry date shall be stamped in bold characters on the face of every license issued.63 56

Art. 6 See reference 58 Art. 8; for Art. 7, supra 59 Art. 10 60 Art. 35 (2), infra 61 Art. 3 (2), except Marriages Exempted from License Requirement, supra 62 Art. 9, id. Where a marriage license is required, each of the contracting parties shall file separately a sworn application for such license with the proper local civil registrar. which shall specify the following: (1) Full name of the contracting party; (2) Place of birth; (3) Age and date of birth; (4) Civil status; 57

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a. Foreign National 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. Stateless persons or refugees from other countries shall, in lieu of the certificate of legal capacity herein required, submit an affidavit stating the circumstances showing such capacity to contract marriage.64 b. Exceptions In case either or both of the contracting parties are at the point of death, the marriage may be solemnized without necessity of a marriage license and shall remain valid even if the ailing party subsequently survives.65 A marriage in articulo mortis between passengers or crew members may also be solemnized by a ship captain or by an airplane pilot not only while the ship is at sea or the plane is in flight, but also during stopovers at ports of call.66 A military commander of a unit, who is a commissioned officer, shall likewise have authority to solemnize marriages in articulo mortis between persons within the zone of military operation, whether members of the armed forces or civilians.67 No license shall be necessary for the marriage of a man and a woman who have lived together as husband and wife for at least five years and without any legal impediment to marry each other. The contracting parties shall state the foregoing facts in an affidavit before any person authorized by law to administer oaths. The solemnizing officer shall also

(5) If previously married, how, when and where the previous marriage was dissolved or annulled; (6) Present residence and citizenship; (7) Degree of relationship of the contracting parties; (8) Full name, residence and citizenship of the father; (9) Full name, residence and citizenship of the mother; and (10) Full name, residence and citizenship of the guardian or person having charge, in case the contracting party has neither father nor mother and is under the age of twenty-one years. The applicants, their parents or guardians shall not be required to exhibit their residence certificates in any formality in connection with the securing of the marriage license (Art. 11) 63 Art. 20 64 Art. 21 65 Art. 27 66 Art. 31 67 Art. 32

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state under oath that he ascertained the qualifications of the contracting parties are found no legal impediment to the marriage68 7. Marriage Certificate The marriage certificate, in which the parties shall declare that they take each other as husband and wife, shall also state: (1) The full name, sex and age of each contracting party; (2) Their citizenship, religion and habitual residence; (3) The date and precise time of the celebration of the marriage; (4) That the proper marriage license has been issued according to law69 (5) That either or both of the contracting parties have secured the parental consent in appropriate cases; (6) That either or both of the contracting parties have complied with the legal requirement regarding parental advice in appropriate cases; and (7) That the parties have entered into marriage settlement, if any, attaching a copy thereof70 C. Effect of Marriage celebrated abroad and foreign divorce71 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, except those prohibited under Articles 35 (1), (4), (5) and (6), 36, 37 and 38.72 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.

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Art. 34 except Marriages Exempted from License Requirement, supra 70 Art. 22 71 Art. 26 72 infra 69

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D. Void and Voidable marriages 1. Void Marriages 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.73 Either of the former spouses may marry again after compliance with the foregoing requirements; otherwise, the subsequent marriage shall be null and void.74 a. Absence of Requisites The following marriages shall be void from the beginning: (1) Contracted by any party below eighteen (18) years of age even with the consent of parents or guardians; (2) 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; (3) Solemnized without license;75 (4) Bigamous or polygamous marriages not failing under Article 41;76 (5) Contracted through mistake of one contracting party as to the identity of the other; and (6) Subsequent marriages that are void under Article 53.77 b. Psychological incapacity 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 its solemnization.78

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Art. 52 Art. 53 75 except Marriages Exempted from License Requirement, supra 76 infra 77 Art. 35; Art. 53, infra 78 Art. 36 74

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c. Incestous marriages Whether the relationship between the parties be legitimate or illegitimate: (1) Between ascendants and descendants of any degree; and (2) Between brothers and sisters, whether of the full or half blood.79 For reasons of public policy: (1) Between collateral blood relatives whether legitimate or illegitimate, up to the fourth civil degree; (2) Between step-parents and step-children; (3) Between parents-in-law and children-in-law; (4) Between the adopting parent and the 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; and (9) Between parties where one, with the intention to marry the other, killed that other person's spouse, or his or her own spouse. 2. Prescription The action or defense for the declaration of absolute nullity shall not prescribe. In case of marriage celebrated before the effectivity of this Code and falling under Article 36,80 such action or defense shall prescribe in ten (10) years after this Code shall take effect.81

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Art. 37 supra 81 Art. 39 80

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3. Subsequent marriages 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.82 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 39183 of the Civil Code, an absence of only two (2) years shall be sufficient.84 For the purpose of contracting the subsequent marriage under the preceding paragraph, the spouse present must institute a summary proceeding for the declaration of presumptive death of the absentee, without prejudice to the effect of reappearance of the absent spouse. The subsequent marriage referred to shall be automatically terminated by the recording of the affidavit of reappearance of the absent spouse, unless there is a judgment annulling the previous marriage or declaring it void ab initio. A sworn statement of the fact and circumstances of reappearance shall be recorded in the civil registry of the residence of the parties to the subsequent marriage at the instance of any interested person, with due notice to the spouses of the subsequent marriage and without prejudice to the fact of reappearance being judicially determined in case such fact is disputed.85 Effects of termination of the subsequent marriage: (1) The children of the subsequent marriage conceived prior to its termination shall be considered legitimate; (2) The absolute community of property or the conjugal partnership, as the case may be, shall be dissolved and liquidated, but if either spouse contracted said marriage in 82

Art. 40 The following shall be presumed dead for all purposes, including the division of the estate among the heirs: (1) A person on board a vessel lost during a sea 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. 84 Art. 41 85 Art. 42 83

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bad faith, his or her share of the net profits of the community property or conjugal partnership property shall be forfeited in favor of the common children or, if there are none, the children of the guilty spouse by a previous marriage or in default of children, the innocent spouse; (3) Donations by reason of marriage shall remain valid, except that if the donee contracted the marriage in bad faith, such donations made to said donee are revoked by operation of law; (4) The innocent spouse may revoke the designation of the other spouse who acted in bad faith as beneficiary in any insurance policy, even if such designation be stipulated as irrevocable; and (5) The spouse who contracted the subsequent marriage in bad faith shall be disqualified to inherit from the innocent spouse by testate and intestate succession86 If both spouses of the subsequent marriage acted in bad faith, said marriage shall be void ab initio and all donations by reason of marriage and testamentary dispositions made by one in favor of the other are revoked by operation of law.87 4. Annullable marriage A marriage may be annulled for any of the following causes, existing at the time of the marriage: (1) The party in whose behalf it is sought to have the marriage annulled was eighteen years of age or over but below twenty-one, and the marriage was solemnized without the consent of the parents, guardian or person having substitute parental authority over the party, in that order, unless after attaining the age of twenty-one, such party freely cohabited with the other and both lived together as husband and wife; (2) Either party was of unsound mind, unless such party after coming to reason, freely cohabited with the other as husband and wife; (3) The consent of either party was obtained by fraud, unless such party afterwards, with full knowledge of the facts constituting the fraud, freely cohabited with the other as husband and wife; (4) The consent of either party was obtained by force, intimidation or undue influence, unless the same having disappeared or ceased, such party thereafter freely cohabited with the other as husband and wife;

86 87

Art. 43 Art. 44

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(5) Either party was physically incapable of consummating the marriage with the other, and such incapacity continues and appears to be incurable; or (6) Either party was afflicted with a sexually-transmissible disease found to be serious and appears to be incurable.88 Any of the following circumstances shall constitute fraud referred to in Number 3: (1) Non-disclosure of a previous conviction by final judgment of the other party of a crime involving moral turpitude; (2) Concealment by the wife of the fact that at the time of the marriage, she was pregnant by a man other than her husband; (3) Concealment of sexually transmissible disease, regardless of its nature, existing at the time of the marriage; or (4) Concealment of drug addiction, habitual alcoholism or homosexuality or lesbianism existing at the time of the marriage. No other misrepresentation or deceit as to character, health, rank, fortune or chastity shall constitute such fraud as will give grounds for action for the annulment of marriage89 5. Voidable marriages The action for annulment of marriage must be filed by the following persons and within the periods indicated: (1) By the party whose parent or guardian did not give his or her consent, within five (5) years after attaining the age of twenty-one, or by the parent or guardian or person having legal charge of the minor, at any time before such party has reached the age of twenty-one;90 (2) By the sane spouse, who had no knowledge of the other's insanity; or by any relative or guardian or person having legal charge of the insane, at any time before the death of either party, or by the insane spouse during a lucid interval or after regaining sanity;91 (3) By the injured party, within five (5) years after the discovery of the fraud;92

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Art. 45 Art. 46 90 No. 1 of Art. 45, supra 91 No. 2, id. 92 No. 3, id. 89

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(4) By the injured party, within five (5) years from the time the force, intimidation or undue influence disappeared or ceased;93 (5) By the injured party, within five (5) years after the marriage.94 6. Presence of prosecutor In all cases of annulment or declaration of absolute nullity of marriage, the Court shall order the prosecuting attorney or fiscal assigned to it to appear on behalf of the State to take steps to prevent collusion between the parties and to take care that evidence is not fabricated or suppressed. No judgment shall be based upon a stipulation of facts or confession of judgment.95 7. Pendency of action 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. It shall also provide for appropriate visitation rights of the other parent.96 8. Effects of nullity The effects provided for by paragraphs (2), (3), (4) and (5) of Article 43 and by Article 4497 shall also apply in the proper cases to marriages which are declared ab initio or annulled by final judgment under Articles 40 and 45.98 The final judgment in such cases shall provide for the liquidation, partition and distribution of the properties of the spouses, the custody and support of the common children, and the delivery of third presumptive legitimes, unless such matters had been adjudicated in previous judicial proceedings. All creditors of the spouses as well as of the absolute community or the conjugal partnership shall be notified of the proceedings for liquidation.

93

No. 4, id. Nos. 5 & 6, id. (Art. 47) 95 Art. 48 96 Art. 49 97 supra 98 Ibid. 94

21

In the partition, the conjugal dwelling and the lot on which it is situated, shall be adjudicated in accordance with the provisions of Articles 102 and 129.99 In said partition, the value of the presumptive legitimes of all common children, computed as of the date of the final judgment of the trial court, shall be delivered in cash, property or sound securities, unless the parties, by mutual agreement judicially approved, had already provided for such matters. The children or their guardian or the trustee of their property may ask for the enforcement of the judgment. The delivery of the presumptive legitimes shall in no way prejudice the ultimate successional rights of the children accruing upon the death of either of both of the parents; but the value of the properties already received under the decree of annulment or absolute nullity shall be considered as advances on their legitime100 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.101 Either of the former spouses may marry again after compliance with the requirements of the immediately preceding Article; otherwise, the subsequent marriage shall be null and void.102 Children conceived or born before the judgment of annulment or absolute nullity of the marriage under Article 36103 has become final and executory shall be considered legitimate. Children conceived or born of the subsequent marriage under Article 53 shall likewise be legitimate.104

99

Art. 50; for Arts. 102 & 109, see Reference Art. 51 101 Art. 52 102 Art. 53 103 supra 104 Art. 54 100

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III. Legal Separation A. Grounds (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. The term "child" shall include a child by nature or by adoption.105 B. Defenses (1) The aggrieved party has condoned the offense or act complained of; (2) The aggrieved party has consented to the commission of the offense or act complained of; (3) There is connivance between the parties in the commission of the offense or act constituting the ground for legal separation; (4) Both parties have given ground for legal separation; (5) There is collusion between the parties to obtain decree of legal separation; or 105

Art. 55; see also R. A. 9262, Anti-Violence Against Women and Children

23

(6) The action is barred by prescription106 An action for legal separation shall be filed within five (5) years from the time of the occurrence of the cause.107 C. Cooling-off Period An action for legal separation shall in no case be tried before six (6) months shall have elapsed since the filing of the petition.108 D. Reconciliation efforts No legal separation may be decreed unless the Court has taken steps toward the reconciliation of the spouses and is fully satisfied, despite such efforts, that reconciliation is highly improbable.109 E. Confession of Judgment No decree of legal separation shall be based upon a stipulation of facts or a confession of judgment. In any case, the Court shall order the prosecuting attorney or fiscal assigned to it to take steps to prevent collusion between the parties and to take care that the evidence is not fabricated or suppressed.110 F. Effects of Filing Petition The spouses shall be entitled to live separately from each other. The court, in the absence of a written agreement between the spouses, shall designate either of them or a third person to administer the absolute community or conjugal partnership property. The administrator appointed by the court shall have the same powers and duties as those of a guardian under the Rules of Court.111

106

Art. 56 Art. 57 108 Art. 58 109 Art. 59 110 Art. 60 111 Art. 61 107

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G. Effects of pendency The provisions of Article 49112 shall apply to the support of the spouses and the custody and support of the common children.113 H. Effects of legal separation (1) The spouses shall be entitled to live separately from each other, but the marriage bonds shall not be severed; (2) The absolute community or the conjugal partnership shall be dissolved and liquidated but the offending spouse shall have no right to any share of the net profits earned by the absolute community or the conjugal partnership, which shall be forfeited in accordance with the provisions of Article 43(2);114 (3) The custody of the minor children shall be awarded to the innocent spouse, subject to the provisions of Article 213115 of this Code; and (4) The offending spouse shall be disqualified from inheriting from the innocent spouse by intestate succession. Moreover, provisions in favor of the offending spouse made in the will of the innocent spouse shall be revoked by operation of law. After the finality of the decree of legal separation, the innocent spouse may revoke the donations made by him or by her in favor of the offending spouse, as well as the designation of the latter as beneficiary in any insurance policy, even if such designation be stipulated as irrevocable. The revocation of the donations shall be recorded in the registries of property in the places where the properties are located. Alienations, liens and encumbrances registered in good faith before the recording of the complaint for revocation in the registries of property shall be respected. The revocation of or change in the designation of the insurance beneficiary shall take effect upon written notification thereof to the insured The action to revoke the donation must be brought within five (5) years from the time the decree of legal separation become final.116

112

supra Art. 62 114 supra 115 See Reference 116 Art. 64 113

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I. Reconciliation If the spouses should reconcile, a corresponding joint manifestation under oath duly signed by them shall be filed with the court in the same proceeding for legal separation.117 Consequences: (1) The legal separation proceedings, if still pending, shall thereby be terminated at whatever stage; and (2) The final decree of legal separation shall be set aside, but the separation of property and any forfeiture of the share of the guilty spouse already effected shall subsist, unless the spouses agree to revive their former property regime. The court's order containing the foregoing shall be recorded in the proper civil registries.118 The agreement to revive the former property regime shall be executed under oath and shall specify: (1) The properties to be contributed anew to the restored regime; (2) Those to be retained as separated properties of each spouse; and (3) The names of all their known creditors, their addresses and the amounts owing to each. The agreement of revival and the motion for its approval shall be filed with the court in the same proceeding for legal separation, with copies of both furnished to the creditors named therein. After due hearing, the court shall, in its order, take measure to protect the interest of creditors and such order shall be recorded in the proper registries of properties. The recording of the ordering in the registries of property shall not prejudice any creditor not listed or not notified, unless the debtor-spouse has sufficient separate properties to satisfy the creditor's claim.119

117

Art. 65 Art. 66 119 Art. 67 118

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IV. Rights and Obligations Between Husband and Wife A. Essential Obligations The husband and wife are obliged to live together, observe mutual love, respect and fidelity, and render mutual help and support.120 B. Family domicile The husband and wife shall fix the family domicile. In case of disagreement, the court shall decide. The court may exempt one spouse from living with the other if the latter should live abroad or there are other valid and compelling reasons for the exemption. However, such exemption shall not apply if the same is not compatible with the solidarity of the family.121 C. Support The spouses are jointly responsible for the support of the family. The expenses for such support and other conjugal obligations shall be paid from the community property and, in the absence thereof, from the income or fruits of their separate properties. In case of insufficiency or absence of said income or fruits, such obligations shall be satisfied from the separate properties.122 D. Management of household The right and the duty of both spouses. The expenses for such management shall be paid in accordance with the provisions of Article 70.123 E. Effect of neglect of duty The aggrieved party may apply to the court for relief.124

120

Art. 68 Art. 69 122 Art. 70 123 Art. 71 124 Art. 72 121

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F. Exercise of profession Either spouse may exercise any legitimate profession, occupation, business or activity without the consent of the other. The latter may object only on valid, serious, and moral grounds. In case of disagreement, the court shall decide whether or not: (1) The objection is proper, and (2) Benefit has occurred to the family prior to the objection or thereafter. If the benefit accrued prior to the objection, the resulting obligation shall be enforced against the separate property of the spouse who has not obtained consent. The foregoing provisions shall not prejudice the rights of creditors who acted in good faith.125 V. Property Relations of the Spouses A. Marriage Settlements In order that any modification in the marriage settlements may be valid, it must be made before the celebration of the marriage, subject to the provisions of Articles 66, 67,126 128, 135 and 136.127 The marriage settlements and any modification thereof shall be in writing, signed by the parties and executed before the celebration of the marriage. They shall not prejudice third persons unless they are registered in the local civil registry where the marriage contract is recorded as well as in the proper registries of properties.128 A minor who according to law may contract marriage may also execute his or her marriage settlements, but they shall be valid only if the persons designated in Article 14129 to give consent to the marriage are made parties to the agreement.130 For the validity of any marriage settlement executed by a person upon whom a sentence of civil interdiction has been pronounced or who is subject to any other disability,

125

Art. 73 supra 127 Art. 76; see Reference for Arts. 128, 135-6 128 Art. 77 129 The father, mother, surviving parent or guardian, or persons having legal charge of them, in the order mentioned. 130 Art. 78 126

28

it shall be indispensable for the guardian appointed by a competent court to be made a party thereto131 In the absence of a contrary stipulation in a marriage settlement, 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.132 This rule shall not apply: (1) Where both spouses are aliens; (2) With respect to the extrinsic validity of contracts affecting property not situated in the Philippines and executed in the country where the property is located; and (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. Everything stipulated in the settlements or contracts referred to in the preceding articles in consideration of a future marriage, including donations between the prospective spouses made therein, shall be rendered void if the marriage does not take place. However, stipulations that do not depend upon the celebration of the marriages shall be valid.133 B. Donations by Reason of Marriage Those which are made before its celebration, in consideration of the same, and in favor of one or both of the future spouses.134 These donations are governed by the rules on ordinary donations established in Title III of Book III of the Civil Code, insofar as they are not modified by the following articles135 May be revoked by the donor in the following cases: (1) If the marriage is not celebrated or judicially declared void ab initio except donations made in the marriage settlements, which shall be governed by Article 81;136

131

Art. 79 Art. 80 133 Art. 81 134 Art. 82 135 Art. 83 136 supra 132

29

(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 general137 Donations by reason of marriage shall remain valid, except that if the donee contracted the marriage in bad faith, such donations made to said donee are revoked by operation of law;138 The effects provided for by paragraphs (2), (3), (4) and (5) of Article 43139 and by Article 44140 shall also apply in the proper cases to marriages which are declared ab initio or annulled by final judgment under Articles 40141 and 45.142 The final judgment in such cases shall provide for the liquidation, partition and distribution of the properties of the spouses, the custody and support of the common children, and the delivery of third presumptive legitimes, unless such matters had been adjudicated in previous judicial proceedings. All creditors of the spouses as well as of the absolute community or the conjugal partnership shall be notified of the proceedings for liquidation. In the partition, the conjugal dwelling and the lot on which it is situated, shall be adjudicated in accordance with the provisions of Articles 102 and 129.143 C. Void donations by the spouses Every donation or grant of gratuitous advantage, direct or indirect, between the spouses during the marriage shall be void, except moderate gifts which the spouses may give each other on the occasion of any family rejoicing. The prohibition shall also apply to persons living together as husband and wife without a valid marriage.144

137

Art. 86 Art. 43 (3) 139 See (3) Subsequent marriages, supra 140 supra 141 ibid 142 See (4) Annullable marriages, supra 143 Art. 50; see Reference for Arts. 102 & 129 144 Art. 87 138

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D. Absolute Community of property 1. General Provisions The future spouses may, in the marriage settlements, agree upon the regime of absolute community, conjugal partnership of gains, complete separation of property, or any other regime. In the absence of a marriage settlement, or when the regime agreed upon is void, the system of absolute community of property as established in this Code shall govern145 If the future spouses agree upon a regime other than the absolute community of property, they cannot donate to each other in their marriage settlements more than onefifth of their present property. Any excess shall be considered void.146 Donations of future property shall be governed by the provisions on testamentary succession and the formalities of wills. Donations by reason of marriage of property subject to encumbrances shall be valid. In case of foreclosure of the encumbrance and the property is sold for less than the total amount of the obligation secured, the donee shall not be liable for the deficiency. If the property is sold for more than the total amount of said obligation, the donee shall be entitled to the excess.147 The absolute community of property between spouses shall commence at the precise moment that the marriage is celebrated. Any stipulation, express or implied, for the commencement of the community regime at any other time shall be void.148 No waiver of rights, shares and effects of the absolute community of property during the marriage can be made except in case of judicial separation of property.149 When the waiver takes place upon a judicial separation of property, or after the marriage has been dissolved or annulled, the same shall appear in a public instrument and shall be recorded as provided in Article 77.150 The creditors of the spouse who made such waiver may petition the court to rescind the waiver to the extent of the amount sufficient to cover the amount of their credits.

145

Art. 75 Art. 84 147 Art. 85 148 Art. 88 149 Art. 89 150 See Reference 146

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The provisions on co-ownership shall apply to the absolute community of property between the spouses in all matters not provided for.151 2. What constitutes Community Property Consist of all the property owned by the spouses at the time of the celebration of the marriage or acquired thereafter.152 Excluded from the community property: (1) Property acquired during the marriage by gratuitous title by either spouse, and the fruits as well as the income thereof, if any, unless it is expressly provided by the donor, testator or grantor that they shall form part of the community property; (2) Property for personal and exclusive use of either spouse. However, jewelry shall form part of the community property; (3) Property acquired before the marriage by either spouse who has legitimate descendants by a former marriage, and the fruits as well as the income, if any, of such property.153 Property acquired during the marriage is presumed to belong to the community, unless it is proved that it is one of those excluded therefrom.154 3. Charges Upon and Obligations of the Community Property (1) The support of the spouses, their common children, and legitimate children of either spouse; however, the support of illegitimate children shall be governed by the provisions of this Code on Support; (2) All debts and obligations contracted during the marriage by the designated administrator-spouse for the benefit of the community, or by both spouses, or by one spouse with the consent of the other; (3) Debts and obligations contracted by either spouse without the consent of the other to the extent that the family may have been benefited; (4) All taxes, liens, charges and expenses, including major or minor repairs, upon the community property; 151

Art. 90 Art. 91 153 Art. 92 154 Art. 93 152

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(5) All taxes and expenses for mere preservation made during marriage upon the separate property of either spouse used by the family; (6) Expenses to enable either spouse to commence or complete a professional or vocational course, or other activity for self-improvement; (7) Antenuptial debts of either spouse insofar as they have redounded to the benefit of the family; (8) The value of what is donated or promised by both spouses in favor of their common legitimate children for the exclusive purpose of commencing or completing a professional or vocational course or other activity for self-improvement; (9) Antenuptial debts of either spouse other than those falling under paragraph (7) of this Article, the support of illegitimate children of either spouse, and liabilities incurred by either spouse by reason of a crime or a quasi-delict, in case of absence or insufficiency of the exclusive property of the debtor-spouse, the payment of which shall be considered as advances to be deducted from the share of the debtor-spouse upon liquidation of the community; and (10) Expenses of litigation between the spouses unless the suit is found to be groundless. If the community property is insufficient to cover the foregoing liabilities, except those falling under paragraph (9), the spouses shall be solidarily liable for the unpaid balance with their separate properties.155 Whatever may be lost during the marriage in any game of chance, betting, sweepstakes, or any other kind of gambling, whether permitted or prohibited by law, shall be borne by the loser and shall not be charged to the community but any winnings therefrom shall form part of the community property.156 4. Ownership, Administration, Enjoyment and Disposition of the Community Property The administration and enjoyment of the community property shall belong to both spouses jointly. In case of disagreement, the husband's decision shall prevail, subject to recourse to the court by the wife for proper remedy, which must be availed of within five years from the date of the contract implementing such decision.

155 156

Art. 94 Art. 95

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In the event that one spouse is incapacitated or otherwise unable to participate in the administration of the common properties, the other spouse may assume sole powers of administration. These powers do not include disposition or encumbrance without authority of the court or the written consent of the other spouse. In the absence of such authority or consent, the disposition or encumbrance shall be void. However, the transaction shall be construed as a continuing offer on the part of the consenting spouse and the third person, and may be perfected as a binding contract upon the acceptance by the other spouse or authorization by the court before the offer is withdrawn by either or both offerors.157 Either spouse may dispose by will of his or her interest in the community property.158 Neither spouse may donate any community property without the consent of the other. However, either spouse may, without the consent of the other, make moderate donations from the community property for charity or on occasions of family rejoicing or family distress.159 5. Dissolution of Community Regime (1) Upon the death of either spouse; (2) There is a decree of legal separation; (3) The marriage is annulled or declared void; or (4) Judicial separation of property during the marriage under Article 134 to 138.160 The separation in fact between husband and wife shall not affect the regime of absolute community except that: (1) The spouse who leaves the conjugal home or refuses to live therein, without just cause, shall not have the right to be supported; (2) When the consent of one spouse to any transaction of the other is required by law, judicial authorization shall be obtained in a summary proceeding; (3) In the absence of sufficient community property, the separate property of both spouses shall be solidarily liable for the support of the family. The spouse present shall, upon proper petition in a summary proceeding, be given judicial authority to administer or encumber any specific separate property of the other spouse and use the fruits or proceeds thereof to satisfy the latter's share.161 157

Art. 96 Art. 97 159 Art. 98 160 Art. 99; see Reference for Arts. 134-138 161 Art. 100 158

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If a spouse without just cause abandons the other or fails to comply with his or her obligations to the family, the aggrieved spouse may petition the court for receivership, for judicial separation of property or for authority to be the sole administrator of the absolute community, subject to such precautionary conditions as the court may impose. The obligations to the family mentioned in the preceding paragraph refer to marital, parental or property relations. A spouse is deemed to have abandoned the other when her or she has left the conjugal dwelling without intention of returning. The spouse who has left the conjugal dwelling for a period of three months or has failed within the same period to give any information as to his or her whereabouts shall be prima facie presumed to have no intention of returning to the conjugal dwelling. 162 6. Liquidation of the Absolute Community Assets and Liabilities Procedure: (1) An inventory shall be prepared, listing separately all the properties of the absolute community and the exclusive properties of each spouse. (2) The debts and obligations of the absolute community shall be paid out of its assets. In case of insufficiency of said assets, the spouses shall be solidarily liable for the unpaid balance with their separate properties in accordance with the provisions of the second paragraph of Article 94.163 (3) Whatever remains of the exclusive properties of the spouses shall thereafter be delivered to each of them. (4) The net remainder of the properties of the absolute community shall constitute its net assets, which shall be divided equally between husband and wife, unless a different proportion or division was agreed upon in the marriage settlements, or unless there has been a voluntary waiver of such share provided in this Code. For purpose of computing the net profits subject to forfeiture in accordance with Articles 43, No. (2) and 63, No. (2),164 the said profits shall be the increase in value between the market value of the community property at the time of the celebration of the marriage and the market value at the time of its dissolution.

162

Art. 101 supra 164 ibid 163

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(5) The presumptive legitimes of the common children shall be delivered upon partition, in accordance with Article 51.165 (6) Unless otherwise agreed upon by the parties, in the partition of the properties, the conjugal dwelling and the lot on which it is situated shall be adjudicated to the spouse with whom the majority of the common children choose to remain. Children below the age of seven years are deemed to have chosen the mother, unless the court has decided otherwise. In case there in no such majority, the court shall decide, taking into consideration the best interests of said children.166 Upon the termination of the marriage by death, the community property shall be liquidated in the same proceeding for the settlement of the estate of the deceased. If no judicial settlement proceeding is instituted, the surviving spouse shall liquidate the community property either judicially or extra-judicially within six months from the death of the deceased spouse. If upon the lapse of the six months period, no liquidation is made, any disposition or encumbrance involving the community property of the terminated marriage shall be void. Should the surviving spouse contract a subsequent marriage without compliance with the foregoing requirements, a mandatory regime of complete separation of property shall govern the property relations of the subsequent marriage.167 Whenever the liquidation of the community properties of two or more marriages contracted by the same person before the effectivity of this Code is carried out simultaneously, the respective capital, fruits and income of each community shall be determined upon such proof as may be considered according to the rules of evidence. In case of doubt as to which community the existing properties belong, the same shall be divided between the different communities in proportion to the capital and duration of each.168

165

ibid Art. 102 167 Art. 103 168 Art. 104 166

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E. Conjugal Partnership of Gains 1. General Provisions In case the future spouses agree in the marriage settlements that the regime of conjugal partnership gains shall govern their property relations during marriage, the provisions in this Chapter shall be of supplementary application. The provisions shall also apply to conjugal partnerships of gains already established between spouses before the effectivity of this Code, without prejudice to vested rights already acquired in accordance with the Civil Code or other laws, as provided in Article 256.169 Under the regime of conjugal partnership of gains, the husband and wife place in a common fund the proceeds, products, fruits and income from their separate properties and those acquired by either or both spouses through their efforts or by chance, and, upon dissolution of the marriage or of the partnership, the net gains or benefits obtained by either or both spouses shall be divided equally between them, unless otherwise agreed in the marriage settlements.170 The rules provided in Articles 88 and 89171 shall also apply to conjugal partnership of gains.172 The conjugal partnership shall be governed by the rules on the contract of partnership in all that is not in conflict with what is expressly determined in this Chapter or by the spouses in their marriage settlements.173 2. Exclusive Property of Each Spouse (1) Brought to the marriage as his or her own; (2) Each acquires during the marriage by gratuitous title; (3) Acquired by right of redemption, by barter or by exchange with property belonging to only one of the spouses; and (4) Purchased with exclusive money of the wife or of the husband174

169

Art. 105; see Reference for Art. 256 Art. 106 171 supra 172 Art. 107 173 Art. 108 174 Art. 109 170

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The spouses retain the ownership, possession, administration and enjoyment of their exclusive properties. Either spouse may, during the marriage, transfer the administration of his or her exclusive property to the other by means of a public instrument, which shall be recorded in the registry of property of the place the property is located.175 A spouse of age may mortgage, encumber, alienate or otherwise dispose of his or her exclusive property, without the consent of the other spouse, and appear alone in court to litigate with regard to the same.176 The alienation of any exclusive property of a spouse administered by the other automatically terminates the administration over such property and the proceeds of the alienation shall be turned over to the owner-spouse.177 Property donated or left by will to the spouses, jointly and with designation of determinate shares, shall pertain to the donee-spouses as his or her own exclusive property, and in the absence of designation, share and share alike, without prejudice to the right of accretion when proper.178 If the donations are onerous, the amount of the charges shall be borne by the exclusive property of the donee spouse, whenever they have been advanced by the conjugal partnership of gains.179 Retirement benefits, pensions, annuities, gratuities, usufructs and similar benefits shall be governed by the rules on gratuitous or onerous acquisitions as may be proper in each case.180

175

Art. 110 Art. 111 177 Art. 112 178 Art. 113 179 Art. 114 180 Art. 115 176

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3. Conjugal Partnership Property All property acquired during the marriage, whether the acquisition appears to have been made, contracted or registered in the name of one or both spouses, is presumed to be conjugal unless the contrary is proved.181 The following are conjugal partnership properties: (1) Those acquired by onerous title during the marriage at the expense of the common fund, whether the acquisition be for the partnership, or for only one of the spouses; (2) Those obtained from the labor, industry, work or profession of either or both of the spouses; (3) The fruits, natural, industrial, or civil, due or received during the marriage from the common property, as well as the net fruits from the exclusive property of each spouse; (4) The share of either spouse in the hidden treasure which the law awards to the finder or owner of the property where the treasure is found; (5) Those acquired through occupation such as fishing or hunting; (6) Livestock existing upon the dissolution of the partnership in excess of the number of each kind brought to the marriage by either spouse; and (7) Those which are acquired by chance, such as winnings from gambling or betting. However, losses therefrom shall be borne exclusively by the loser-spouse.182 Property bought on installments paid partly from exclusive funds of either or both spouses and partly from conjugal funds belongs to the buyer or buyers if full ownership was vested before the marriage and to the conjugal partnership if such ownership was vested during the marriage. In either case, any amount advanced by the partnership or by either or both spouses shall be reimbursed by the owner or owners upon liquidation of the partnership.183 Whenever an amount or credit payable within a period of time belongs to one of the spouses, the sums which may be collected during the marriage in partial payments or by installments on the principal shall be the exclusive property of the spouse. However, interests falling due during the marriage on the principal shall belong to the conjugal partnership.184

181

Art. 116 Art. 117 183 Art. 118 184 Art. 119 182

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The ownership of improvements, whether for utility or adornment, made on the separate property of the spouses at the expense of the partnership or through the acts or efforts of either or both spouses shall pertain to the conjugal partnership, or to the original owner-spouse, subject to the following rules: When the cost of the improvement made by the conjugal partnership and any resulting increase in value are more than the value of the property at the time of the improvement, the entire property of one of the spouses shall belong to the conjugal partnership, subject to reimbursement of the value of the property of the owner-spouse at the time of the improvement; otherwise, said property shall be retained in ownership by the owner-spouse, likewise subject to reimbursement of the cost of the improvement. In either case, the ownership of the entire property shall be vested upon the reimbursement, which shall be made at the time of the liquidation of the conjugal partnership. 4. Charges upon and obligations of the Conjugal Partnership of Gains (1) The support of the spouse, their common children, and the legitimate children of either spouse; (2) All debts and obligations contracted during the marriage by the designated administrator-spouse for the benefit of the conjugal partnership of gains, or by both spouses or by one of them with the consent of the other; (3) Debts and obligations contracted by either spouse without the consent of the other to the extent that the family may have benefited; (4) All taxes, liens, charges, and expenses, including major or minor repairs upon the conjugal partnership property; (5) All taxes and expenses for mere preservation made during the marriage upon the separate property of either spouse; (6) Expenses to enable either spouse to commence or complete a professional, vocational, or other activity for self-improvement; (7) Antenuptial debts of either spouse insofar as they have redounded to the benefit of the family; (8) The value of what is donated or promised by both spouses in favor of their common legitimate children for the exclusive purpose of commencing or completing a professional or vocational course or other activity for self-improvement; and

40

(9) Expenses of litigation between the spouses unless the suit is found to groundless. If the conjugal partnership is insufficient to cover the foregoing liabilities, the spouses shall be solidarily liable for the unpaid balance with their separate properties.185 The payment of personal debts contracted by the husband or the wife before or during the marriage shall not be charged to the conjugal properties partnership except insofar as they redounded to the benefit of the family. Neither shall the fines and pecuniary indemnities imposed upon them be charged to the partnership. However, the payment of personal debts contracted by either spouse before the marriage, that of fines and indemnities imposed upon them, as well as the support of illegitimate children of either spouse, may be enforced against the partnership assets after the responsibilities enumerated in the preceding Article have been covered, if the spouse who is bound should have no exclusive property or if it should be insufficient; but at the time of the liquidation of the partnership, such spouse shall be charged for what has been paid for the purpose above-mentioned.186 Whatever may be lost during the marriage in any game of chance or in betting, sweepstakes, or any other kind of gambling whether permitted or prohibited by law, shall be borne by the loser and shall not be charged to the conjugal partnership but any winnings therefrom shall form part of the conjugal partnership property.187 5. Administration of the of the Conjugal Partnership of Gains The administration and enjoyment of the conjugal partnership shall belong to both spouses jointly. In case of disagreement, the husband's decision shall prevail, subject to recourse to the court by the wife for proper remedy, which must be availed of within five years from the date of the contract implementing such decision. In the event that one spouse is incapacitated or otherwise unable to participate in the administration of the conjugal properties, the other spouse may assume sole powers of administration. These powers do not include disposition or encumbrance without authority of the court or the written consent of the other spouse. In the absence of such authority or consent, the disposition or encumbrance shall be void. However, the transaction shall be construed as a continuing offer on the part of the consenting spouse and the third person, 185

Art. 121 Art. 122 187 Art. 123 186

41

and may be perfected as a binding contract upon the acceptance by the other spouse or authorization by the court before the offer is withdrawn by either or both offerors.188 Neither spouse may donate any conjugal partnership property without the consent of the other. However, either spouse may, without the consent of the other, make moderate donations from the conjugal partnership property for charity or on occasions of family rejoicing or family distress.189 6. Dissolution of the regime of Conjugal Partnership of Gains (1) Upon the death of either spouse; (2) There is a decree of legal separation; (3) The marriage is annulled or declared void; or (4) In case of judicial separation of property during the marriage under Articles 134 to 138.190 The separation in fact between husband and wife shall not affect the regime of conjugal partnership, except that: (1) The spouse who leaves the conjugal home or refuses to live therein, without just cause, shall not have the right to be supported; (2) When the consent of one spouse to any transaction of the other is required by law, judicial authorization shall be obtained in a summary proceeding; (3) In the absence of sufficient conjugal partnership property, the separate property of both spouses shall be solidarily liable for the support of the family. The spouse present shall, upon petition in a summary proceeding, be given judicial authority to administer or encumber any specific separate property of the other spouse and use the fruits or proceeds thereof to satisfy the latter's share.191 If a spouse without just cause abandons the other or fails to comply with his or her obligation to the family, the aggrieved spouse may petition the court for receivership, for judicial separation of property, or for authority to be the sole administrator of the conjugal partnership property, subject to such precautionary conditions as the court may impose. The obligations to the family mentioned in the preceding paragraph refer to marital, parental or property relations. 188

Art. 124 Art. 125 190 Art. 126 191 Art. 127 189

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A spouse is deemed to have abandoned the other when he or she has left the conjugal dwelling without intention of returning. The spouse who has left the conjugal dwelling for a period of three months or has failed within the same period to give any information as to his or her whereabouts shall be prima facie presumed to have no intention of returning to the conjugal dwelling.192 7. Liquidation of the Conjugal Partnership Assets and Liabilities Procedure: (1) An inventory shall be prepared, listing separately all the properties of the conjugal partnership and the exclusive properties of each spouse. (2) Amounts advanced by the conjugal partnership in payment of personal debts and obligations of either spouse shall be credited to the conjugal partnership as an asset thereof. (3) Each spouse shall be reimbursed for the use of his or her exclusive funds in the acquisition of property or for the value of his or her exclusive property, the ownership of which has been vested by law in the conjugal partnership. (4) The debts and obligations of the conjugal partnership shall be paid out of the conjugal assets. In case of insufficiency of said assets, the spouses shall be solidarily liable for the unpaid balance with their separate properties, in accordance with the provisions of paragraph (2) of Article 121.193 (5) Whatever remains of the exclusive properties of the spouses shall thereafter be delivered to each of them. (6) Unless the owner had been indemnified from whatever source, the loss or deterioration of movables used for the benefit of the family, belonging to either spouse, even due to fortuitous event, shall be paid to said spouse from the conjugal funds, if any. (7) The net remainder of the conjugal partnership properties shall constitute the profits, which shall be divided equally between husband and wife, unless a different proportion or division was agreed upon in the marriage settlements or unless there has been a voluntary waiver or forfeiture of such share as provided in this Code. (8) The presumptive legitimes of the common children shall be delivered upon the partition in accordance with Article 51.194 192

Art. 128 supra 194 ibid 193

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(9) In the partition of the properties, the conjugal dwelling and the lot on which it is situated shall, unless otherwise agreed upon by the parties, be adjudicated to the spouse with whom the majority of the common children choose to remain. Children below the age of seven years are deemed to have chosen the mother, unless the court has decided otherwise. In case there is no such majority, the court shall decide, taking into consideration the best interests of said children.195 Upon the termination of the marriage by death, the conjugal partnership property shall be liquidated in the same proceeding for the settlement of the estate of the deceased. If no judicial settlement proceeding is instituted, the surviving spouse shall liquidate the conjugal partnership property either judicially or extra-judicially within six months from the death of the deceased spouse. If upon the lapse of the six-month period no liquidation is made, any disposition or encumbrance involving the conjugal partnership property of the terminated marriage shall be void. Should the surviving spouse contract a subsequent marriage without compliance with the foregoing requirements, a mandatory regime of complete separation of property shall govern the property relations of the subsequent marriage.196 Whenever the liquidation of the conjugal partnership properties of two or more marriages contracted by the same person before the effectivity of this Code is carried out simultaneously, the respective capital, fruits and income of each partnership shall be determined upon such proof as may be considered according to the rules of evidence. In case of doubt as to which partnership the existing properties belong, the same shall be divided between the different partnerships in proportion to the capital and duration of each.197 The Rules of Court on the administration of estates of deceased persons shall be observed in the appraisal and sale of property of the conjugal partnership, and other matters which are not expressly determined in this Chapter.198 From the common mass of property support shall be given to the surviving spouse and to the children during the liquidation of the inventoried property and until what belongs to them is delivered; but from this shall be deducted that amount received for support which exceeds the fruits or rents pertaining to them.199

195

Art. 129 Art. 130. 197 Art. 131 198 Art. 132 199 Art. 133 196

44

F. Separation of Property of the Spouses and Administration of Common Property by One Spouse During the Marriage 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.200 Any of the following shall be considered sufficient cause for judicial separation of property: (1) That the spouse of the petitioner has been sentenced to a penalty which carries with it civil interdiction; (2) That the spouse of the petitioner has been judicially declared an absentee; (3) That loss of parental authority of the spouse of petitioner has been decreed by the court; (4) That the spouse of the petitioner has abandoned the latter or failed to comply with his or her obligations to the family as provided for in Article 101;201 (5) That the spouse granted the power of administration in the marriage settlements has abused that power; and (6) That at the time of the petition, the spouses have been separated in fact for at least one year and reconciliation is highly improbable. In the cases provided for in Numbers (1), (2) and (3), the presentation of the final judgment against the guilty or absent spouse shall be enough basis for the grant of the decree of judicial separation of property.202 The spouses may jointly file a verified petition with the court for the voluntary dissolution of the absolute community or the conjugal partnership of gains, and for the separation of their common properties. All creditors of the absolute community or of the conjugal partnership of gains, as well as the personal creditors of the spouse, shall be listed in the petition and notified of the filing thereof. The court shall take measures to protect the creditors and other persons with pecuniary interest.203 200

Art. 134 supra 202 Art. 135 203 Art. 136 201

45

Once the separation of property has been decreed, the absolute community or the conjugal partnership of gains shall be liquidated in conformity with this Code. During the pendency of the proceedings for separation of property, the absolute community or the conjugal partnership shall pay for the support of the spouses and their children.204 After dissolution of the absolute community or of the conjugal partnership, the provisions on complete separation of property shall apply.205 The petition for separation of property and the final judgment granting the same shall be recorded in the proper local civil registries and registries of property.206 The separation of property shall not prejudice the rights previously acquired by creditors.207 The spouses may, in the same proceedings where separation of property was decreed, file a motion in court for a decree reviving the property regime that existed between them before the separation of property in any of the following instances: (1) When the civil interdiction terminates; (2) When the absentee spouse reappears; (3) When the court, being satisfied that the spouse granted the power of administration in the marriage settlements will not again abuse that power, authorizes the resumption of said administration; (4) When the spouse who has left the conjugal home without a decree of legal separation resumes common life with the other; (5) When parental authority is judicially restored to the spouse previously deprived thereof; (6) When the spouses who have separated in fact for at least one year, reconcile and resume common life; or (7) When after voluntary dissolution of the absolute community of property or conjugal partnership 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. 204

Art. 137 Art. 138 206 Art. 139 207 Art. 140 205

46

The revival of the former property regime shall be governed by Article 67.208 The administration of all classes of exclusive property of either spouse may be transferred by the court to the other spouse: (1) When one spouse becomes the guardian of the other; (2) When one spouse is judicially declared an absentee; (3) When one spouse is sentenced to a penalty which carries with it civil interdiction; or (4) When one spouse becomes a fugitive from justice or is in hiding as an accused in a criminal case. If the other spouse is not qualified by reason of incompetence, conflict of interest, or any other just cause, the court shall appoint a suitable person to be the administrator.209 G. Regime of Separation of Property Should the future spouses agree in the marriage settlements that their property relations during marriage shall be governed by the regime of separation of property, the provisions of this Chapter shall be suppletory.210 Separation of property may refer to present or future property or both. It may be total or partial. In the latter case, the property not agreed upon as separate shall pertain to the absolute community.211 Each spouse shall own, dispose of, possess, administer and enjoy his or her own separate estate, without need of the consent of the other. To each spouse shall belong all earnings from his or her profession, business or industry and all fruits, natural, industrial or civil, due or received during the marriage from his or her separate property.212 Both spouses shall bear the family expenses in proportion to their income, or, in case of insufficiency or default thereof, to the current market value of their separate properties.

208

Art. 141. Art. 142. 210 Art. 143 211 Art. 144 212 Art. 145 209

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The liabilities of the spouses to creditors for family expenses shall, however, be solidary.213 H. Property Regime of Unions Without Marriage When a man and a woman who are capacitated to marry each other, live exclusively with each other as husband and wife without the benefit of marriage or under a void marriage, their wages and salaries shall be owned by them in equal shares and the property acquired by both of them through their work or industry shall be governed by the rules on co-ownership. In the absence of proof to the contrary, properties acquired while they lived together shall be presumed to have been obtained by their joint efforts, work or industry, and shall be owned by them in equal shares. For purposes of this Article, a party who did not participate in the acquisition by the other party of any property shall be deemed to have contributed jointly in the acquisition thereof if the former's efforts consisted in the care and maintenance of the family and of the household. Neither party can encumber or dispose by acts inter vivos of his or her share in the property acquired during cohabitation and owned in common, without the consent of the other, until after the termination of their cohabitation. When only one of the parties to a void marriage is in good faith, the share of the party in bad faith in the co-ownership shall be forfeited in favor of their common children. In case of default of or waiver by any or all of the common children or their descendants, each vacant share shall belong to the respective surviving descendants. In the absence of descendants, such share shall belong to the innocent party. In all cases, the forfeiture shall take place upon termination of the cohabitation.214 In cases of cohabitation not falling under the preceding Article, only the properties acquired by both of the parties through their actual joint contribution of money, property, or industry shall be owned by them in common in proportion to their respective contributions. In the absence of proof to the contrary, their contributions and corresponding shares are presumed to be equal. The same rule and presumption shall apply to joint deposits of money and evidences of credit. If one of the parties is validly married to another, his or her share in the coownership shall accrue to the absolute community or conjugal partnership existing in such valid marriage. If the party who acted in bad faith is not validly married to another, his or her shall be forfeited in the manner provided in the last paragraph of the preceding Article.

213 214

Art. 146 Art. 147

48

The foregoing rules on forfeiture shall likewise apply even if both parties are in both faith.215

215

Art. 148

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VI. The Family A. The Family as an Institution 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.216 Family relations include those: (1) Between husband and wife; (2) Between parents and children; (3) Among brothers and sisters, whether of the full or half-blood.217 No suit between members of the same family shall prosper unless it should appear from the verified complaint or petition that earnest efforts toward a compromise have been made, but that the same have failed. If it is shown that no such efforts were in fact made, the same case must be dismissed. This rules shall not apply to cases which may not be the subject of compromise under the Civil Code.218 B. The Family Home The family home, constituted jointly by the husband and the wife or by an unmarried head of a family, is the dwelling house where they and their family reside, and the land on which it is situated.219 The family home is deemed constituted on a house and lot from the time it is occupied as a family residence. From the time of its constitution and so long as any of its beneficiaries actually resides therein, the family home continues to be such and is exempt 216

Art. 149. Art. 150 218 Art. 151 No compromise upon the following questions shall be valid: (1) The civil status of persons; (2) The validity of a marriage or a legal separation; (3) Any ground for legal separation; (4) Future support; (5) The jurisdiction of courts; (6) Future legitime (Art. 2035) 219 Art. 152 217

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from execution, forced sale or attachment except as hereinafter provided and to the extent of the value allowed by law.220 The beneficiaries of a family home are: (1) The husband and wife, or an unmarried person who is the head of a family; and (2) Their parents, ascendants, descendants, brothers and sisters, whether the relationship be legitimate or illegitimate, who are living in the family home and who depend upon the head of the family for legal support.221 The family home shall be exempt from execution, forced sale or attachment except: (1) For nonpayment of taxes; (2) For debts incurred prior to the constitution of the family home; (3) For debts secured by mortgages on the premises before or after such constitution; and (4) For debts due to laborers, mechanics, architects, builders, materialmen and others who have rendered service or furnished material for the construction of the building.222 The family home must be part of the properties of the absolute community or the conjugal partnership, or of the exclusive properties of either spouse with the latter's consent. It may also be constituted by an unmarried head of a family on his or her own property. Nevertheless, property that is the subject of a conditional sale on installments where ownership is reserved by the vendor only to guarantee payment of the purchase price may be constituted as a family home.223 The actual value of the family home shall not exceed, at the time of its constitution, the amount of the three hundred thousand pesos in urban areas, and two hundred thousand pesos in rural areas, or such amounts as may hereafter be fixed by law. In any event, if the value of the currency changes after the adoption of this Code, the value most favorable for the constitution of a family home shall be the basis of evaluation.

220

Art. 153 Art. 154. 222 Art. 155 223 Art. 156 221

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Urban areas are deemed to include chartered cities and municipalities whose annual income at least equals that legally required for chartered cities. All others are deemed to be rural areas.224 The family home may be sold, alienated, donated, assigned or encumbered by the owner or owners thereof with the written consent of the person constituting the same, the latter's spouse, and a majority of the beneficiaries of legal age. In case of conflict, the court shall decide.225 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 for as long as there is a minor beneficiary, and the heirs cannot partition the same unless the court finds compelling reasons therefor. This rule shall apply regardless of whoever owns the property or constituted the family home.226 When a creditor whose claims is not among those mentioned in Article 155227 obtains a judgment in his favor, and he has reasonable grounds to believe that the family home is actually worth more than the maximum amount fixed in Article 157 228, he may apply to the court which rendered the judgment for an order directing the sale of the property under execution. The court shall so order if it finds that the actual value of the family home exceeds the maximum amount allowed by law as of the time of its constitution. If the increased actual value exceeds the maximum allowed in Article 157 and results from subsequent voluntary improvements introduced by the person or persons constituting the family home, by the owner or owners of the property, or by any of the beneficiaries, the same rule and procedure shall apply. At the execution sale, no bid below the value allowed for a family home shall be considered. The proceeds shall be applied first to the amount mentioned in Article 157, and then to the liabilities under the judgment and the costs. The excess, if any, shall be delivered to the judgment debtor.229 For purposes of availing of the benefits of a family home, a person may constitute, or be the beneficiary of, only one family home.230 The provisions in this Chapter shall also govern existing family residences insofar as said provisions are applicable.231 224

Art. 157 Art. 158 226 Art. 159 227 supra 228 ibid 229 Art. 160 230 Art. 161 231 Art. 162 225

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VII. Paternity and Filiation A. Legitimate Children The filiation of children may be by nature or by adoption. Natural filiation may be legitimate or illegitimate.232 Children conceived or born during the marriage of the parents are legitimate. Children conceived as a result of artificial insemination of the wife with the sperm of the husband or that of a donor or both are likewise legitimate children of the husband and his wife, provided, that both of them authorized or ratified such insemination in a written instrument executed and signed by them before the birth of the child. The instrument shall be recorded in the civil registry together with the birth certificate of the child.233 Children conceived and born outside a valid marriage are illegitimate, unless otherwise provided in this Code.234 Legitimacy of a child may be impugned only on the following grounds: (1) That it was physically impossible for the husband to have sexual intercourse with his wife within the first 120 days of the 300 days which immediately preceded the birth of the child because of: (a) the physical incapacity of the husband to have sexual intercourse with his wife; (b) the fact that the husband and wife were living separately in such a way that sexual intercourse was not possible; or (c) serious illness of the husband, which absolutely prevented sexual intercourse; (2) That it is proved that for biological or other scientific reasons, the child could not have been that of the husband, except in the instance provided in the second paragraph of Article 164;235 or

232

Art. 163 Art. 164 234 Art. 165 235 supra 233

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(3) That in case of children conceived through artificial insemination, the written authorization or ratification of either parent was obtained through mistake, fraud, violence, intimidation, or undue influence.236 The child shall be considered legitimate although the mother may have declared against its legitimacy or may have been sentenced as an adulteress.237 If the marriage is terminated and the mother contracted another marriage within three hundred days after such termination of the former marriage, these rules shall govern in the absence of proof to the contrary: (1) A child born before one hundred eighty days after the solemnization of the subsequent marriage is considered to have been conceived during the former marriage, provided it be born within three hundred days after the termination of the former marriage; (2) A child born after one hundred eighty days following the celebration of the subsequent marriage is considered to have been conceived during such marriage, even though it be born within the three hundred days after the termination of the former marriage.238 The legitimacy or illegitimacy of a child born after three hundred days following the termination of the marriage shall be proved by whoever alleges such legitimacy or illegitimacy.239 The action to impugn the legitimacy of the child shall be brought within one year from the knowledge of the birth or its recording in the civil register, if the husband or, in a proper case, any of his heirs, should reside in the city or municipality where the birth took place or was recorded. If the husband or, in his default, all of his heirs do not reside at the place of birth as defined in the first paragraph or where it was recorded, the period shall be two years if they should reside in the Philippines; and three years if abroad. If the birth of the child has been concealed from or was unknown to the husband or his heirs, the period shall be counted from the discovery or knowledge of the birth of the child or of the fact of registration of said birth, whichever is earlier.240

236

Art. 166 Art. 167 238 Art. 168 239 Art. 169. 240 Art. 170 237

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The heirs of the husband may impugn the filiation of the child within the period prescribed in the preceding article only in the following cases: (1) If the husband should die before the expiration of the period fixed for bringing his action; (2) If he should die after the filing of the complaint without having desisted therefrom; or (3) If the child was born after the death of the husband.241 B. Proof of Filiation By any of the following: (1) The record of birth appearing in the civil register or a final judgment; or (2) An admission of legitimate filiation in a public document or a private handwritten instrument and signed by the parent concerned. In the absence of the foregoing evidence, by: (1) The open and continuous possession of the status of a legitimate child; or (2) Any other means allowed by the Rules of Court and special laws.242 The action to claim legitimacy may be brought by the child during his or her lifetime and shall be transmitted to the heirs should the child die during minority or in a state of insanity. In these cases, the heirs shall have a period of five years within which to institute the action.243 Legitimate children shall have the right: (1) To bear the surnames of the father and the mother, in conformity with the provisions of the Civil Code on Surnames; (2) 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; and (3) To be entitled to the legitimate and other successional rights granted to them by the Civil Code.244 241

Art. 171. Art. 172 243 Art. 173 244 Art. 174 242

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C. Illegitimate Children May establish their illegitimate filiation in the same way and on the same evidence as legitimate children. The action must be brought within the same period specified in Article 173,245 except when the action is based on the second paragraph of Article 172,246 in which case the action may be brought during the lifetime of the alleged parent.247 Illegitimate children shall use the surname and shall be under the parental authority of their mother, and shall be entitled to support. However, illegitimate children may use the surname of their father if their filiation has been expressly recognized by the father through the record of birth appearing in the civil register, or when an admission in a public document or private handwritten instrument is made by the father. The father has the right to institute an action before the regular courts to prove non-filiation during his lifetime. The legitime of each illegitimate child shall consist of one-half (1/2) of the legitime of a legitimate child.248 D. Legitimated Children Only children conceived and born outside of wedlock of parents who, at the time of the conception of the former, were not disqualified by any impediment to marry each other may be legitimated.249 Legitimation shall take place by a subsequent valid marriage between parents. The annulment of a voidable marriage shall not affect the legitimation.250 Legitimated children shall enjoy the same rights as legitimate children.251 The effects of legitimation shall retroact to the time of the child's birth.252 The legitimation of children who died before the celebration of the marriage shall benefit their descendants.253 Legitimation may be impugned only by those who are prejudiced in their rights, within five years from the time their cause of action accrues.254 245

supra Ibid. 247 Art. 175 248 Art. 176, as amended by R.A. 9255 249 Art. 177 250 Art. 178 251 Art. 179 252 Art. 180 253 Art. 181 246

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VIII. Adoption A. Domestic Adoption Act of 1998255 1. Who can adopt (a) Any Filipino citizen of legal age, in possession of full civil capacity and legal rights, of good moral character, has not been convicted of any crime involving moral turpitude, emotionally and psychologically capable of caring for children, at least sixteen (16) years older than the adoptee, and who is in a position to support and care for his/her children in keeping with the means of the family. The requirement of sixteen (16) year difference between the age of the adopter and adoptee may be waived when the adopter is the biological parent of the adoptee, or is the spouse of the adoptee's parent; b) Any alien possessing the same qualifications as above stated for Filipino nationals: Provided, That his/her country has diplomatic relations with the Republic of the Philippines, that he/she has been living in the Philippines for at least three (3) continuous years prior to the filing of the application for adoption and maintains such residence until the adoption decree is entered, that he/she 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, and that his/her government allows the adoptee to enter his/her country as his/her adopted son/daughter: Provided, Further, That the requirements on residency and certification of the alien's qualification to adopt in his/her country may be waived for the following: (i) a former Filipino citizen who seeks to adopt a relative within the fourth (4th) degree of consanguinity or affinity; or (ii) one who seeks to adopt the legitimate son/daughter of his/her Filipino spouse; or (iii) one who is married to a Filipino citizen and seeks to adopt jointly with his/her spouse a relative within the fourth (4th) degree of consanguinity or affinity of the Filipino spouse; or (c) The guardian with respect to the ward after the termination of the guardianship and clearance of his/her financial accountabilities.

254 255

Art. 182 R.A. 8552

57

Husband and wife shall jointly adopt, except in the following cases: (i) if one spouse seeks to adopt the legitimate son/daughter of the other; or (ii) if one spouse seeks to adopt his/her own illegitimate son/daughter: Provided, the other spouse has signified his/her consent thereto; or (iii) if the spouses are legally separated from each other. In case husband and wife jointly adopt, or one spouse adopts the illegitimate son/daughter of the other, joint parental authority shall be exercised by the spouses.256 2. Who can be adopted (a) Any person below eighteen (18) years of age who has been administratively or judicially declared available for adoption; (b) The legitimate son/daughter of one spouse by the other spouse; (c) An illegitimate son/daughter by a qualified adopter to improve his/her 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 own child since minority; (e) A child whose adoption has been previously rescinded; or (f) A child whose biological or adoptive parent(s) has died: Provided, That no proceedings shall be initiated within six (6) months from the time of death of said parent(s). 3. Rights of an adopted child Except in cases where the biological parent is the spouse of the adopter, all legal ties between the biological parent(s) and the adoptee shall be severed and the same shall then be vested on the adopter(s).257 The adoptee shall be considered the legitimate son/daughter of the adopter(s) for all intents and purposes and as such is entitled to all the rights and obligations provided by law to legitimate sons/daughters born to them without discrimination of any kind. To this

256 257

Sec. 7 Sec. 16

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end, the adoptee is entitled to love, guidance, and support in keeping with the means of the family.258 In legal and intestate succession, the adopter(s) and the adoptee shall have reciprocal rights of succession without distinction from legitimate filiation. However, if the adoptee and his/her biological parent(s) had left a will, the law on testamentary succession shall govern. Adoption shall have the following effects: (1) For civil purposes, the adopted shall be deemed to be a legitimate child of the adopters and both shall acquire the reciprocal rights and obligations arising from the relationship of parent and child, including the right of the adopted to use the surname of the adopters; (2) The parental authority of the parents by nature over the adopted shall terminate and be vested in the adopters, except that if the adopter is the spouse of the parent by nature of the adopted, parental authority over the adopted shall be exercised jointly by both spouses; and (3) The adopted shall remain an intestate heir of his parents and other blood relatives.259 Legal or intestate succession to the estate of the adopted shall be governed by the following rules: (1) Legitimate and illegitimate children and descendants and the surviving spouse of the adopted shall inherit from the adopted, in accordance with the ordinary rules of legal or intestate succession; (2) When the parents, legitimate or illegitimate, or the legitimate ascendants of the adopted concur with the adopter, they shall divide the entire estate, one-half to be inherited by the parents or ascendants and the other half, by the adopters; (3) When the surviving spouse or the illegitimate children of the adopted concur with the adopters, they shall divide the entire estate in equal shares, one-half to be inherited by the spouse or the illegitimate children of the adopted and the other half, by the adopters. (4) When the adopters concur with the illegitimate children and the surviving spouse of the adopted, they shall divide the entire estate in equal shares, one-third to be

258 259

Sec. 17 Art. 189, FC

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inherited by the illegitimate children, one-third by the surviving spouse, and one-third by the adopters; (5) When only the adopters survive, they shall inherit the entire estate; and (6) When only collateral blood relatives of the adopted survive, then the ordinary rules of legal or intestate succession shall apply.260 4. Rescission of adoption Upon petition of the adoptee, with the assistance of the Department if a minor or if over eighteen (18) years of age but is incapacitated, as guardian/counsel, the adoption may be rescinded on any of the following grounds committed by the adopter(s): (a) repeated physical and verbal maltreatment by the adopter(s) despite having undergone counseling; (b) attempt on the life of the adoptee; (c) sexual assault or violence; or (d) abandonment and failure to comply with parental obligations. 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 adoptee for causes provided in Article 919261 of the Civil Code.262 If the petition is granted, the parental authority of the adoptee's biological parent(s), if known, or the legal custody of the Department shall be restored if the adoptee is still a minor or incapacitated. The reciprocal rights and obligations of the adopter(s) and the adoptee to each other shall be extinguished. The court shall order the Civil Registrar to cancel the amended certificate of birth of the adoptee and restore his/her original birth certificate. Succession rights shall revert to its status prior to adoption, but only as of the date of judgment of judicial rescission. Vested rights acquired prior to judicial rescission shall be respected. All the foregoing effects of rescission of adoption shall be without prejudice to the penalties imposable under the Penal Code if the criminal acts are properly proven.263

260

Art. 190, id. See Reference 262 Sec. 19, R.A. 8552 263 Sec. 20, id. 261

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C. Inter- Country Adoption Act of 1995264 1. Who can Adopt An alien or a Filipino citizen permanently residing abroad may file an application for inter-country adoption of a Filipino child if he/she: (a) is at least twenty-seven (27) years of age and at least sixteen (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; and (i) possesses all the qualifications and none of the disqualifications provided herein and in other applicable Philippine laws.265

264 265

R.A. 8043 Sec. 9

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2. Who can be adopted Only a legally free child may be the subject of inter-country adoption. 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; and (f) Recent photo of the child.266 IX. Support A. What it Comprises Everything indispensable for sustenance, dwelling, clothing, medical attendance, education and transportation, in keeping with the financial capacity of the family. The education of the person entitled to be supported referred to in the preceding paragraph shall include his schooling or training for some profession, trade or vocation, even beyond the age of majority. Transportation shall include expenses in going to and from school, or to and from place of work.267 B. Who are Obliged (1) The spouses; (2) Legitimate ascendants and descendants; (3) Parents and their legitimate children and the legitimate and illegitimate children of the latter; (4) Parents and their illegitimate children and the legitimate and illegitimate children of the latter; and (5) Legitimate brothers and sisters, whether of full or half-blood268

266

Sec. 8 Art. 194 268 Art. 195 267

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Brothers and sisters not legitimately related, whether of the full or half-blood, are likewise bound to support each other to the full extent set forth in Article 194269, except only when the need for support of the brother or sister, being of age, is due to a cause imputable to the claimant's fault or negligence.270 In case of legitimate ascendants; descendants, whether legitimate or illegitimate; and brothers and sisters, whether legitimately or illegitimately related, only the separate property of the person obliged to give support shall be answerable provided that in case the obligor has no separate property, the absolute community or the conjugal partnership, if financially capable, shall advance the support, which shall be deducted from the share of the spouse obliged upon the liquidation of the absolute community or of the conjugal partnership.271 Whenever two or more persons are obliged to give support, the liability shall devolve upon the following persons in the order herein provided: (1) The spouse; (2) The descendants in the nearest degree; (3) The ascendants in the nearest degree; and (4) The brothers and sisters.272 When the obligation to give support falls upon two or more persons, the payment of the same shall be divided between them in proportion to the resources of each. However, in case of urgent need and by special circumstances, the judge may order only one of them to furnish the support provisionally, without prejudice to his right to claim from the other obligors the share due from them. When two or more recipients at the same time claim support from one and the same person legally obliged to give it, should the latter not have sufficient means to satisfy all claims, the order established in the preceding article shall be followed, unless the concurrent obligees should be the spouse and a child subject to parental authority, in which case the child shall be preferred.273 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 without intention of being reimbursed.274

269

supra Art. 196 271 Art. 197 272 Art. 199 273 Art. 200 274 Art. 206 270

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When the person obliged to support another unjustly refuses or fails to give support when urgently needed by the latter, any third person may furnish support to the needy individual, with right of reimbursement from the person obliged to give support. This shall particularly apply when the father or mother of a child under the age of majority unjustly refuses to support or fails to give support to the child when urgently needed.275 In case of 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. Furthermore, contractual support shall be subject to adjustment whenever modification is necessary due to changes of circumstances manifestly beyond the contemplation of the parties.276 C. Support during marriage litigation The spouses and their children shall be supported from the properties of the absolute community or the conjugal partnership. After the final judgment granting the petition, the obligation of mutual support between the spouses ceases. However, in case of legal separation, the court may order that the guilty spouse shall give support to the innocent one, specifying the terms of such order.277 D. Amount Shall be in proportion to the resources or means of the giver and to the necessities of the recipient.278 Support shall be reduced or increased proportionately, according to the reduction or increase of the necessities of the recipient and the resources or means of the person obliged to furnish the same.279 E. When Demandable From the time the person who has a right to receive the same needs it for maintenance, but it shall not be paid except from the date of judicial or extrajudicial demand. Support pendente lite may be claimed in accordance with the Rules of Court.

275

Art. 207 Art. 208 277 Art. 198 278 Art. 201. 279 Art. 202 276

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Payment shall be made within the first five (5) days of each corresponding month or when the recipient dies, his heirs shall not be obliged to return what he has received in advance.280 F. Options The person obliged to give support shall have the option to fulfill the obligation either by paying the allowance fixed, or by receiving and maintaining in the family dwelling the person who has a right to receive support. The latter alternative cannot be availed of in case there is a moral or legal obstacle thereto.281 G. 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.282 X. Parental Authority A. General Provisions Pursuant to the natural right and duty of parents over the person and property of their unemancipated children, parental authority and responsibility shall include the caring for and rearing them for civic consciousness and efficiency and the development of their moral, mental and physical character and well-being.283 Parental authority and responsibility may not be renounced or transferred except in the cases authorized by law.284 The father and the mother shall jointly exercise parental authority over the persons of their common children. In case of disagreement, the father's decision shall prevail, unless there is a judicial order to the contrary. Children shall always observe respect and reverence towards their parents and are obliged to obey them as long as the children are under parental authority.285 In case of absence or death of either parent, the parent present shall continue exercising parental authority. The remarriage of the surviving parent shall not affect the

280

Art. 203 Art. 204 282 Art. 205 283 Art. 209 284 Art. 210 285 Art. 211 281

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parental authority over the children, unless the court appoints another person to be the guardian of the person or property of the children.286 In case of separation of the parents, parental authority shall be exercised by the parent designated by the Court. 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.287 In case of death, absence or unsuitability of the parents, substitute parental authority shall be exercised by the surviving grandparent. In case several survive, the one designated by the court, taking into account the same consideration mentioned in the preceding article, shall exercise the authority.288 No descendant shall be compelled, in a criminal case, to testify against his parents and grandparents, except when such testimony is indispensable in a crime against the descendant or by one parent against the other.289 B. Substitute and Special Parental Authority The following persons shall exercise substitute parental authority over the child in the order indicated: (1) The surviving grandparent, as provided in Art. 214;290 (2) The oldest brother or sister, over twenty-one years of age, unless unfit or disqualified; and (3) The child's actual custodian, over twenty-one years of age, unless unfit or disqualified. Whenever the appointment or a judicial guardian over the property of the child becomes necessary, the same order of preference shall be observed.291 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.292 286

Art. 212 Art. 213. 288 Art. 214 289 Art. 215 290 supra 291 Art. 216 292 Art. 217 287

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The school, its administrators and teachers, or the individual, entity or institution engaged in child are shall have special parental authority and responsibility over the minor child while under their supervision, instruction or custody. Authority and responsibility shall apply to all authorized activities whether inside or outside the premises of the school, entity or institution.293 Those given the authority and responsibility under the preceding Article shall be principally and solidarily liable for damages caused by the acts or omissions of the unemancipated minor. The parents, judicial guardians or the persons exercising substitute parental authority over said minor shall be subsidiarily liable. The respective liabilities of those referred to in the preceding paragraph shall not apply if it is proved that they exercised the proper diligence required under the particular circumstances. All other cases not covered by this and the preceding articles shall be governed by the provisions of the Civil Code on quasi-delicts.294 C. Effect of Parental Authority upon the Persons of the Children The parents and those exercising parental authority shall have with the respect to their unemancipated children on wards the following rights and duties: (1) To keep them in their company, to support, educate and instruct them by right precept and good example, and to provide for their upbringing in keeping with their means; (2) To give them love and affection, advice and counsel, companionship and understanding; (3) To provide them with moral and spiritual guidance, inculcate in them honesty, integrity, self-discipline, self-reliance, industry and thrift, stimulate their interest in civic affairs, and inspire in them compliance with the duties of citizenship; (4) To furnish them with good and wholesome educational materials, supervise their activities, recreation and association with others, protect them from bad company, and prevent them from acquiring habits detrimental to their health, studies and morals; (5) To represent them in all matters affecting their interests;

293 294

Art. 218 Art. 219

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(6) To demand from them respect and obedience; (7) To impose discipline on them as may be required under the circumstances; and (8) To perform such other duties as are imposed by law upon parents and guardians.295 Parents and other persons exercising parental authority shall be civilly liable for the injuries and damages caused by the acts or omissions of their unemancipated children living in their company and under their parental authority subject to the appropriate defenses provided by law.296 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.297 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. 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. However, if in the same proceeding 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.298 The measures referred to in the preceding article may include the commitment of the child for not more than thirty days in entities or institutions engaged in child care or in children's homes duly accredited by the proper government agency. The parent exercising parental authority shall not interfere with the care of the child whenever committed but shall provide for his support. Upon proper petition or at its own instance, the court may terminate the commitment of the child whenever just and proper.299

295

Art. 220 Art. 221 297 Art. 222 298 Art. 223 299 Art. 224 296

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D. Effects of Parental Authority upon the Property of the Children The father and the mother shall jointly exercise legal guardianship over the property of the unemancipated common child without the necessity of a court appointment. In case of disagreement, the father's decision shall prevail, unless there is a judicial order to the contrary. Where the market value of the property or the annual income of the child exceeds P50,000, the parent concerned shall be required to furnish a bond in such amount as the court may determine, but not less than ten per centum (10%) of the value of the property or annual income, to guarantee the performance of the obligations prescribed for general guardians. A verified petition for approval of the bond shall be filed in the proper court of the place where the child resides, or, if the child resides in a foreign country, in the proper court of the place where the property or any part thereof is situated. The petition shall be docketed as a summary special proceeding in which all incidents and issues regarding the performance of the obligations referred to in the second paragraph of this Article shall be heard and resolved. The ordinary rules on guardianship shall be merely suppletory except when the child is under substitute parental authority, or the guardian is a stranger, or a parent has remarried, in which case the ordinary rules on guardianship shall apply.300 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. The right of the parents over the fruits and income of the child's property shall be limited primarily to the child's support and secondarily to the collective daily needs of the family.301 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. 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. In any case, the proceeds thus give in whole or in part shall not be charged to the child's legitime.302 300

Art. 225 Art. 226 302 Art. 227 301

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E. Suspension or Termination of Parental Authority Parental authority terminates permanently: (1) Upon the death of the parents; (2) Upon the death of the child; or (3) Upon emancipation of the child.303 Parental authority also terminates:304 (1) Upon adoption of the child; (2) Upon appointment of a general guardian; (3) Upon judicial declaration of abandonment of the child in a case filed for the purpose; (4) Upon final judgment of a competent court divesting the party concerned of parental authority; or (5) Upon judicial declaration of absence or incapacity of the person exercising parental authority.305 Parental authority is suspended upon conviction of the parent or the person exercising the same of a crime which carries with it the penalty of civil interdiction. The authority is automatically reinstated upon service of the penalty or upon pardon or amnesty of the offender.306 The court in an action filed for the purpose in a related case may also suspend parental authority if the parent or the person exercising the same: (1) Treats the child with excessive harshness or cruelty; (2) Gives the child corrupting orders, counsel or example; (3) Compels the child to beg; or (4) Subjects the child or allows him to be subjected to acts of lasciviousness. The grounds enumerated above are deemed to include cases which have resulted from culpable negligence of the parent or the person exercising parental authority. 303

Art. 228 unless subsequently revived by a final judgment 305 Art. 229 306 Art. 230 304

70

If the degree of seriousness so warrants, or the welfare of the child so demands, the court shall deprive the guilty party of parental authority or adopt such other measures as may be proper under the circumstances. The suspension or deprivation may be revoked and the parental authority revived in a case filed for the purpose or in the same proceeding if the court finds that the cause therefor has ceased and will not be repeated.307 If the person exercising parental authority has subjected the child or allowed him to be subjected to sexual abuse, such person shall be permanently deprived by the court of such authority.308 The person exercising substitute parental authority shall have the same authority over the person of the child as the parents. In no case shall the school administrator, teacher of individual engaged in child care exercising special parental authority inflict corporal punishment upon the child.309 XI. Emancipation Emancipation takes place by the attainment of majority.310 Emancipation also takes place: (1) By the marriage of the minor; or (2) By the recording in the Civil Register of an agreement in a public instrument executed by the parent exercising parental authority and the minor at least eighteen years of age. Such emancipation shall be irrevocable.311 Emancipation for any cause shall terminate parental authority over the person and property of the child who shall then be qualified and responsible for all acts of civil life.312

307

Art. 231 Art. 232 309 Art. 233 310 Unless otherwise provided, majority commences at the age of twenty-one years. 311 Art. 234, as amended by R.A. 6809 312 Art. 236 308

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XII. Summary Judicial Proceedings in Family Law Cases The procedural rules provided for shall apply as regards separation in fact between husband and wife, abandonment by one of the other, and incidents involving parental authority.313 When a husband and wife are separated in fact, or one has abandoned the other and 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, a verified petition may be filed in court alleging the foregoing facts. The petition shall attach the proposed deed, if any, embodying the transaction, and, if none, shall describe in detail the said transaction and state the reason why the required consent thereto cannot be secured. In any case, the final deed duly executed by the parties shall be submitted to and approved by the court.314 Claims for damages by either spouse, except costs of the proceedings, may be litigated only in a separate action.315 Jurisdiction over the petition shall, upon proof of notice to the other spouse, be 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.316 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. The notice shall be accompanied by a copy of the petition and shall be served at the last known address of the spouse concerned.317 A preliminary conference shall be conducted by the judge personally without the parties being assisted by counsel. After the initial conference, if the court deems it useful, the parties may be assisted by counsel at the succeeding conferences and hearings.318 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.319 313

Art. 238 Art. 239 315 Art. 240 316 Art. 241 317 Art. 242 318 Art. 243. 319 Art. 244 314

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If, despite all efforts, the attendance of the non-consenting 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.320 If the petition is not resolved at the initial conference, said petition shall be decided in a summary hearing on the basis of affidavits, documentary evidence or oral testimonies at the sound discretion of the court. 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.321 The judgment of the court shall be immediately final and executor.322 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 the family shall also be governed by these rules.323 Petitions filed under Articles 223, 225 and 235324 of this Code involving parental authority shall be verified.325 Such petitions shall be verified and filed in the proper court of the place where the child resides.326 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.327 The rules in Chapter 2328 hereof shall also govern summary proceedings under this Chapter insofar as they are applicable.329

320

Art. 245 Art. 246 322 Art. 247 323 Art. 248 324 supra 325 Art. 249 326 Art. 250 327 Art. 251 328 Separation in Fact 329 Art. 252 321

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XIII. Retroactivity of the Family Code Insofar as it does not prejudice or impair vested or acquired rights in accordance with the Civil Code or other laws.330 XIV. Funerals 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 294.331 In case of descendants of the same degree, or of brothers and sisters, the oldest shall be preferred. In case of ascendants, the paternal shall have a better right.332 Every funeral shall be in keeping with the social position of the deceased.333 The funeral shall be in accordance with the expressed wishes of the deceased. In the absence of such expression, his religious beliefs or affiliation shall determine the funeral rites. In case of doubt, the form of the funeral shall be decided upon by the person obliged to make arrangements for the same, after consulting the other members of the family.334 No human remains shall be retained, interred, disposed of or exhumed without the consent of the persons mentioned in articles 294 and 305.335 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.336 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.337

330

Art. 256 See Reference 332 Art. 305 333 Art. 306 334 Art. 307 335 Art. 308; Art. 305, supra 336 Art. 309 337 Art. 310 331

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XV. Use of surnames338 Legitimate and legitimated children shall principally use the surname of the

339

father.

An adopted child shall bear the surname of the adopter.340 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.341 Natural children by legal fiction shall principally employ the surname of the father.342 Illegitimate children referred to in article 287 shall bear the surname of the mother.343 Children conceived before the decree annulling a voidable marriage shall principally use the surname of the father.344 A married woman may use: (1) Her maiden first name and surname and add her husband's surname, or (2) Her maiden first name and her husband's surname or (3) Her husband's full name, but prefixing a word indicating that she is his wife, such as "Mrs."345 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: (1) The court decrees otherwise, or (2) She or the former husband is married again to another person.346 338

other articles repealed by Family Code Art. 364 340 Art. 365 341 Art. 366 342 Art. 367 343 Art. 368 344 Art. 369 345 Art. 370 339

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When legal separation has been granted, the wife shall continue using her name and surname employed before the legal separation.347 A widow may use the deceased husband's surname as though he were still living, in accordance with article 370.348 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.349 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: (1) Add a middle name or the mother's surname, or (2) Add the Roman numerals II, III, and so on.350 No person can change his name or surname without judicial authority.351 Usurpation of a name and surname may be the subject of an action for damages and other relief.352 The unauthorized or unlawful use of another person's surname gives a right of action to the latter.353 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.354 Except as provided in the preceding article, no person shall use different names and surnames.355

346

Art. 371 Art. 372 348 Art. 373 349 Art. 374 350 Art. 375 351 Art. 376, amended by R.A. 9048, infra 352 Art. 377 353 Art. 378 354 Art. 379 355 Art. 380 347

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XVI. Absence 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.356 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. For the purpose of contracting the subsequent marriage, the spouse present must institute a summary proceeding as provided in this Code for the declaration of presumptive death of the absentee, without prejudice to the effect of reappearance of the absent spouse.357 A. Provisional measures in case of absence 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. This same rule shall be observed when under similar circumstances the power conferred by the absentee has expired.358 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.359 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.360 356

Art. 43, CC Art. 41, FC 358 Art. 381 359 Art. 382 360 Art. 383 357

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B. Declaration of Absence Two (2) years having elapsed without any news about the absentee or since the receipt of the last news, and five (5) years in case the absentee has left a person in charge of the administration of his property, his absence may be declared.361 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; (4) Those who may have over the property of the absentee some right subordinated to the condition of his death.362 The judicial declaration of absence shall not take effect until six (6) months after its publication in a newspaper of general circulation.363 C. Administration of the Property of the Absentee An administrator of the absentee's property shall be appointed in accordance with Article 383.364 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.365 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. 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.366 361

Art. 384 Art. 385 363 Art. 386 364 Art. 387 365 Art. 388 366 Art. 389 362

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D. Presumption of Death After an absence of seven (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 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.367 The following shall be presumed dead for all purposes, including the division of the estate among the heirs: (1) A person on board a vessel lost during a sea 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.368 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.369

367

Art. 390 Art. 391 369 Art. 392 368

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XVII. Civil Registrar A. Arts. 407-413 Acts, events and judicial decrees concerning the civil status of persons shall be recorded in the civil register.370 The following shall be entered in the civil register: (1) Births; (2) marriages; (3) deaths; (4) legal separations; (5) annulments of marriage; (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.371 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.372

370

Art. 407 Art. 408 372 Art. 409 371

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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.373 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.374 No entry in a civil register shall be changed or corrected, without a judicial order.375 All other matters pertaining to the registration of civil status shall be governed by special laws.376 B. Correction of Clerical Errors377 C. Rule 108, Rules of Court378

373

Art. 410 Art. 411 375 Art. 412 376 Art. 413 377 R.A. 9048, entitled “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….”, See Reference 378 ibid 374

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PROPERTY379 I. Characteristics 1. Utility for the satisfaction of moral and economic wants 2. Susceptibility of appropriation 3. Individuality or substantivity380 II. Classification381 Immovables or real382

Movables383

a) By nature – those which cannot be General Rule: All things which can be carried from place to place.384 transported from place to place without impairment of the real property to which 1. Lands, buildings, roads and they are fixed. constructions (adhered to the soil).385 Exclusions: those movables susceptible of 2. Mines, quarries and slag dumps, appropriation which are not included in the while the matter thereof forms part of the enumeration of immovables. bed, and waters either running or stagnant. a. Special: real property which by any b) By incorporation – essentially movables special provisions of law is considered as but are attached to an immovable in a fixed personalty. manner to be an integral part thereof.386 b. In parts: forces of nature which are 1. Trees, plants and growing fruits brought under control by science. while they are attached to the land or form 379

All things which are, or may be the object of appropriation that is, it can exist by itself, and not merely as a part of the whole; hence, the human hair becomes property only when it is detached from the hair 381 Tests: a. Immovable - cannot be transferred from place to place. b. Movable – excluded from the enumeration of immovable and can be moved from place to place without damage thereto. c. Mixed/semi-movable - those which move by themselves (both immovable and movable in nature). 382 Art. 415 383 Art. 416 to 417 384 Pars. 1 & 8 385 The materials constituting a building which is the subject of demolition are movable. A structure which is merely superimposed, not adhered, to the soil may be considered movable. 386 Pars. 2, 3 & 7 380

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an integral part of an immovable.

c. Obligations and actions which have for their object movables391 or demandable 2. Everything attached to an immovable sums.392 in a fixed manner in such a way that it cannot be separated therefrom without d. Shares of stocks or interests in breaking the material or deterioration of the juridical entities. object.387 3. Fertilizers actually used on a piece of land. c) By destination – essentially movables but are placed in an immovable as an added utility. 1. Statutes, reliefs painting or other objects for use or ornamentation, placed in a building 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.388 2. Machinery, instruments or implements intended by the owner of the tenement for an industry or works which may be carried on in a building or land, and which tend directly to meet the needs of such industry or works.389 3. Animal houses or breeding places, in case the owner has placed or preserved them with the intention to attach them permanently to the land, and the animals in these places. 4. 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.

387

Rex vinta Indirect utility 389 Direct utility 388

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d) By analogy - classified by express provision of law because it is regarded as united to the immovable property.390 1. Contracts for public works. 2. Servitudes. 3. Real

rights

over

immovable

property. A. Hidden Treasure393

Belongs to the owner of the land, building, or other property on which it is found. When the discovery is made on the property of another, or of the State or any of its subdivisions, and by chance, one-half (1/2) thereof shall be allowed to the finder. If the finder is a trespasser, he shall not be entitled to any share of the treasure. If the 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.394 By treasure is understood, for legal purposes, any hidden and unknown deposit of money, jewelry, or other precious objects, the lawful ownership of which does not appear.395

391

corporeal or intangible These are really personal rights because they have a definite passive subject (e.g. intellectual property). 390 Par. 10 393 Treasure consists of money, jewels, or other precious objects which are hidden and unknown, such that their finding is a real discovery. 394 Art. 438 395 Art. 439 392

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B. Right of Accession

The ownership of property gives the right by accession to everything which is produced thereby, or which is incorporated or attached thereto, either naturally or artificially.396 1. Fruits To the owner belongs: (1) The natural fruits; (2) The industrial fruits; (3) The civil fruits.397 Natural fruits are the spontaneous products of the soil, and the young and other products of animals. labor.

Industrial fruits are those produced by lands of any kind through cultivation or

Civil fruits are the rents of buildings, the price of leases of lands and other property and the amount of perpetual or life annuities or other similar income.398 He who receives the fruits has the obligation to pay the expenses made by a third person in their production, gathering, and preservation.399 Only such as are manifest or born are considered as natural or industrial fruits. With respect to animals, it is sufficient that they are in the womb of the mother, although unborn.400

396

Art. 440 Art. 441 398 Art. 442 399 Art. 443 400 Art. 444 397

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2. With respect to Immovable Property a. Builder, planter, sower on land of another in concept of owner (1) Builder, planter, sower in good faith The owner of the land on which anything has been built, sown or planted in good faith, shall have the right to appropriate as his own the works, sowing or planting, after payment of the indemnity provided for in articles 546 and 548401, or to oblige the one who built or planted to pay the price of the land, and the one who sowed, the proper rent. However, the builder or planter cannot be obliged to buy the land if its value is considerably more than that of the building or trees. In such case, he shall pay reasonable rent, if the owner of the land does not choose to appropriate the building or trees after proper indemnity. The parties shall agree upon the terms of the lease and in case of disagreement, the court shall fix the terms thereof.402 In the cases of the two preceding articles,403 the landowner is entitled to damages from the builder, planter or sower.404 The builder, planter or sower in bad faith is entitled to reimbursement for the necessary expenses of preservation of the land.405 If there was bad faith, not only on the part of the person who built, planted or sowed on the land of another, but also on the part of the owner of such land, the rights of one and the other shall be the same as though both had acted in good faith. It is understood that there is bad faith on the part of the landowner whenever the act was done with his knowledge and without opposition on his part.406 When the landowner acted in bad faith and the builder, planter or sower proceeded in good faith, the provisions of Article 447407 shall apply.408

401

See reference Art. 448 403 Refers to Arts. 449 and 450, infra 404 Art. 451 405 Art. 452 406 Art. 453 407 supra 408 Art. 454 402

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If the materials, plants or seeds belong to a third person who has not acted in bad faith, the owner of the land shall answer subsidiarily for their value and only in the event that the one who made use of them has no property with which to pay. This provision shall not apply if the owner makes use of the right granted by article 450. If the owner of the materials, plants or seeds has been paid by the builder, planter or sower, the latter may demand from the landowner the value of the materials and labor.409 Good faith does not necessarily exclude negligence, which gives right to damages under Article 2176.410 (2) Builder, planter, sower in bad faith He who builds, plants or sows in bad faith on the land of another, loses what is built, planted or sown without right to indemnity.411 The owner of the land on which anything has been built, planted or sown in bad faith may demand the demolition of the work, or that the planting or sowing be removed, in order to replace things in their former condition at the expense of the person who built, planted or sowed; or he may compel the builder or planter to pay the price of the land, and the sower the proper rent.412 b. Usufructuary The usufructuary may make on the property held in usufruct such useful improvements or expenses for mere pleasure as he may deem proper, provided he does not alter its form or substance; but he shall have no right to be indemnified therefor. He may, however, remove such improvements, should it be possible to do so without damage to the property.413 3. Lands adjoining river banks a. Alluvion To the owners of lands adjoining the banks of rivers belong the accretion which they gradually receive from the effects of the current of the waters.414

409

Art. 455 Art. 456; see Reference for Art. 2176 411 Art. 449 412 Art. 450 413 Art. 579 414 Art. 457 410

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b. Change of course of river River beds which are abandoned through the natural change in the course of the waters ipso facto belong to the owners whose lands are occupied by the new course in proportion to the area lost. However, the owners of the lands adjoining the old bed shall have the right to acquire the same by paying the value thereof, which value shall not exceed the value of the area occupied by the new bed.415 Whenever a river, changing its course by natural causes, opens a new bed through a private estate, this bed shall become of public dominion.416 When a river or stream suddenly changes its course to traverse private lands, the owners of the affected lands may not compel the government to restore the river to its former bed; nor can they restrain the government from taking steps to revert the river or stream to its former course. The owners of the land thus affected are not entitled to compensation for any damage sustained thereby. However, the former owners of the new bed shall be the owners of the abandoned bed in proportion to the area lost by each. The owners of the affected lands may undertake to return the river or stream to its old bed at their own expense; Provided, a permit therefor is secured from the Secretary of Public Works, Transportation and Communication and work pertaining thereto are commenced within two (2) years from the change in the course of the river or stream.417 c. Avulsion Whenever the current of a river, creek or torrent segregates from an estate on its bank a known portion of land and transfers it to another estate, the owner of the land to which the segregated portion belonged retains the ownership of it, provided that he removes the same within two years418 Trees uprooted and carried away by the current of the waters belong to the owner of the land upon which they may be cast, if the owners do not claim them within six months. If such owners claim them, they shall pay the expenses incurred in gathering them or putting them in a safe place.419 River beds which are abandoned through the natural change in the course of the waters ipso facto belong to the owners whose lands are occupied by the new course in proportion to the area lost. However, the owners of the lands adjoining the old bed shall

415

Art. 461 Art. 462 417 Art. 58, P.D. 1067 or the Water Code 418 Art. 459 419 Art. 460 416

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have the right to acquire the same by paying the value thereof, which value shall not exceed the value of the area occupied by the new bed.420 Whenever a river, changing its course by natural causes, opens a new bed through a private estate, this bed shall become of public dominion.421 Whenever the current of a river divides itself into branches, leaving a piece of land or part thereof isolated, the owner of the land retains his ownership. He also retains it if a portion of land is separated from the estate by the current.422 4. Islands Islands which may be formed on the seas within the jurisdiction of the Philippines, on lakes, and on navigable or floatable rivers belong to the State.423 Islands which through successive accumulation of alluvial deposits are formed in non-navigable and non-floatable rivers, belong to the owners of the margins or banks nearest to each of them, or to the owners of both margins if the island is in the middle of the river, in which case it shall be divided longitudinally in halves. If a single island thus formed be more distant from one margin than from the other, the owner of the nearer margin shall be the sole owner thereof.424 C. By Object

1. Real or immovable425 (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;

420

Art. 461 Art. 462 422 Art. 463 423 Art. 464 424 Art. 465 425 See also Classification, supra 421

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(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 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. 2. Personal or Movable426 (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. Also considered as personal property: (1) Obligations and actions which have for their object movables or demandable sums; and (2) Shares of stock of agricultural, commercial and industrial entities, although they may have real estate. Movable property is either consumable or nonconsumable. To the first class belong those movables which cannot be used in a manner appropriate to their nature without their being consumed; to the second class belong all the others. 426

ibid

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D. By Owner

1. Of public dominion It is not owned by the state but pertains to the state, which, as territorial sovereign exercises certain juridical prerogatives over such property.427 The ownership of such properties is in the social group, whether national, provincial or municipal. 2. Of private ownership a. Patrimonial property (i)

Distinction between private property individual persons, and of State entities

Patrimonial property428

of

Property of private ownership

Property of the State owned by it in its This refers to all property belonging to private or proprietary capacity. private persons either individually or collectively and those belonging to the State The state has the same rights over this kind and any of its political subdivisions which of property as a private individual in are patrimonial in nature. relation to his own private property E. By Nature

1. Consumable/non-consumable vs. Fungible/non-fungible Consumable429

– cannot be used in a manner appropriate to their nature without being consumed

427

a. For public use (e.g. roads, canals, rivers) b. For public service (e.g. public buildings) c. For the development of the national wealth. 428 Used by the political subdivision as a juridical person in its private capacity (e.g. property acquired through escheat proceedings, tax sales). It is the property which the unit has the same rights, and of which it may dispose, to the same extent as private individuals according to laws and regulations on the procedure of exercising such rights. Hence, it is subject to the principles on private properties (e.g. subject to prescription 429 Consumable goods cannot be the subject matter of a contract of commodatum unless the purpose of the contract is not the consumption of the object as when it is merely for exhibition.

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Non-consumable

- not consumed by use.

Fungibles

- belong to a common genus permitting substitution of the same kind, quantity and quality;430

Non-fungibles

– specifically determined and cannot be substituted431

III. Ownership A. Rights in general432 1. Bundle of rights a. Jus utendi,433 fruendi,434 abutendi,435 vindicandi,436 disponendi437 (possidendi) (1) Actions to recover ownership and possession of real property

430

e.g. 10 bottles of wine e.g. 10 bottles of wine which I have in my room 432 The right to enjoy, dispose, and recover a thing without further limitations than those established by law or the will of the owner. 433 the right to use 434 the right to enjoy the fruits 435 the right to destroy (but cannot harm others) 436 The right of action available to the owner to recover the property against the holder or possessor 437 The right to dispose, or the right to alienate, encumber, transform 431

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(a)

Accion reinvindicatoria438 An action to recover real property based on ownership. Here, the object is the recovery of the dominion over the property as owner.

Distinctions between accion reivindicatoria, accion publiciana, accion interdictal

Accion publiciana439 Ordinary civil proceeding to recover the better right of possession, except in cases of forcible entry and unlawful detainer. The involved is not possession de facto but possession de jure.

Accion interdictal440 Summary action to recover physical or material possession only. It consists of the summary actions of: 1. Forcible entry - Action for recovery of material possession of real property when a person originally in possession was deprived thereof by force, intimidation, strategy, threat or stealth 2. Unlawful Detainer Action for recovery of

438

This action should be filed in case of refusal of a party to deliver possession of property due to an adverse claim of ownership. Requisites: 1. Identity of the Property 2. Plaintiff’s title to the property 439 plenary action Whenever the owner is dispossessed by any other means (e.g. possession is due to tolerance of the owner) other than FISTS, he may maintain this action to recover possession without waiting for the expiration of 1 year before commencing this suit. It may also be brought after the expiration of 1 year if no action had been instituted for forcible entry or unlawful detainer 440 Period to file action: Within 1 year after such unlawful deprivation or withholding of possession, commencing from the time of last demand (oral or written; direct or indirect) to vacate. No demand is necessary for a lessee to vacate when it is specifically provided for in the agreement. Prayer: for the restitution of possession, with damages and costs. However, the only damages that can be recovered in an Ejectment suit are the fair rental value or the reasonable compensation for the use and occupation of the real property. Other damages must be claimed in an ordinary action. The defendant, however, may set up a counterclaim for moral damages and recover it if it is within the jurisdiction of the court. Jurisdiction: MTC (summary proceedings). Whatever the amount of plaintiff’s damages will not affect the court’s jurisdiction. Issue: Physical possession. The decision in such action is res judicata in the question of possession. Sublessees are bound by the judgment rendered against the lessee in an ejectment case even if they were not made parties thereto.

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possession of any land or building by landlord, vendor, vendee, or other person against whom the possession of the same was unlawfully withheld after the expiration or termination of the right to hold possession, by virtue of any contract. (b) Distinction between forcible entry and unlawful detainer441 Forcible entry Unlawful detainer As to when possession became unlawful Possession of the defendant is unlawful from the beginning as he acquires possession by Force, intimidation, strategy, threat or stealth

Possession is inceptively lawful but becomes illegal from the time defendant unlawfully withholds possession after the expiration or termination of his right thereto.

As to the necessity of demand No previous demand for the defendant to Demand is jurisdictional if the ground is vacate is necessary non-payment of rentals or failure to comply with the lease contract As to necessity of proof of prior physical possession

441

See Accion Interdictal, supra Ejectment suit: a. Can be brought by anyone of the co–owners. A co-owner may bring such an action without the necessity of joining all the other co-owners as coplaintiffs because the suit is deemed to be instituted for the benefit of all. However, if the action is for the benefit of the plaintiff alone, such that he claims the possession for himself and not for the co-ownership, the action will NOT prosper. b. Action may be brought not only against strangers but even against a co–owner. The effect of the action will be to obtain recognition of the co-ownership. The defendant cannot be excluded because he has a right to possess as a co-owner, and the plaintiff cannot recover any material or determinate part of the property. c. An adverse decision in the action is not necessarily res judicata with respect to the other co– owners not being parties to the action, but they are bound where it appears that the action was instituted in their behalf with their express or implied consent.

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Plaintiff must prove that he was in prior Plaintiff need not have been in prior physical possession of the premises until physical possession he was deprived thereof by the defendant As to when the 1 year period is counted from From the date of actual entry on the land

From the date of last demand or last letter of demand

(2) Actions for recovery of possession of movable Property Replevin - remedy when the complaint prays for the recovery of the possession of personal property. (3) Requisites for recovery of property (a) Proof of right Evidence to prove ownership: a. Torrens title. b. Title from the Spanish Government. c. Patent duly registered in the Registry of Property by the grantee. d. Deed of sale. e. Long possession. (b) Identity Identity of the property. (c) Reliance on strength of own evidence not weakness of defendant’s claim Strength of plaintiff’s title.442 442

proof of ownership Tax declarations are not conclusive proof of ownership. However, when coupled with possession for a period sufficient for prescription, they become strong evidence of ownership. Also, the failure of a person to declare land for taxation may be admitted to show that he is not the owner thereof.

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2. Distinction between real and personal rights Real Rights

Personal Rights

Jus in re, a right enforceable against the Jus ad rem, a right enforceable only against a whole world definite person or group of persons Right pertaining to a person over a specific thing, without a passive subject individually determined against whom such right may be personally enforced

Right pertaining to the person to demand from another, as a definite passive subject, the fulfillment of a prestation to give, to do or not to do.

Object is corporeal thing443

Object is an intangible thing444

Creates juridical relations through mode & Creates juridical relations through title title Extinguished through loss or destruction of Not extinguished thing destruction of thing

B. Modes of acquiring ownership 1. Original 2. Derivative Original 1. Occupation 2. Work which includes Intellectual creation

Derivative 1. Law 2. Tradition 3. Donation 4. Prescription 5. Succession

443 444

obligation specific thing

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through

loss

or

C. Limitations 1. General limitations445 Taxation

Eminent domain

The inherent power of the sovereign, exercised through the legislature, to impose burdens upon the subjects and objects within its jurisdiction, for the purpose of raising revenues to carry out the legitimate objects of the government.

Police power

No person shall be deprived of his property except by competent authority and from public use and always upon payment of just compensation.

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 Should this requirement be show that such not complied with, the condemnation or seizure is courts shall protect and, in unjustified.446 proper cases, restore the owner in his possession.

2. Specific Limitations a. Those imposed by law 1. sic utere tuo ut non laedas - the owner of a thing cannot make use thereof in such a manner as to injure the rights of a 3rd person.447 2. Nuisance448 3. State of necessity – law permits injury or destruction of things owned by another provided this is necessary to avert a greater danger449 445

For the benefit of the state Requisites: 1 .The interest of the public in general, as distinguished from those of a particular class, requires such interference. 2. The means employed are reasonably necessary for the accomplishment of a purpose, and not unduly oppressive upon individuals. 447 sic utere tuo This is based on the police power of the State. It does not apply where the owner of a thing makes use of it in a lawful manner for then it cannot be said that the manner of the use is such “as to injure the rights of a third person”. 448 infra 449 with right to indemnity – vs. principle of unjust enrichment Requisites: 446

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b. Easements voluntarily imposed by owner 1. Servitudes 2. mortgages imposed by contract IV. Accession450 A. Right to hidden treasure451 General rule: It belongs to the owner of the land, building or other property on which it is found. Exceptions: The finder is entitled to ½ provided: 1. Discovery was made on the property of another, or of the state or any of its political subdivisions; 2. The finding was made by chance; 3. The finder is not a co-owner of the property where it is found; 4. The finder is not a trespasser; 5. The finder is not an agent of the landowner; 6. The finder is not married under the absolute community or the conjugal partnership system.452

1. The interference is necessary. 2. The damage to another is much greater than the damage to the property. The seriousness or gravity of the danger must be much greater than the damage to the property affected or destroyed by the protective act. Danger to life is always greater than damage to property. If through an error, one believed himself to be in a state of necessity, or used excessive means, his act would be illicit, and the owner of the property can use the principle of self-help. The law does not require that the person acting in a state of necessity be free from negligence in the creation of the threatened danger 450 The right by virtue of which the owner of a thing becomes the owner of everything that it may produce or which may be inseparably united or incorporated thereto, either naturally or artificially. 451 Hidden treasure - any hidden or unknown deposit of money, jewelry or other precious objects, the lawful ownership of which does not appear. 452 Otherwise, his share belongs to the community

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B. General Rules: 1. For immovables: a. Accession discreta453 and continua454 Accession discreta

Accession continua

The right pertaining to the owner of a thing The right pertaining to the owner of a thing over everything produced thereby over everything that is incorporated or attached thereto either naturally or artificially; by external forces. General rule:

Artificial/industrial

To the owner belongs the natural,455 industrial,456 and civil fruits.457 Exceptions:

Building, planting or sowing General rule – Whatever is built, planted or sown on the land of another and the improvements or repairs made thereon belong to the owner of the land.458

If the thing is: a) in possession of a possessor in good faith;

Exception: contrary is proven

b) subject to a usufruct;

Natural

c) leased or pledged; or

d) in possession of an antichretic Alluvion or alluvium– increment which lands creditor abutting rivers gradually receive as a result of the current of the waters. It is the gradual deposit of sediment by the natural action of

453

Natural, industrial and civil fruits artificial/industrial and natural 455 spontaneous products of the soil and the young and other products of animals 456 those produced by lands of any kind through cultivation or labor 457 rents of buildings, price of leases or lands and the amount of perpetual or life annuities or other similar income 458 The owner of the land must be known, otherwise no decision can be rendered on the ownership of the thing planted, built or sown until a hearing shall have been accorded to whosoever is entitled thereto. 454

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a current of fresh water (not sea water, the original identity of the deposit being lost.459 Avulsion - the accretion which takes place when the current of the river, creek or torrent segregates from an estate on its bank a known portion and transfers it to another estate, in which case, the owner of the estate to which the segregated portion belonged, retains the ownership thereof.460 Rule Estates adjoining ponds or lagoons

The owners of estates adjoining ponds or lagoons do not acquire the land left dry by the natural decrease of the waters, or loss that inundated by them in extraordinary floods

Trees uprooted/by force of river

Trees uprooted and carried away by the current of the waters belong to the owner of the land upon which they may be case, if the owners do not claim them within 6 months. If such owners claim them, they shall pay the expenses incurred in gathering or putting them in a safe place.461

Abandoned river bed/change in the course River beds which are abandoned through of river the natural change in the course of waters ipso facto belong to the owners whose lands

459

To the owners of the lands adjoining the banks of rivers belong the accretions which they gradually receive from the effects of the current of the waters. 460 The owner of the estate to which the segregated portion belongs preserves his ownership of the segregated portion provided he removes (not merely claims) the same within the period of 2 years. Failure to do so would have the effect of automatically transferring ownership over it to the owner of the other estate. 461 This rule refers to uprooted trees only. If a known portion of land with trees standing thereon is carried away by the current to another land, the rule on avulsion governs.

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are occupied by the new course in proportion to the area lost.462 New river bed without abandonment

Whenever a river, changing its course by natural causes, opens a new bed through a private estate, this bed shall become of public dominion.463

Branching of course of river

Whenever the current of a river divides itself into branches, leaving a piece of land or part thereof isolated, the owner of the land retains his ownership thereto. He also retains ownership to a portion of his land separated from the estate by the current.

Formation of Islands

1. If formed on the seas within the jurisdiction of the Philippines, on lakes, or on navigable or floatable rivers:464 the island belongs to the State as part of its patrimonial property. 2. If formed in non – navigable and non – floatable rivers: a. It belongs to the nearest riparian owner, or owner of the margin or bank nearest to it as he is considered on the best position to

462

However, the owners of land adjoining the old bed are given preferential right to acquire the same by paying the value thereof to promote the interest of agriculture because the riparian owners of the old course/bed can better cultivate the same. The indemnification to be paid shall not exceed the value of the area occupied by the new bed. River beds are part of public domain. In this case, there is abandonment by the government of its right over the old bed. The owner of the invaded land automatically acquires ownership of the same without the necessity of any formal act on his part. “In proportion to the area lost” implies that there are two or more owners whose lands are occupied by the new bed. Therefore, if only one owner lost a portion of his land, the entire old bed should belong to him. 463 The bed of a public river or stream is of public ownership. If the river changes its course and opens a new bed, this bed becomes of public dominion even if it is on private property. The law does not make any distinction whether the river is navigable or not. 464 One which in its natural state affords a channel for useful commerce and not such as is only sufficient to float a banca or a canoe.

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cultivate and develop the island. b. If the island is in the middle of the river, the island is divided longitudinally in halves. If the island formed is longer than the property of the riparian owner, the latter is deemed ipso jure to be the owner of that portion which corresponds to the length of that portion of his property along the margin of the river.

c. If a single island be more distant from one margin than from the other, the owner of the nearer margin shall be the sole owner thereof.

b. Accession industrial465 c. Accession natural466 2. For movables: a. Accession continua467 Adjunction or conjunction

Commixtion or confusion

It is the union of 2 movable things belonging to different owners in such a way that they form a single object, but each one of the component things preserves its value.

When two or more things belonging to different owners are mixed or combined with the respective identities of the component parts destroyed or lost.

465

building, planting, sowing in good faith or bad faith, supra accretion, avulsion, rivers, islands, ibid. 467 conjunction, adjunction, commixtion/confusion, specification 466

102

Specification Whenever the work of a person is done on the material of another, and such material, as a consequence of the work itself, undergoes a transformation

Rules:

Rules:

Rules:

1. Adjunction in good faith:

1. Mixture by will of both 1. Worker and owner of the the owners or by chance: materials in good faith:

If the union took place without bad faith, the owner a. Their rights shall first of the principal thing be governed by their acquires the accessory, with stipulations. the obligation to indemnify the owner of the accessory b. If the things mixed are for its value. of the same kind and quality, there is no conflict of rights, 2. Adjunction in bad faith: and the mixture can easily be divided between the 2 If the union took place in owners. bad faith, the following rules shall apply: c. If the things mixed are of different kind and quality, a. Bad faith on the part in the absence of a of owner of accessory: stipulation, each owner acquires a right or interest in i. He shall lose the the mixture in proportion to thing incorporated, and the value of his material as in co-ownership. ii. He shall be liable for damages to the owner of the 2. Mixture caused by an principal thing, or the owner in good faith or by payment of the price, chance: including its sentimental value as appraised by a. Their rights shall first experts. be governed by their stipulations. iii. The principal may demand for the delivery of a b. If the things mixed are thing equal in kind and value of the same kind and quality, and in all other respects to there is no conflict of rights, that of the principal thing, and the mixture can easily be or the payment of the price, divided between the 2 including its sentimental owners. value as appraised by experts. c. If the things mixed are of different kind and quality, b. Bad faith on the part in the absence of a

103

The worker becomes the owner of the work/transformed thing but he must indemnify the owner of the material for its value. Exception: If the material is more precious or of more value than the work/transformed thing, the owner of the material may choose: a. To appropriate the new thing to himself but must pay for the value of the work or labor, or b. To demand indemnity for the material. 2. Worker in bad faith but the owner of the material in good faith: The owner of the material has the option either: a. To appropriate the work to himself without paying the maker, OR b. To demand the value of the material plus damages.

of the owner principal:

of

the stipulation, each owner 3. Owner of the materials in acquires a right or interest in bad faith but the worker is the mixture in proportion to in good faith: The owner of the the value of his material as accessory thing is given the in co-ownership. The owner of the option either: material is in bad faith when 3. Mixture caused by an he does not object to the i. To require the owner owner in bad faith: employment of his materials. of the principal thing to pay the value of the accessory The owner in bad faith not Accordingly, he shall lose his thing, plus damages. only forfeits the thing materials and shall have the belonging to him but also obligation to indemnify the ii. To have the becomes liable to pay worker for the damages he accessory thing separated indemnity for the damages may have suffered even if it be necessary to caused to the other owner. destroy the principal thing, 4. Both owners are in bad plus damages. 4. Mixture by both owners faith: in bad faith: iii. The accessory may Their rights shall be demand for the delivery of a There is bad faith when the determined as though both thing equal in kind and value mixture is made with the acted in good faith. and in all other respects to knowledge and without the that of the accessory thing, objection of the other or the payment of the price, owner. Accordingly, their including its sentimental respective rights shall be value as appraised by determined as though both experts. acted in good faith. c. Both parties in bad faith: Their respective rights are to be determined as though both acted in good faith. Sentimental value shall be duly appreciated

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Adjunction

Mixture

Involves at least 2 things

Accessory principal

follows

Involves at least 2 things

the Co-ownership results

Specification May involve one thing (or more) but form is changed Accessory principal

follows

the

Things joined retain their Things mixed or confused The new object retains or nature may either retain or lose preserves the nature of the their respective natures original object. b. Rules for determining the principal and accessory468 Adjunction

Mixture

Specification

In the order of application, the principal is that:

Strictly speaking, there is no Labor is the principal. accession in mixture since there is neither a principal a. To which the accessory nor an accessory has been united as an ornament or for its use or perfection.469 b. Of greater value, if they are of unequal values. c. Of greater volume, if they are of an equal value. d. Of greater merits taking into consideration all the pertinent legal provisions applicable as well as the comparative merits, utility and volume of their respective things.

468

In paintings and sculpture, writings, printed matter, engraving and lithographs, the board, metal stone, canvas, paper or parchment shall be deemed the accessory thing. 469 Rule of importance and purpose

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V. Quieting of Title to or Interest in and Removal or Prevention of Cloud over Title to or Interest in Real Property Quieting of Title - an equitable action in rem to determine the condition of the ownership or the rights to immovable property, and remove doubts thereon.470 A. Requirements: 1. Plaintiff must have a legal or equitable title to, or interest in the real property which is the subject matter of the action; 2. There must be a cloud in such title; 3. Such cloud must be due to some instrument, record, claim, encumbrance or proceeding which is apparently valid but is in truth invalid, ineffective, voidable or unenforceable, and is prejudicial to the plaintiff’s title; and 4. Plaintiff must return to the defendant all benefits he may have received from the latter, or reimburse him for expenses that may have redounded to his benefit. B. Distinction between quieting of title and removing/preventing a cloud471 Quieting of Title

Removing/Preventing a Cloud

Strictly considered, is substantially an action Intended to procure the cancellation, to put an end to vexatious litigation in delivery of, release of an instrument, respect to the property involved encumbrance, or claim constituting a claim on plaintiff’s title, and which may be used to injure or vex him in the enjoyment of his title. 470

The action to quiet title does not apply: a) to questions involving interpretation of documents b) to mere written or oral assertions of claims; except: i) if made in a legal proceeding ii) if it is being asserted that the instrument or entry in plaintiff’s favor is not what it purports to be c) to boundary disputes d) to deeds by strangers to the title UNLESS purporting to convey the property of the plaintiff e) to instruments invalid on their face f) where the validity of the instrument involves pure questions of law 471 What is a cloud on title? It is a semblance of title, either legal or equitable, or a claim or a right in real property, appearing in some legal form which is, in fact, invalid or which would be inequitable to enforce

106

The plaintiff asserts his own estate and declares generally that the defendant claims some estate in the land, without defining it, and avers that the claim is without foundation.

Plaintiff not only declares his own title, but also avers the source and nature of defendant’s claim, points out its defect, and prays that it be declared void. Relief is granted if the threatened or anticipated cloud is one which if it existed, would be removed by suit to quiet title.

C. Prescription/non-prescription of action Plaintiff in possession

Plaintiff not in possession 10 years472 or 30 years473

Imprescriptible

VI. Co-ownership The right of common dominion which two or more persons have in a spiritual part of a thing which is not physically divided. Co-ownership exists where the ownership of a thing physically undivided pertains to more than one person. A. Characteristics of co-ownership 1. In general a. Plurality of subjects. b. Unity of object or material indivision. c. Recognition of ideal or intellectual shares of co-owners which determine their rights and obligations.

472 473

ordinary extraordinary

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2. Special rules: a. Concept of condominium (1) Condominium corporation An interest in real property consisting of a 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. Any transfer or conveyance of a unit or an apartment, office or store or other space therein, shall include transfer or conveyance of the undivided interest in the common areas or, in a proper case, the membership or shareholdings in the condominium corporation: provided, however, that where the common areas in the condominium project are held by the owners of separate units as co-owners thereof, no condominium unit therein shall be conveyed or transferred to persons other than Filipino citizens or corporations at least 60% of the capital stock of which belong to Filipino citizens, except in cases of hereditary succession. (2) Interest in real property474 (3) Concept of common areas, amendment General rule: Common areas shall remain undivided, and there shall be no judicial partition thereof: Exceptions: 1. When the project has not been rebuilt or repaired substantially to its state prior to its damage or destruction 3 years after damage or destruction which rendered a material part thereof unfit for use; 2. When damage or destruction has rendered ½ or more of the units untenantable and that the condominium owners holding more than 30% interest in the common areas are opposed to restoration of the projects; 3. When the project has been in existence for more than 50 years, that it is obsolete and uneconomic, and the condominium owners holding in aggregate more than 50% interest in the common areas are opposed to restoration, remodeling or modernizing;

474

See Condominium Corporation, supra

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4. When the project or a material part thereof has been condemned or expropriated and the project is no longer viable, or that the condominium owners holding in aggregate more than 70% interest in the common areas are opposed to the continuation of the condominium regime; 5. When conditions for partition by sale set forth in the declaration of restrictions duly registered have been met. (4) Documents to consider Master deed An enabling or master deed shall contain, among others, the following: (a) Description of the land on which the building or buildings and improvements are or are to be located; (b) Description of the building or buildings, stating the number of stories and basements, the number of units and their accessories, if any; (c) Description of the common areas and facilities; (d) A statement of the exact nature of the interest acquired or to be acquired by the purchaser in the separate units and in the common areas of the condominium project. Where title to or the appurtenant interests in the common areas is or is to be held by a condominium corporation, a statement to this effect shall be included; (e) Statement of the purposes for which the building or buildings and each of the units are intended or restricted as to use; (f) A certificate of the registered owner of the property, if he is other than those executing the master deed, as well as of all registered holders of any lien or encumbrance on the property, that they consent to the registration of the deed; (g) The following plans shall be appended to the deed as integral parts thereof: (1) A survey plan of the land included in the project, unless a survey plan of the same property had previously been filed in said office; (2) A diagrammatic floor plan of the building or buildings in the project, in sufficient detail to identify each unit, its relative location and approximate dimensions;

109

(h) Any reasonable restriction not contrary to law, morals or public policy regarding the right of any condominium owner to alienate or dispose of his condominium. The enabling or master deed may be amended or revoked upon registration of an instrument executed by the registered owner or owners of the property and consented to by all registered holders of any lien or encumbrance on the land or building or portion thereof.475 Declaration of restrictions The owner of a project shall, prior to the conveyance of any condominium therein, register a declaration of restrictions relating to such project, which restrictions shall constitute a lien upon each condominium in the project, and shall insure to and bind all condominium owners in the project. Such liens, unless otherwise provided, may be enforced by any condominium owner in the project or by the management body of such project. The Register of Deeds shall enter and annotate the declaration of restrictions upon the certificate of title covering the land included within the project, if the land is patented or registered under the Land Registration or Cadastral Acts. The declaration of restrictions shall provide for the management of the project by anyone of the following management bodies: a condominium corporation, an association of the condominium owners, a board of governors elected by condominium owners, or a management agent elected by the owners or by the board named in the declaration. It shall also provide for voting majorities quorums, notices, meeting date, and other rules governing such body or bodies.476 Articles and by-laws Any provision of the Corporation Law to the contrary notwithstanding, the by-laws of a condominium corporation shall provide that a stockholder or member shall not be entitled to demand payment of his shares or interest in those cases where such right is granted under the Corporation Law unless he consents to sell his separate interest in the project to the corporation or to any purchaser of the corporation's choice who shall also buy from the corporation the dissenting member or stockholder's interest. In case of disagreement as to price, the procedure set forth in the appropriate provision of the Corporation Law for valuation of shares shall be followed. The corporation shall have two years within which to pay for the shares or furnish a purchaser of its choice from the time of award. All expenses incurred in the liquidation of the interest of the dissenting member or stockholder shall be borne by him.477

475

Sec. 4, R.A. 4726 Sec. 9, 477 Sec. 17 476

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b. Rights and obligations of condominium owner (1) Contributions/Dues For reasonable assessments to meet authorized expenditures, each condominium unit to be assessed separately for its share of such expenses in proportion to its owners fractional interest in any common areas.478 (2) P.D. 957479 and R.A. 6552480 Under P.D. 957

Under R.A. 6552

A. Obligations and Rights of the Owner/ Where the buyer has paid at least two Developer (2) years of installments, the buyer is entitled to the following rights in case he 1) Mortgage of Subdivision Lot or defaults in the payment of succeeding Condominium Unit installments: a) Requirements:

(a) To pay, without additional interest, the unpaid installments due within the total Owner or developer must: grace period earned by him which is hereby fixed at the rate of one month grace period i. secure prior written for every one year of installment payments approval from the Authority made. This right shall be exercised by the (HLURB); buyer only once in every five years of the life of the contract and its extensions, if ii. show that the proceeds of any. the mortgage loan inures to the development of the condominium or (b) If the contract is canceled, the subdivision project seller shall refund to the buyer the cash surrender value of the payments on the iii. cause the determination of property equivalent to fifty per cent of the the loan value of each lot or unit total payments made, and, after five years covered by the mortgage; and of installments, an additional five per cent every year but not to exceed ninety per cent iv. notify the buyer, if any. of the total payments made. The actual cancellation of the contract shall take place b) Buyer’s Option: To pay the after thirty days from receipt by the buyer mortgage loan of his lot or unit of the notice of cancellation or the demand for rescission of the contract by a notarial 478

Sec. 9 (d) The Subdivision and Condominium Buyers' Protective Decree 480 Realty Installment Buyer Act 479

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to acquire title thereof from the act and upon full payment of the cash mortgage.481 surrender value to the buyer. Down payments, deposits or options on the 2) Advertisement of the Subdivision or contract shall be included in the Condominium computation of the total number of installment payments made. a) Contents: The owner must advertise only: In case where less than two (2) years of installments were paid, the seller shall give i. real facts, and the buyer a grace period of not less than sixty days from the date the installment ii. in a manner that does not became due. mislead or deceive the public.482 If the buyer fails to pay the installments due at the expiration of the grace period, the seller may cancel the contract after thirty days from receipt by i. Nature: Constitutes sales the buyer of the notice of cancellation or warranties483 the demand for rescission of the contract by a notarial act. ii. Time of Completion:

b) Improvements, facilities, stated in the advertisement

etc.

The buyer shall have the right to sell a) Sales On the Effectivity his rights or assign the same to another of this Decree: person or to reinstate the contract by updating the account during the grace Within one (1) year from the period and before actual cancellation of the issuance of the license of subdivision or contract. The deed of sale or assignment condominium project, or other period fixed shall be done by notarial act. by the Authority (HLURB).484 The buyer shall have the right to pay b) Sales Prior to in advance any installment or the full thisDecree: unpaid balance of the purchase price any time without interest and to have such full Within two (2) years from the payment of the purchase price annotated in effectivity of this Decree, except: the certificate of title covering the property. i. if extended by the Any stipulation in any contract Authority (HLURB), hereafter entered into contrary to the provisions of Sections 3, 4, 5 and 6, shall be ii. if adequate null and void. 481

Sec. 18 Sec. 19 483 ibid 484 Sec. 20 482

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performance bond in accordance with Sec. 6 of this Decree is filed.485 3) Alteration of the Approved Subdivision Plan and/or of Representations in Advertisement: Requirements: The owner or developer must: a) secure approval of the Authority (HLURB), and b) written conformity or consent of the duly organized homeowners association, or in its absence, by the majority of the lot buyers in the subdivision.486 4) Non-Forfeiture of Payments by the Owner or Developer a) If the failure of the subdivision or condominium buyer to pay installment is caused by the failure of the owner or developer to develop the subdivision or condominium according to the approved plan and within time limit, the buyer shall be reimbursed with legal interest and amortization interest, but excluding 487 delinquency interest. b) If such failure is due to other causes, Republic Act No. 6552 which took effect on August 26, 1976, but prior to such date, the buyer is entitled to refund based on installments paid after the effectivity of the law in the absence of contrary stipulation. 488 485

Sec. 21 Sec. 22 487 Sec. 23 488 Sec. 24 486

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5) Issuance of Title to the Buyer by the Owner or Developer a) Time: Upon the full payment of the lot or unit. b) Chargeable Fee: The owner or developer can only charge from the buyer fee for the registration of the Deed of Sale to the Register of Deeds. c) If the lot or unit is mortgaged, the owner or developer should redeem the lot or unit within six months from the issuance of the title. 6) Payment of Realty Tax and Other Charges on the Subdivision or Condominium: Rules on: a) Real Taxes: 1) Paid by owner or developer unless title is passed to the buyer. 2) Buyer who actually occupied and possessed a lot or unit is liable for taxes to the owner or developer from the year following such occupation or 489 possession. b) Other Charges: 1) It cannot be collected by 489

Sec. 26

114

the owner or developer. 2) It can be collected only by a properly organized homeowners association with the consent of majority of lot or unit buyers actually residing in the subdivision or 490 condominium project. 7) Access to Public Offices in the Subdivisions: No owner or developer shall deny any person free access to any government office or public establishment located within the subdivision or which may be reached only by passing through the subdivision.491 8) Right of Way to Public Road It should be secured by the owner and developer of a subdivision without access to any public road or street. Such way must be developed and maintained in accordance with the requirement set forth by the government.492 9) Organization Association

of

Homeowner

a) Formation: Initiated owner or developer.

by

the

b) Members: buyers and residents of the project c) Purpose: for the promotion and protection of mutual interest of

490

Sec. 27 Sec. 28 492 Sec. 29 491

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the buyers and residents, and for the community development493 10) Mandatory Donations of Roads and Open Spaces to Local Government494

c. Grounds for partition of common areas, or dissolution of the condominium Voluntary Dissolution495

Involuntary Dissolution

Grounds:

Grounds:

a) Three (3) years after damage or Those provided for by law on corporations. destruction to the projects 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; b) Damage or destruction to the project has rendered one-half or more of its units thereof untenantable and the owners holding in aggregate more than 30% interest in common areas are opposed to repair or restoration of the project; c) The project has been in existence in excess of 50 years, that it is obsolete and uneconomic, and that owners holding in aggregate more than 30% interest in common areas are opposed to repair or restoration of the projects; d) The project or material part thereof has been condemned or expropriated and that the project is no longer viable, or that the owners holding in aggregate more than 70% 493

Sec. 30 P. D. No. 1216, amending Sec. 31 of this Decree 495 Action for dissolution under Rule 104 of the Rules of Court. 494

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interest in common areas are opposed to the continuation of the condominium regime; e) Conditions for partition under the declaration of restrictions have been met.496

B. Sources of co-ownership 1. The Law497 2. Contracts 3. Succession498 4. Fortuitous event or chance499 5. Occupancy500 C. Rights of co-owners 1. Distinction between right to property owned in common and full ownership over his/her ideal share Right to property owned in common a) To use the thing owned in common501

Right as to the ideal share of each co-owner: a) Each has full ownership of his part and of his share of the fruits and benefits

b) To share in the benefits and charges in proportion to the interest of each.502 b) Right to substitute another person its enjoyment, except when personal rights are c) To the benefits of prescription: involved c) Right to alienate, dispose or encumber 496

Sec. 8, P.D. 4726 as in party walls, fences and in the legal conjugal partnership. 498 as when a person dies intestate, leaving his properties undivided to several heirs, who become coowners of the inheritance. 499 as in cases of commixtion and confusion caused by accident or chance, and of hidden treasure accidentally discovered by a stranger on the land of another. 500 as when 2 persons catch a wild beast or gather forest products. 501 Limitations: i. use according to the purpose for which it was intended ii. interest of the co-ownership must not be prejudiced iii. other co-owners must not be prevented from using it according to their own rights 502 Any stipulation to the contrary is void. 497

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prescription by one co-owner benefits all. d) Right to renounce part of his interest to d) Repairs and taxes: to compel the others reimburse necessary expenses incurred by to share in the expenses of preservation another co-owner even if incurred without prior notice.503 e) Alterations: to oppose alterations made e) Transactions entered into by each cowithout the consent of all, even if owner only affect his ideal share. beneficial.504 f) To protest against seriously prejudicial decisions of the majority g) Legal redemption: to be exercised within 30 days from written notice of sale of an undivided share of another co-owner to a stranger h) To defend the co-ownership’s interest in court i) To demand partition at any time 2. Right to oppose acts of alteration505 To oppose alterations made without the consent of all, even if beneficial. 3. Right to partition506 General rule: time.

Partition is demandable by any of the co-owners as a matter of right at any

503

The co-owner being compelled may exempt himself from the payment of taxes and expenses by renouncing his share equivalent to such taxes and expenses. The value of the property at the time of the renunciation will be the basis of the portion to be renounced. 504 Alteration is an act by virtue of which a co-owner changes the thing from the state in which the others believe it should remain, or withdraws it from the use to which they desire it to be intended. Expenses to improve or embellish are decided by the majority 505 Alteration is an act by virtue of which a co-owner changes the thing from the state in which the others believe it should remain, or withdraws it from the use to which they desire it to be intended. Expenses to improve or embellish are decided by the majority 506 The division between 2 or more persons of real or personal property which they own in common so that each may enjoy and possess his sole estate to the exclusion of and without interference from others

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Exceptions: a. When there is a stipulation against it; but not to exceed 10 years. b. When the condition of indivision is imposed by the donor or testator; but not to exceed 20 years. c. When the legal nature of the community prevents partition. d. When partition would render the thing unserviceable. e. When partition is prohibited by law f. When another co-owner has possessed the property as exclusive owner for a period sufficient to acquire it by prescription. 4. Right to contributions for expenses Each co-owner shall have a right to compel the other co-owners to contribute to the expenses of preservation507 of the thing or right owned in common and to the taxes in proportion to their interest therein. 5. Waiver508 Any one of the co-owners may exempt himself from this obligation by renouncing so much of his undivided interest as may be equivalent to his share of the expenses and taxes.

507

Necessary expenses Expenses of preservation include all those which, if not made, would endanger the existence of the thing or reduce its value or productivity. They do not imply an improvement or increase. There is no other remedy available against the co-owner who refuses to pay his share in the expenses of preservation except an action to compel him to contribute such share. Failure to contribute does not amount to a renunciation of any portion of share in the co-ownership. The co-owner in default cannot be compelled to renounce his share therein. Renunciation is a voluntary and free act. 508 No such waiver shall be made if it is prejudicial to the co-ownership Rules on renunciation: a. Total or partial. b. Expressly made – a tacit renunciation cannot produce any effect. c. The renunciation is in reality a case of dacion en pago; the debt of the co-owner consisting of his share in the expenses of preservation and taxes, is paid, not in money, but in an interest in property. d. Since the renunciation refers to a portion equivalent in value to the share of the renouncing coowner in an existing debt, it is only logical that the other co-owners, who must should the debt of the renouncer in exchange for the portion being renounced, should consent thereto. e. Renunciation refers to existing debts and not to future expenses. f. Renunciation is a free act; a co-owner may not be compelled to renounce. g. However, waiver is not allowed if it is prejudicial to the co–ownership.

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6. Right to redemption of co-owners share Legal redemption: to be exercised within 30 days from written notice of sale of an undivided share of another co-owner to a stranger D. Termination/extinguishment509 The separation, division and assignment of the thing held in common among those to whom it may belong; the thing itself may be divided, or its value. After partition, the portion belonging to each co-owner has been identified and localized, so that co-ownership, in its real sense, no longer exists. 1. Effects of partition Partition shall not prejudice third persons who do not intervene in the partition After partition, there should be mutual accounting of benefits, reimbursements, payment of damages due to negligence or fraud, liability for defects of title and quality of portion assigned to each.510 Part allotted to a co-owner at partition will be deemed to be possessed by such coowner from the time the co- ownership commenced. Heir is exclusive owner of property adjudicated to him. Co-owners reciprocally bound to each other for warranty of title and quality of part given to each (hidden defect) after partition. Obligation of warranty is proportionate to respective hereditary shares; insolvency of one makes the others liable subject to reimbursement (joint liability).511 Each former co-owner is deemed to have had exclusive possession of the part allotted to him for the entire period during which the co-possession lasted; Partition confers upon each the exclusive title over his respective share.

509

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. 510 See Art. 500 511 under Art. 1093

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2. Rights against individual co-owners in case of partition512 3. Partition in case co-owners cannot agree The thing shall be sold and its proceeds distributed to the co-owners.513 VII. Possession The holding of a thing or enjoyment of a right, A. Characteristics Characterized by two (2) relations: 1. The possessor’s relation to the property itself; and 2. The possessor’s relation to the world. B. How acquired By the material occupation of a thing or the exercise of a right, or by the fact that it is subject to the action of our will, or by the proper acts and legal formalities established for acquiring such right.514

512

See Effects of partition, supra Art. 498 The sale of the property held in common is resorted to when (1) the right to partition the property among the co-owners is invoked by any of them but because of the nature of the property, it cannot be subdivided or its subdivision [See Article 495 of the New Civil Code] would prejudice the interests of the co-owners (See Section 5 of Rule 69 of the Revised Rules of Court) and (2) the co-owners are not in agreement as to who among them shall be allotted or assigned the entire property upon reimbursement of the shares of the other co-owners (Marina Reyes, et al. vs. Hon. Alfredo Concepcion, et al., G.R. No. 56550, Oct. 1, 1990 The sale may be public or private, and the purchaser may be a co-owner or a third person. 514 Art. 531 513

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C. Effects of Possession 1. Possessor in Good Faith He is entitled to the fruits received before the possession is legally interrupted. Natural and industrial fruits are considered received from the time they are gathered or severed. Civil fruits are deemed to accrue daily and belong to the possessor in good faith in that proportion.515 He is deemed a possessor in good faith who is not aware that there exists in his title or mode of acquisition any flaw which invalidates it. faith.

516

Mistake upon a doubtful or difficult question of law may be the basis of good

Good faith is always presumed, and upon him who alleges bad faith on the part of a possessor rests the burden of proof.517 a. Right to pending fruits 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. The charges shall be divided on the same basis by the two possessors. The owner of the thing may, should he so desire, give the possessor in good faith the right to finish the cultivation and gathering of the growing fruits, as an indemnity for his part of the expenses of cultivation and the net proceeds; the possessor in good faith who for any reason whatever should refuse to accept this concession, shall lose the right to be indemnified in any other manner.518

515

Art. 544 Art. 526 517 Art. 527 518 Art. 545 516

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b. Right to be reimbursed (1) Necessary and useful expenses Necessary expenses shall be refunded to every possessor; but only the possessor in good faith may retain the thing until he has been reimbursed therefor. 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 by reason thereof.519 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 exercises the option under paragraph 2 of the preceding article. (2) Expenses for pure luxury Not to be refunded to the possessor in good faith; but he may remove the ornaments with which he has embellished the principal thing if it suffers no injury thereby, and if his successor in the possession does not prefer to refund the amount expended.520 2. Possessor in Bad Faith He who builds, plants or sows in bad faith on the land of another, loses what is built, planted or sown without right to indemnity.521 The possessor in bad faith shall reimburse the fruits received and those which the legitimate possessor could have received, and shall have a right only to the expenses mentioned in paragraph 1 of Article 546522 and in Article 443.523 The expenses incurred in improvements for pure luxury or mere pleasure shall not be refunded to the possessor in bad faith, but he may remove the objects for which such expenses have been incurred, provided that the thing suffers no injury thereby, and that the lawful possessor does not prefer to retain them by paying the value they may have at the time he enters into possession.524

519

Art. 546 Art. 548 521 Art. 449 522 supra 523 See Reference 524 Art. 549 520

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A possessor in good faith shall not be liable for the deterioration or loss of the thing possessed, except in cases in which it is proved that he has acted with fraudulent intent or negligence, after the judicial summons.525 A possessor in bad faith shall be liable for deterioration or loss in every case, even if caused by a fortuitous event. D. Loss or Unlawful Deprivation of a Movable The possession of movable property acquired in good faith is equivalent to a title. Nevertheless, one who has lost any movable or has been unlawfully deprived thereof, may recover it from the person in possession of the same.526 If the possessor of a movable lost or which the owner has been unlawfully deprived, has acquired it in good faith at a public sale, the owner cannot obtain its return without reimbursing the price paid therefor. Where goods are sold by a person who is not the owner thereof, and who does not sell them under authority or with the consent of the owner, the buyer acquires no better title to the goods than the seller had, unless the owner of the goods is by his conduct precluded from denying the seller's authority to sell. Nothing, however, shall affect: xxx (3) Purchases made in a merchant's store, or in fairs, or markets, in accordance with the Code of Commerce and special laws527 1. Period to Recover Four (4) years – if in good faith.528 Eight (8) years – if in bad faith. The provisions of Articles 559 and 1505529 shall be observed with regard to the right of the owner to recover personal property lost or of which he has been illegally deprived, as well as with respect to movables acquired in a public sale, fair, or market, or from a merchant's store.530

525

Art. 552 Art. 559 527 Art. 1505 (3) 528 Ten (10) years in case of immovables (Art. 1134) 529 supra 530 Art. 1132 526

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Movables possessed through a crime can never be acquired through prescription by the offender.531 Actions to recover movables shall prescribe eight (8) years from the time the possession thereof is lost, unless the possessor has acquired the ownership by prescription for a less period, according to Articles 1132,532 and without prejudice to the provisions of Articles 559, 1505, and 1133.533 2. Finder of Lost Movable Whoever finds a movable, which is not treasure, must return it to its previous possessor. If the latter is unknown, the finder shall immediately deposit it with the mayor of the city or municipality where the finding has taken place. The finding shall be publicly announced by the mayor for two consecutive weeks in the way he deems best. If 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. 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 and the owner shall be obliged, as the case may be, to reimburse the expenses.534 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.535 3. Distinguished from voidable title Where the seller of goods has a voidable title thereto, but his title has not been avoided at the time of the sale, the 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.536

531

Art. 1133 supra 533 Id., Art. 1140 534 Art. 719 535 Art. 720 536 Art. 1506 532

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E. In concept of owner, holder, in one’s own name, in name of another537 In the concept of In the concept of In one’s own name owner holder Possessor of the thing or right, by his actions, is considered or is believed by other people as the owner, regardless of the good or bad faith of the possessor

In the another

name

of

Possessor holds it Possessor claims the For whom the thing merely to keep or thing for himself is held by the enjoy it, the possessor ownership pertaining to another person; possessor acknowledges in another a superior right which he believes to be ownership.

F. Rights of the possessor 1. Right to be respected in his possession; if disturbed – protected by means established by law; spoliation 2. Possession acquired and enjoyed in concept of owner538 can serve as title for acquisitive prescription 3. Person in concept of owner has in his favor the legal presumption of just title539 4. Possession of real property presumes that movables are included 5. Co-possessors deemed to have exclusively possessed part which may be allotted to him; interruption in whole or in part shall be to the prejudice of all 6. Possessor in good faith entitled to fruits received before possession is legally interrupted540 537

None of these holders assert a claim of ownership in himself over the thing but they may be considered as possessors in the concept of owner, or under claim of ownership, with respect to the right they respectively exercise over the thing. 538 a. Possession has to be in concept of owner, public, peaceful and uninterrupted b. Title short of ownership 539 prima facie 540 natural and industrial – gathered or severed; civil – accrue daily

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7. Possessor in good faith entitled to part of net harvest and part of expenses of cultivation if there are natural or industrial fruits;541 owner has option to require possessor to finish cultivation and gathering of fruits and give net proceeds as indemnity for his part of expenses; if possessor in good faith refuses – barred from indemnification in other manner 8. Possessor has right to be indemnified for necessary expenses whether in good faith or in bad faith; Possessor in good faith has right of retention over thing unless necessary expenses paid by owner 9. Possessor in good faith has right to be reimbursed for useful expenses with right of retention; owner has option of paying expenses or paying the increase in value of property which thing acquired by reason of useful expenses 10. Possessor in good faith may remove improvements if can be done w/o damage to principal thing- unless owner exercises option of paying; possessor in bad faith not entitled. 11. Possessor in good faith and bad faith may not be entitled to payment for luxurious expense but may remove them provided principal is not injured – provided owner does not refund the amount expended 12. Improvements caused by nature or time to inure to the benefit of person who has succeeded in recovering possession 13. Wild animals possessed while in one’s control; domesticated – possessed if they retain habit of returning back home 14. One who recovers, according to law, possession unjustly lost is deemed to have enjoyed it w/o interruption

541

proportionate to time of possession

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G. Loss/termination A possessor may lose his possession: (1) By the abandonment of the thing;542 (2) By an assignment543 made to another either by onerous or gratuitous title; (3) By the destruction or total loss of the thing544, or because it goes out of commerce; (4) By the possession of another, subject to the provisions of article 537545, if the new possession has lasted longer than one year546. But the real right of possession is not lost till after the lapse of ten years.547 (5) by recovery by lawful owner or possessor548 VIII. Usufruct A. Characteristics 1. A real right; 2. Of temporary duration; 3. Transmissible; 4. May be constituted on real or personal property, consummable or non – consummable, tangible or intangible, the ownership of which is vested on another

542

The voluntary renunciation of all rights which a person has over a thing thereby allowing a third person to acquire ownership or possession thereof by means of occupancy; By voluntary abandonment, thing becomes without an owner or possessor and is converted into res nullius and may thus be acquired by a third person by occupation; Abandonment which converts the thing into res nullius, ownership of which may be acquired by occupation can hardly apply to land, as to which said mode of acquisition is not available 543 The complete transmission of the thing or right to another by any lawful manner; -the effect is that he who was the owner or possessor is no longer so 544 A thing is lost when it perishes, or goes out of commerce, or disappears in such a way that its existence is unknown, or cannot be recovered 545 see Reference 546 This refers to possession de facto and not de jure 547 Art. 555 548 Recovered in an reivindicatory action or in an action to recover the better right of possession

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B. Classification 1. Whether or not impairment of object is - normal; allowed - abnormal 2. Origin

- legal; - voluntary; - mixed

3. Number of usufructuaries:

- simple; - multiple which may either be : - simultaneous; - successive

4. Terms or conditions:

- pure; - with a term or period; - conditional

5. Quality or kind of object:

- of things; - of rights

6. Quantity or extent of object

- total; - partial

7. Extent of owner’s patrimony

- universal; - particular

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C. Rights and obligations of usufructuary Obligations549

Rights

1. To civil, natural & industrial fruits of 1. Pay expenses to 3rd persons for property cultivation & production at beginning of usufruct; whose who have right to fruits 2. To hidden treasure as stranger should reimburse expenses incurred 3. To transfer usufructuary rights – gratuitous or onerous; but is co-terminus with term of usufruct; fruits proportionate at duration of usufruct; but can’t do acts of ownership such as alienation or conveyance except when property is: a. consumable

2. Generally, usufructuary has no liability when due to wear & tear, thing deteriorates, obliged to return in that state; except when there is fraud or negligence, then he shall be liable 3. Before entering into usufructuary: a. Notice of inventory of property551

b. intended for sale

b. Posting of security552 c. appraised when delivered; if not appraised & consumable – return same quality550 4. Take care of property as a good father of family 4. Right not exempt from execution and can be sold at public auction by owner 5. Obliged to make ordinary repairs – wear & tear due to natural use of thing and are 5. Naked owner still have rights but w/o indispensable for preservation; owner may prejudice to usufructuary; may still exercise make them at expense of usufructuary – act of ownership - bring action to preserve during existence of usufruct 6. To fruits growing at time usufruct begins; 6. Obliged to make expenses due to his growing fruits at termination of usufruct fault; cannot escape by renouncing usufruct belongs to owner 7. Pay legal interest from extraordinary 7. To necessary expenses from cultivation at expenses made by owner end of usufruct 8. Payment of expenses, charges & taxes 8. To enjoy accessions & servitudes in its affecting fruits favor & all benefits inherent therein 549

Arts. 583-602 mutuum 551 appraisal of movables & description 552 1. not applicable to parents who are usufructuary of children except when 2nd marriage contracted 2. excused – allowed by owner, not required by law or no one will be injured 550

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9. To make use of dead trunks of fruit 9. Payment of interest on amount paid by bearing trees & shrubs or those owner charges on capital uprooted/cut by accident but obliged to plant anew 10. Obliged to notify owner of act of 3rd person prejudicial to rights of ownership – 10. Usufructuary of woodland – ordinary he is liable if he does not do so for damages cutting as owner does habitually or custom – as if it was caused through his own fault of place; cannot cut down trees unless it is for the restoration of improvement of 11. Expenses, cost & liabilities in suits things in usufruct – must notify owner first brought with regard to usufructuary – borne by usufructuary 11. To leave dead, uprooted trees at the disposal of owner with right to demand that owner should clear & remove them – if caused by calamity or extraordinary event – impossible to replace them 12. To oblige owner to give authority & furnish him proofs if usufruct is extended to recover real property or real right 13. To necessary expenses 14. To introduce useful & luxurious expenses but with no obligation of reimbursement on part of owner; may remove improvement if can be done w/o damage 15. To set-off improvements against damages he made against the property 16. To administer when property is coowned; if co-ownership cease – usufruct of part allotted to co-owner belongs to usufructuary – not affected 17. To demand the increase in value of property if owner did not spend for extraordinary repairs when urgent & necessary for preservation of thing

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D. Rights of the owner 1. Alienate thing 2. Can’t alter form or substance 3. Can’t do anything prejudicial to usufructuary 4. Construct any works 5. Make any improvement provided it does not diminish value or usufruct or prejudice right of usufructuary E. Extinction/termination 1. Death of the usufructuary; 2. Expiration of period or fulfillment of condition; 3. Merger; 4. Renunciation; 5. Loss of the thing; 6. Termination of right of owner; 7. Prescription; 8. Other causes553 IX. Easements An easement or servitude is an encumbrance imposed upon an immovable for the benefit of another immovable belonging to a different owner. The immovable in favor of which the easement is established is called the dominant estate; that which is subject thereto, the servient estate.554 Easements may be continuous or discontinuous, apparent or non-apparent. Continuous easements are those the use of which is or may be incessant, without the intervention of any act of man.

553

such as emancipation of the child (Art. 603) A usufruct is not extinguished by bad use of the thing in usufruct 554 Art. 613

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Discontinuous easements are those which are used at intervals and depend upon the acts of man. Apparent easements are those which are made known and are continually kept in view by external signs that reveal the use and enjoyment of the same. Nonapparent easements are those which show no external indication of their existence.555 Easements are also positive or negative. A positive easement is one which imposes upon the owner of the servient estate the obligation of allowing something to be done or of doing it himself, and a negative easement, that which prohibits the owner of the servient estate from doing something which he could lawfully do if the easement did not exist.556 A. Characteristics a) It is a real right but will affect third persons only when duly registered b) It is enjoyed over another immovable, never on one’s own property c) It involves two neighboring estates (in case of real easements) d) It is inseparable from the estate to which it is attached, and, therefore, cannot be alienated independently of the estate e) It is indivisible for it is not affected by the division of the estate between two or more persons f) It is a right limited by the needs of the dominant owner or estate, without possession g) It cannot consist in the doing of an act unless the act is accessory in relation to a real easement h) It is a limitation on the servient owner’s rights of ownership for the benefit of the dominant owner; and, therefore, it is not presumed.

555 556

Art. 615 Art. 616

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B. Classification 1. Legal easements They are easements imposed by law and which have for their object either public use or the interest of private persons. a. Right of way The right granted to the owner of an estate which is surrounded by other estates belonging to other persons and without an adequate outlet to a public highway to demand that he be allowed a passageway throughout such neighboring estates after payment of proper indemnity.557 2. Voluntary easements558 Constituted by the will of the parties or of a testator. The owner possessing capacity to encumber property may constitute voluntary servitude. If there are various owners, all must consent; but consent once given is not revocable. a. Effect of Zoning ordinance The existence of a zoning ordinance is immaterial. The ordinance might be repealed at any time; and if so repealed, this prohibition would not be enforceable against new purchasers of the land, who may be ignorant thereof.559

557

Requisites: 1. Claimant must be an owner of enclosed immovable or one with real right 2. There must be no adequate outlet to a public highway 3. Right of way must be absolutely necessary 4. Isolation must not be due to the claimant’s own act 5. Easement must be established at the point least prejudicial to the servient estate 6. Payment of proper indemnity Special cause of extinction: the opening of a public road, or joining the dominant tenement to another with exit on a public road. The extinction is NOT automatic. There must be a demand for extinction coupled with tender of indemnity by the servient owner. 558 Art. 688; see Reference 559 see In re: Petition for cancellation of condition annotated on Transfer certificate of title no. 54417, Quezon city, Dra. Rafaela v. Trias, vs. Gregorio Araneta, Inc., G.R. No. L-20786, October 30, 1965

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C. Modes of Acquiring Easements 1. Compulsory easements Continuous and apparent easements are acquired either by virtue of a title or by prescription of ten years.560 In order to acquire by prescription the easements referred to, the time of possession shall be computed thus: 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; and 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.561 Continuous nonapparent easements, and discontinuous ones, whether apparent or not, may be acquired only by virtue of a title.562 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.563 The existence of an apparent sign of easement between two estates, established or maintained by the owner of both, shall be considered, should either of them be alienated, as a title in order that the easement may continue actively and passively, 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.564 2. Easement of light and view When the distances in Article 670565 are not observed, the owner of a wall which is not party wall, adjoining a tenement or piece of land belonging to another, can make in it openings to admit light at the height of the ceiling joints or immediately under the ceiling, and of the size of thirty centimeters square, and, in every case, with an iron grating imbedded in the wall and with a wire screen.

560

Art. 620 Art. 621 562 Art. 622 563 Art. 623 564 Art. 624 565 See Reference 561

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Nevertheless, the owner of the tenement or property adjoining the wall in which the openings are made can close them should he acquire part-ownership thereof, if there be no stipulation to the contrary. He can also obstruct them by constructing a building on his land or by raising a wall thereon contiguous to that having such openings, unless an easement of light has been acquired.566 No windows, apertures, balconies, or other similar projections which afford a direct view upon or towards an adjoining land or tenement can be made, without leaving a distance of two meters between the wall in which they are made and such contiguous property. Neither can side or oblique views upon or towards such conterminous property be had, unless there be a distance of sixty centimeters. The nonobservance of these distances does not give rise to prescription.567 The distance referred to shall be measured in cases of direct views from the outer line of the wall when the openings do not project, from the outer line of the latter when they do, and in cases of oblique view from the dividing line between the two properties.568 The provisions of Article 670569 are not applicable to buildings separated by a public way or alley, which is not less than three meters wide, subject to special regulations and local ordinances.570 Whenever by any title a right has been acquired to have direct views, balconies or belvederes overlooking an adjoining property, the owner of the servient estate cannot build thereon at less than a distance of three meters to be measured in the manner provided in Article 671.571 Any stipulation permitting distances less than those prescribed in article 670 is void.572

566

Art. 669 Art. 670 568 Art. 671 569 supra 570 Art. 672 571 supra 572 Art. 673 567

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D. Rights and obligations of dominant and subservient estate E. How terminated X. Nuisance A. Definition 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.573 B. Classification Public nuisance 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.

573

Private nuisance One which violates only private rights and produces damage to but one or few persons, and cannot be said to be public.

Art. 694

137

Mixed nuisances A thing may be nuisance without public one or nuisance without private one.

a private being a a public being a

C. Remedies Public nuisance574

Private nuisance

1. Prosecution under the Penal Code or any 1. A civil action; or other local ordinance; 2. Abatement, 2. Civil action; proceedings.576 3. Abatement, proceedings575

without

without

judicial

judicial

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.577

574

Art. 699 The remedies are not exclusive but cumulative; All of the may be availed of by public officers, and the last two by private persons, if the nuisance is especially injurious to the latter Role of district health officer and others with respect to public nuisance: The district health officer is charged with the duty to see to it that one or all of the remedies against a public nuisance are availed of; He shall determine whether the third remedy, a is the best remedy against a public nuisance; the remedy must be availed of only with the intervention of the district health officer; It does not necessarily follow that the failure to observe art. 702 is in itself a ground for the award for damages; Art. 702 does not empower the district officer to abate a public nuisance to the exclusion of all other authorities; The action must be commenced by the city or municipal mayor; but a private person may also file an action if the public nuisance is especially injurious to him 576 Art. 705 577 Art. 706 575

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XI. Modes of Acquiring Ownership Ownership is acquired by occupation and by intellectual creation. Ownership and other real rights over property are acquired and transmitted by law, by donation, by testate and intestate succession, and in consequence of certain contracts, by tradition. They may also be acquired by means of prescription.578 A. Occupation Things appropriable by nature which are without an owner579 are acquired by occupation.580 B. Donation 1. Definition An act of liberality whereby a person disposes gratuitously of a thing or right in favor of another, who accepts it.581 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, or when the gift imposes upon the donee a burden which is less than the value of the thing given, there is also a donation582 Acceptance must be made during the lifetime of the donor and of the donee.583

578

Art. 712 such as animals that are the object of hunting and fishing, hidden treasure and abandoned movables 580 Art. 713 581 Art. 725 582 Art. 726 583 Art. 746 579

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2. Characteristics a. Extent to which donor may donate property584 A person may not donate more than he can give by will and a person may not receive by way of donation more than what the donor is allowed by law to give by will; otherwise the donation shall be inofficious and shall be reduced with regard to the excess.585 b. Reservations and reversions586 The donation may comprehend all the present property of the donor, or part thereof, 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. Without such reservation, the donation shall be reduced in petition of any person affected.587 The donor may provide for reversion, whereby the property donated shall “go back” to the donor or some other person.588 584

What may be given: All or part of donor’s present property provided he reserves sufficient means for the support of the ff: a) himself b) relatives who by law are entitled to his support c) legitimes shall not be impaired when w/o reservation or if inofficious, may be reduced on petition of persons affected. Except: conditional donation & donation mortis causa Except: future property 585 See Art. 752 586 1. Future property cannot be donated. 2. Present property that can be donated: a) if the donor has forced heirs: he cannot give or receive by donation more than he can give of receive by will b) if the donor has no forced heirs: donation may include all present property provided he reserves in full ownership or in usufruct: 1) the amount necessary to support him, and 2) those relatives entitled to support from him 3) property sufficient to pay the donor’s debt contracted prior to the donation. 3. Donation should not prejudice creditors 4. Donee must reserve sufficient means for his support and for his relatives which are entitled to be supported by him. 587 A donor may donate all his present property or part thereof provided he reserves sufficient property in ownership or in usufruct for the support of himself and of all relatives who are entitled to be supported by him at the time of the perfection of the donation 588 See Art. 757 A reversion in favor of the donor may be validly established “for any case and circumstances”;

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3. Kinds a. Donation inter vivos589 When the donor intends that the donation shall take effect during the lifetime of the donor, though the property shall not be delivered till after the donor's death. The fruits of the property from the time of the acceptance of the donation, shall pertain to the donee, unless the donor provides otherwise.590 b. Donation By Reason of Marriage Those which are made before its celebration, in consideration of the same, and in favor of one or both of the future spouses.591 These donations are governed by the rules on ordinary donations, insofar as they are not modified by the following articles592 A donation by reason of marriage may be revoked by the donor in the following cases: (1) If the marriage is not celebrated or judicially declared void ab initio except donations made in the marriage settlements, which shall be governed by Article 81;593 (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 general594

If the revision is in favor of other persons, such other persons must be “living at the time of the donation 589 In case of doubt with regard to nature of donation: inter vivos 590 Art. 729 591 Art. 82, FC 592 Art. 83, id. 593 supra 594 Art. 86, id.

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c. Donation Mortis Causa Donations which are to take effect upon the death of the donor partake of the nature of testamentary provisions, and shall be governed by the rules on Succession.595 d. Onerous Donation Donations with an onerous cause shall be governed by the rules on contracts and remuneratory donations as regards that portion which exceeds the value of the burden imposed.596 e. Simple, modal, conditional Simple Gratuitous

Conditional Valuable consideration is imposed but value is less than value of thing donated

Modal Imposes upon the donee a burden which is less than the value of the thing donated

4. Formalities required a. How made and accepted Donations of movable property

Donation of immovable property:

a. With simultaneous delivery of a. Must be in a public instrument specifying property donated: the property donated and the burdens assumed by donee, regardless of value 1. it may be oral/written – P5,000 or less; b. Acceptance must be either: 2.. if value exceeds P5,000 – written in public or private 1. in the same instrument; or document 2. in another public instrument, notified to the donor in authentic form, and noted in b. Without simultaneous delivery: both deeds

595

Art. 728 Title conveyed upon donor’s death Void if donor survives done Always revocable Must comply with the formalities required by law for the execution of wills 596 Art. 733

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The donation and acceptance must be written in a public or private instrument, regardless of value. b. Perfection597 c. Differences between formalities for donation of real, personal properties (1) Movables 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.598 (2) Immovables In order that the donation 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. 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.599

597

See (a) How made and accepted, supra Art. 748 599 Art. 749 598

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5. Qualifications of donor, donee Donor

Donee:

All persons who may contract and 1. natural & juridical persons w/c are not especially dispose of their property disqualified by law 2. minors & other incapacitated a) by themselves - if pure & simple donation - if it does not require acceptance

written

b) by guardian, legal representatives if needs written acceptance 1. natural guardian – not more than P50,000 2. court appointed - more than P50,000 3. conceived & unborn child, represented by person who would have been guardian if already born

6. Effects of donation/limitations a. In general Effects of donation

Limitations on donation of property:

1. donee may demand the delivery of the 1. Future property cannot be donated. thing donated 2. Present property that can be donated: 2. donee is subrogated to the rights of the donor in the property a) if the donor has forced heirs: he cannot give or receive by donation 3. in donations propter nuptias, the donor more than he can give of receive by must release the property from will encumbrances, except servitudes b) if the donor has no forced heirs: 4. donor’s warranty exists if donation may include all present property provided he reserves in full

144

a. b. c. d.

expressed donation is propter nuptias donation is onerous donor is in bad faith

ownership or in usufruct: 1) the amount necessary to support him, and 2) those relatives entitled to support from him 3) property sufficient to pay the donor’s debt contracted prior to the donation.

5. when the donation is made to several donees jointly, they are entitled to equal portions, without accretion, unless the contrary is stipulated.

3. Donation should not prejudice creditors 4. Donee must reserve sufficient means for his support and for his relatives which are entitled to be supported by him. b. Double donations Rule: Priority in time, priority in right 1. If movable – one who first take possession in good faith 2. If immovable – one who recorded in registry of property in good faith - no inscription, one who first took possession in good faith - in absence thereof, one who can present oldest title600 c. Excessive/inofficious 1. Shall be reduced with regards to the excess 2. Action to reduce to be filed by heirs who have right to legitimate at time of donation 3. Donees/creditors of deceased donor cannot ask for reduction of donation 4. If there are 2 or more donation: recent ones shall be suppressed 5. If 2 or more donation at same time – treated equally & reduction is pro rata but donor may impose preference which must be expressly stated in donation

600

Art. 1544

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d. Scope of amount The donation may comprehend all the present property of the donor, or part thereof, 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. Without such reservation, the donation shall be reduced in petition of any person affected.601 Donations cannot comprehend future property. By future property is understood anything which the donor cannot dispose of at the time of the donation.602 The provisions of Article 750603 notwithstanding, no person may give or receive, by way of donation, more than he may give or receive by will. The donation shall be inofficious in all that it may exceed this limitation.604 e. In fraud of creditors 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.605

601

Art. 750 Art. 751 603 See Reference 604 Art. 752 605 Art. 759 602

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7. Void Donations (1) Made between persons who were guilty of adultery or concubinage at the time of the donation; (2) Made between persons found guilty of the same criminal offense, in consideration thereof; (3) Made to a public officer or his wife, descendants and ascendants, by reason of his office. In the case referred to in No. 1, the action for declaration of nullity may be brought by 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.606 Incapacity to succeed by will shall be applicable to donations inter vivos.607 The following are incapable of succeeding: (1) The priest who heard the confession of the testator during his last illness, or the minister of the gospel who extended spiritual aid to him during the same period; (2) The relatives of such priest or minister of the gospel within the fourth degree, the church, order, chapter, community, organization, or institution to which such priest or minister may belong; (3) A guardian with respect to testamentary dispositions given by a ward in his favor before the final accounts of the guardianship have been approved, 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; (4) Any attesting witness to the execution of a will, the spouse, parents, or children, or any one claiming under such witness, spouse, parents, or children; (5) Any physician, surgeon, nurse, health officer or druggist who took care of the testator during his last illness; (6) Individuals, associations and corporations not permitted by law to inherit.608

606

Art. 739 Art. 740 608 Art. 1027 607

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8. Revocation609 or reduction610 a. Grounds for revocation611 Reduction612

Revocation i. birth, appearance, or adoption of a child;

i. failure of the donor to reserve sufficient means for support of himself or dependent ii.. non – fulfillment of a resolutory relatives; condition imposed by the donor; ii. failure of the donor to reserve sufficient iii. ingratitude of the donee613 property to pay off his existing debts; iii.

inofficiousness, that is, the donation

exceeds that which the donor can give by will. b. How done Birth of child

Non-fulfillment of condition

Ipso jure revocation, no need needs court action for action., court decision is merely declaratory

Ingratitude needs court action

Extent: portion which may Extent: whole portion but Extent: impair legitime of heirs court may rule partial returned 609

Whole

portion

Affects the whole donation and is allowed during the lifetime of the donor Applies only to donation inter vivos Not applicable to onerous donations 610 Generally affects a portion only of the donation and is allowed during the lifetime of the donor or after his death 611 Art. 760 612 ibid 613 Donee commits offense against person, honor, property of donor, spouse, children under his parental authority Donee imputes to donor any criminal offense or any cat involving moral turpitude even if he should prove it unless act/crime has been committed against donee himself, spouse or children under his parental authority Donee unduly refuses to give support to donor when legally or morally bound to give support to donor

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revocation only Property must be returned

Property in excess

Property to be returned

Alienation/mortgages done prior to recording in Register of Deeds: If already sold or cannot be returned – the value must be returned If mortgaged – donor may redeem the mortgage with right to recover from done

Alienations/mortgages imposed are void unless registered with Register of Deeds

Prior ones are void; demand value of property when alienated and can’t be recovered or redeemed from 3rd persons

Fruits to be returned at filing Fruits to be returned at filing of action for revocation of complaint Prescription of action is 4 Prescription is 4 years from Prescription is 1 year from years from birth, etc. non-fulfilment knowledge of fact and it was possible for him to bring action Action cannot be renounced

Action cannot be renounced in advance

Right of action transmitted Right of action at instance of Heirs can’t file action to heirs donor but may be transmitted to heirs Action extends to donee’s Action does not extend to heirs donee’s heirs

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c. Effects Upon the revocation or reduction of the donation by the birth, appearance or adoption of a child, the property affected shall be returned or its value if the donee has sold the same.614 In this case, the property donated shall be returned to the donor, the alienations made by the donee and the mortgages imposed thereon by him being void, with the limitations established, with regard to third persons, by the Mortgage Law and the Land Registration laws.615 Although the donation is revoked on account of ingratitude, nevertheless, the alienations and mortgages effected before the notation of the complaint for revocation in the Registry of Property shall subsist. Later ones shall be void.616 The donor shall have a right to demand from the donee the value of property alienated which he cannot recover from third persons, or the sum for which the same has been mortgaged. The value of said property shall be fixed as of the time of the donation.617 When the donation is revoked for any of the causes stated in Article 760, 618 or by reason of ingratitude, or when it is reduced because it is inofficious, the donee shall not return the fruits except from the filing of the complaint. If the revocation is based upon noncompliance with any of the 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.619 Donations which in accordance with the provisions of Article 752,620 are inofficious, bearing in mind the estimated net value of the donor's property at the time of his death, shall be reduced with regard to the excess; but this reduction shall not prevent the donations from taking effect during the life of the donor, nor shall it bar the donee from appropriating the fruits.

614

Art. 762 Art. 764, par. 2 616 Art. 766 617 Art. 767 618 See Reference 619 Art. 768 620 supra 615

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For the reduction of donations, the provisions of Articles 911 and 912621 of this Code shall also govern. d. Prescription The donation is revoked ipso jure by operation of law, “by the happening” of any of the events mentioned in Article 760; 622 The period to bring an action is four years, and the day from which the period shall begin to run depends upon the cause for the revocation or reduction; If the donor dies within the period of prescription, the action is transmitted to his legitimate and illegitimate children and descendants; The surviving spouse and the ascendants of the donor are not included. c. Inofficious Donations Every 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.623 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.624 Donations which in accordance with the provisions of Article 752,625 are inofficious, bearing in mind the estimated net value of the donor's property at the time of his death, shall be reduced with regard to the excess; but this reduction shall not prevent

621

See Reference ibid 623 Art. 760 624 Art. 761 625 supra 622

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the donations from taking effect during the life of the donor, nor shall it bar the donee from appropriating the fruits.626 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. Those referred to in the preceding paragraph cannot renounce their right during the lifetime of the donor, either by express declaration, or by consenting to the donation. The donees, devisees and legatees, who are not entitled to the legitime and the creditors of the deceased can neither ask for the reduction nor avail themselves thereof.627 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.628 d. Ingratitude The donation may also be revoked at the instance of the donor, by reason of ingratitude in the following cases: (1) If the donee should commit some offense against the person, the honor or the property of the donor, or of his wife or children under his parental authority; (2) If the donee imputes to the donor any criminal offense, or any act involving moral turpitude, even 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.629 The action granted to the donor by reason of ingratitude cannot be renounced in advance. This action prescribes within one year, to be counted from the time the donor had knowledge of the fact and it was possible for him to bring the action.630

626

Art. 771 Art. 772 628 Art. 773 629 Art. 765 630 Art. 769 627

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PRESCRIPTION I. Definition One acquires ownership and other real rights through the lapse of time in the manner and under the conditions laid down by law.631 A. Acquisitive632 May be ordinary or extraordinary. Ordinary acquisitive prescription requires possession of things in good faith and with just title for the time fixed by law.633 1. Characteristics a. Relationship between the occupant and the land in terms of possession is capable of producing legal consequences; it is the possessor who is the actor b. Requires possession by a claimant who is not the owner c. Applicable to ownership and other real rights d. Vests ownership or other real rights in the occupant e. 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 f. Can be proven under the general issue without its being affirmatively pleaded 2. Ordinary634 a. Good Faith The good faith of the possessor consists in the reasonable belief that the person from whom he received the thing was the owner thereof, and could transmit his ownership.635

631

Art. 1106 One acquires ownership and other real rights through the lapse of time in the manner and under the conditions laid down by law. 633 Art. 1117 634 requires possession of things in good faith and with just title for the time fixed by law 635 Art. 1127 632

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b. Just title 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.636 The title for prescription must be true and valid.637 3. Extraordinary The ownership of personal property also prescribes through uninterrupted possession for eight (8) years, without need of any other condition.638 Ownership and other real rights over immovables also prescribe through uninterrupted adverse possession thereof for thirty (30) years, without need of title or of good faith.639 4. Requisites Possession has to be in the concept of an owner, public, peaceful and uninterrupted.640 Acts of possessory character executed in virtue of license or by mere tolerance of the owner shall not be available for the purposes of possession.641 Possession is interrupted for the purposes of prescription, naturally or civilly.642 Possession is naturally interrupted when through any cause it should cease for more than one year. The old possession is not revived if a new possession should be exercised by the same adverse claimant.643 If the natural interruption is for only one year or less, the time elapsed shall be counted in favor of the prescription.644 636

Art. 1129 Art. 1130 638 Art. 1132, 2nd par. 639 Art. 1137 640 Art. 1118 641 Art. 1119 642 Art. 1120 643 Art. 1121 644 Art. 1122 637

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Civil interruption is produced by judicial summons to the possessor.645 Judicial summons shall be deemed not to have been issued and shall not give rise to interruption: (1) If it should be void for lack of legal solemnities; (2) If the plaintiff should desist from the complaint or should allow the proceedings to lapse; (3) If the possessor should be absolved from the complaint. In all these cases, the period of the interruption shall be counted for the prescription.646 Any express or tacit recognition which the possessor may make of the owner's right also interrupts possession.647 5. Period The ownership of movables prescribes through uninterrupted possession for four (4) years in good faith. The ownership of personal property also prescribes through uninterrupted possession for eight (8) years, without need of any other condition. With regard to the right of the owner to recover personal property lost or of which he has been illegally deprived, as well as with respect to movables acquired in a public sale, fair, or market, or from a merchant's store the provisions of articles 559 and 1505 648 of this Code shall be observed.649 Ownership and other real rights over immovable property are acquired by ordinary prescription through possession of ten (10) years.650 In the computation of time necessary for prescription the following rules shall be observed:

645

Art. 1123 Art. 1124 647 Art. 1125 648 See Reference 649 Art. 1132 650 Art. 1134 646

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(1) The present possessor may complete the period necessary for prescription by tacking his possession to that of his grantor or predecessor in interest; (2) It is presumed that the present possessor who was also the possessor at a previous time, has continued to be in possession during the intervening time, unless there is proof to the contrary; (3) The first day shall be excluded and the last day included.651 6. What cannot be acquired by acquisitive prescription Movables possesses through a crime can never be acquired through prescription by the offender652 but his successors-in-interest may claim prescription, although for purposes of computing the period of prescription, the possession by the offender may not be tacked to the successor’s possession653 Lands registered under the Torrens system cannot be acquired by prescription654 but this rule can be invoked only by one under whose name it was registered.655 B. Extinctive Rights and actions are lost through the lapse of time in the manner and under the conditions laid down by law. 1. Characteristics 1. One does not look to the act of the possessor but to the neglect of the owner 2. Requires inaction of the owner or neglect of one with a right to bring his action 3. Applies to all kinds of rights, whether real or personal 4. Produces the extinction of rights or bars a right of action 5. Results in the loss of a real or personal right, or bars the cause of action to enforce said right 6. Should be affirmatively pleaded and proved to bar the action or claim of the adverse party

651

Art. 1138 Art. 1133 653 See Arts. 533-534 654 Alfonso vs. Jaime, L-12754, Jan. 30, 1960 655 Jocson, et al. vs. Silos, L-12998, July 25, 1960 652

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2. Requisites 1. capacity to acquire by prescription 2. a thing capable of acquisition by prescription 3. possession of thing under certain conditions 4. lapse of time provided by law 3. Periods Movables

Immovables Good Faith

4 years

10 years Bad Faith

8 years656

30 years

656

except where the loss was due to a crime in which case, the offender can not acquire the movable by prescription, and an action to recover it from him is imprescriptible.

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II. No Prescription Applicable A. By Offender Movables possessed through a crime can never be acquired through prescription by the offender.657 B. Registered Lands – PD 1529658 C. The following rights, among others, are not extinguished by prescription: 1. Action legal to demand a right of way The owner, or any person who by virtue of a real right may cultivate or use any immovable, which is surrounded by other immovables pertaining to other persons and without adequate outlet to a public highway, is entitled to demand a right of way through the neighboring estates, after payment of the proper indemnity. Should this easement be established in such a manner that its use may be continuous for all the needs of the dominant estate, establishing a permanent passage, the indemnity shall consist of the value of the land occupied and the amount of the damage caused to the servient estate. In case the right of way is limited to the necessary passage for the cultivation of the estate surrounded by others and for the gathering of its crops through the servient estate without a permanent way, the indemnity shall consist in the payment of the damage caused by such encumbrance. This easement is not compulsory if the isolation of the immovable is due to the proprietor's own acts.659 2. To abate a nuisance660

657

Art. 1133 See reference 659 Art. 649 660 Art. 1143 658

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D. Action to quiet title if plaintiff in possession If the plaintiff is in possession of the property, the action does not prescribe.661 E. Void contracts The action or defense for the declaration of the inexistence of a contract does not prescribe.662 F. Action to demand partition 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. 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. No prescription shall run in favor of a co-owner or co-heir against his co-owners or co-heirs so long as he expressly or impliedly recognizes the co-ownership.663

661

Reason: While the owner continues to be liable to an action, proceeding or suit upon the adverse claim, he has a continuing right to be given aid by the court to ascertain and determine the nature of such claim and its effect on his title, or to assert any superior equity in his favor. He may wait until his possession is disturbed or his title is attacked before taking steps to vindicate his right. 662 Art. 1410 663 Art. 494

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1. Distinguished from laches Laches or “Stale demands: Failure or neglect, for an unreasonable and unexplained length of time, to do that which, by exercising due diligence, could or should have been done earlier; it is negligence or omission to assert a right within reasonable time, warranting a presumption that the party entitled to assert it either has abandoned it or declined to assert it. Laches 1. concerned with effect of delay

Prescription 1. concerned with fact of delay

2. question of inequity of permitting the 2. question or matter of time claim to be enforced 3. not statutory

3. statutory

4. applies in equity

4. applies at law

5. not based on a fixed time

5. based on a fixed time

G. Property of public dominion 1. For public use664 2. For public service665 3. For the development of the national wealth.

664 665

e.g. roads, canals, rivers e.g. public buildings

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III. Prescription or Limitation of Actions A. To recover movables666 B. To recover immovables667 C. Other actions A mortgage action prescribes after ten (10) years.668 The following rights, among others, are not extinguished by prescription: (1) To demand a right of way, regulated in Article 649;669 (2) To bring an action to abate a public or private nuisance.670 The following actions must be brought within ten (10) years from the time the right of action accrues: (1) Upon a written contract; (2) Upon an obligation created by law; (3) Upon a judgment.671 The following actions must be commenced within six (6) years: (1) Upon an oral contract; (2) Upon a quasi-contract.672 The following actions must be instituted within four (4) years: (1) Upon an injury to the rights of the plaintiff; (2) Upon a quasi-delict.673

666

Art. 1140, supra Art. 1141, Ibid. 668 Art. 1142 669 See reference 670 Art. 1143 671 Art. 1144 672 Art. 1145 673 Art. 1146 667

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The following actions must be filed within one (1) year: (1) For forcible entry and detainer; (2) For defamation.674 The limitations of action mentioned in Articles 1140 to 1142, and 1144 to 1147675 are without prejudice to those specified in other parts of this Code, in the Code of Commerce, and in special laws.676 All other actions whose periods are not fixed in this Code or in other laws must be brought within five (5) years from the time the right of action accrues.677 IV. Interruption When the actions are filed before the court, when there is a written extrajudicial demand by the creditors, and when there is any written acknowledgment of the debt by the debtor.678

674

Art. 1147 supra 676 Art. 1148 677 Art. 1149 678 Art. 1155 675

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OBLIGATIONS I. Definition A juridical necessity to give, to do or not to do,679 one impressed with the character of enforceability. II. Elements of an Obligation

The possessor of a right; he in whose favor the obligation is constituted;

1. Active subject680

2. Passive subject681

He who has the duty of giving, doing or not doing;

3. Object or prestation682

May consist of giving a thing, or doing or not doing a certain act683and

4. Efficient cause684

The reason why the obligation exists

679

Art. 1156 obligee or creditor 681 obligor or debtor 682 the subject matter of the obligation 683 Requisites: 1. it must be licit 2. it must be possible, physically & juridically 3. it must be determinate or determinable 4. it must have a possible equivalent in money 684 vinculum or juridical tie 680

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III. Different Kinds of Prestations 1. To give

Consists in the delivery of a movable or an immovable thing, in order to create a real right or for the use of the recipient or for its simple possession or in order to return to its owner

2. To do

All kinds of work or services, whether mental or physical

3. Not to do

Consists in abstaining from some act, includes “not to give,” both being negative obligations

IV. Classification of Obligations 1. Criteria of demandability:

a. Pure - one w/c is not subject to a condition or a term. b. Conditional - 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.685 c. W/ a term686 -

2. Plurality of objects

a. Single

685

Art. 1181 A past thing can never be a condition. A condition is always future and uncertain. Past event unknown to the parties.-- It is really the knowledge of the event w/c constitutes the future. It is the knowledge w/c is future and uncertain. Effect of Impossible Condition.-- It annuls the obligation w/c depends upon them. The entire juridical tie is tainted by the impossible condition. 686 see Reference

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3. Plurality of subjects

b. Alternative - where the debtor must perform any of the prestations687 c. Facultative - where only one thing is due but the debtor has reserved the right to substitute it w/ another688 d. Joint - one in w/c each of the debtors is liable only for a proportionate part of the debt or each creditor is entitled only to a proportionate part of the credit.689 e. Solidary - one in w/c the debtor is liable for the entire obligation or each creditor is entitled to demand the whole obligation. There is only one obligation is a solidary obligation.

4. Performance

a. Divisible - one susceptible of partial performance.

687

The characteristic of alternative obligations is that, several objects being due, the fulfillment of one is sufficient (Tolentino) 688 Art. 1206 689 there are as many obligations as there are debtors multiplied by the number of creditors. Effects of Joint Liability: 1. The demand by one creditor upon one debtor, produces the effects of default only w/ respect to the creditor who demanded and the debtor on whom the demand was made, but not w/ respect to the others; 2. The 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. On the same principle, a partial payment or acknowledgement made by one of several joint debtors does not stop the running of the statute of limitations as to the others; 3. The vices of each obligation arising from the personal defect of a particular debtor or creditor does not affect the obligation or rights of the others; 4. The 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-creditors; 5. In the joint divisible obligation, the defense of res judicata is not extended from one debtor to another. (Manresa.)

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b. Indivisible - one that must be performed in one act.690 5. Sanctions for Breach

a. Simple b. W/ a penal clause - an accessory undertaking to assume greater liability in case of breach.691

V. Sources of Obligations692 A. A single act or omission can give rise to different causes of action It is a source of obligation because of the provision in Article 100 of the Revised code that “every person criminally liable is also civilly liable.”693 B. Natural Obligations694 They are real obligations to which the law denies an action, but which the debtor may perform voluntarily.695 690

General rule: Obligation is indivisible w/c means that it has to be performed in one act singly. Why? Bec. the law provides so: Unless there is an express stipulation to that effect, the creditor cannot be compelled partially to receive the prestations in which the obligation consists. Neither may the debtor be required to make partial payments. xxx (Art. 1248, par. 1.) Three Exceptions to the Rule on Indivisibility: 1. When the parties so provide. (Art. 1248, par. 1.) 2. When the nature of the obligation necessarily entails performance in parts. 3. Where the law provides otherwise. 691 The purpose is to strengthen the coercive force of the obligation. When a penal clause is present, damages do not have to be proved. 692 Obligations arise from: 1. Law 2. Contracts 3. Quasi-contracts 4. Acts or omissions punished by law and 5. Quasi-delicts. 693 Nolledo, Jose N., The Philippine Law on Obligations and Contracts Explained, 1980 Ed., p. 2 694 a. Based not on positive law but on equity and natural law b. Do not grant such right of action to enforce their performance 695 Examples of natural obligations enumerated under the Civil Code: 1. Performance after the civil obligation has prescribed;

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C. Extra-contractual Obligations696 1. Quasi-contract697 - That juridical relation resulting 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 2 kinds: a. Negotiorum gestio - unauthorized management698 b. Solutio indebiti - undue payment 699 2. Quasi-delict/torts700 - It is a fault or act of negligence ( or omission of care ) which causes damage to another, there being no pre-existing contractual relations between the parties.701

2. Reimbursement of a third person for a debt that has prescribed; 3. Restitution by minor after annulment of contract; 4. Delivery by minor of money or fungible thing in fulfillment of obligation; 5. Performance after action to enforce civil obligation has failed; 6. Payment by heir of debt exceeding value of property inherited; and 7. Payment of legacy after will have been declared void. 696 Arts. 2142 to 2194 697 obligation ex quasi-contractu 698 This takes place when a person voluntarily takes charge of another’s abandoned business or property without the owner’s authority 699 This takes place when something is received when there is no right to demand it, and it was unduly delivered thru mistake 700 obligation ex quasi-delicto or ex quasi maleficio 701 Elements: a. There must be fault or negligence attributable to the person charged b. There must be damage or injury c. There must be a direct relation of cause and effect between the fault or negligence on the one hand and the damage or injury on the other hand ( proximate cause )

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VI. Nature and Effect of obligations A. Obligation to give702 1. A determinate or specific thing When what is to be delivered is a determinate thing, the creditor, in addition to the right granted him by Article 1170,703 may compel the debtor to make the delivery.704 The obligation to give a determinate thing includes that of delivering all its accessions and accessories, even though they may not have been mentioned.705 2. An indeterminate or generic thing If the thing is indeterminate or generic, he may ask that the obligation be complied with at the expense of the debtor.706 B. Obligation to do or not to do Obligations to do

In Obligations not to do

If a person is obliged to do something, it must be done as promised, and it cannot be substituted by another act or forbearance against the obligee’s will707. If the obligor fails to do it, the same shall be executed at his cost708 albeit he may not be compelled to do so personally or by himself.

When the obligation consists in not doing, and the obligor does what has been forbidden him, it shall also be undone at his expense.710

This same rule shall be observed if he does it in contravention of the tenor of the obligation. Furthermore, it may be decreed

702

Three Accessory Obligations: 1. To take care of the thing w/ the diligence of a good father of a family until actual delivery.(Art. 1163) 2. To deliver the fruits to the creditor (fruits produced after obligation to deliver arises).(Art. 1164) 3. To deliver accessions and accessories(Art. 1166) 703 See reference 704 Art. 1165, 1st par. 705 Art. 1166 706 Art. 1165 , 2nd par. 707 see Art. 1244 708 see Chavez vs. Gonzales, 32 SCRA 547

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that what has been poorly done be undone.709

C. Breaches of obligations 1. Complete failure to perform Debtor is unable to comply with his obligation because of fortuitous event.711 2. Default, delay or mora712 – no default unless creditors makes a demand;713 exceptions 1. Obligation or law expressly so declares 2. Time is of the essence of the contract 3. Demand is useless as when obligor has rendered beyond his power to perform 4. There is acknowledgment of default. In reciprocal obligations, one party incurs in delay from the moment the other party fulfills his obligation, while he himself does not comply or is not ready to comply in a proper manner with what is incumbent upon him.714 a. Mora solvendi Delay of the debtor to perform his obligation. It may be: 1. Ex re – obligation is to give 2. Ex persona – obligation is to do715

710

see Art. 1168; Cui vs. Chan, 41 Phil. 523 Art. 1167 711 debtor is not liable for damages 712 Non-fulfillment of the obligation with respect to time 713 There must be a demand (judicial or extra-judicial) before delay may be incurred. 714 see Art. 1169 The general rule is that fulfillment by both parties should be simultaneous except when different dates for the performance of obligation is fixed by the parties. Demand is still necessary if their respective obligations are to be performed on separate dates. 715 There can be delay only in positive obligations (to give/to do). There can be no delay in negative obligations (not to give/not to do). 709

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b. Mora accipiendi Delay of the creditor to accept the delivery of the thing w/c is the object of the obligation c. Compesatio morae Delay of the parties or obligors in reciprocal obligation. 3. Fraud in the performance of obligation716 a. Waiver of future fraud is void Responsibility arising from fraud is demandable in all obligations. Any waiver of an action for future fraud is void.717 4. Negligence (culpa)718 in the performance of obligation a. Diligence normally required is ordinary diligence or diligence of a good father of a family b. Exceptions: common carriers which are required to exercise extraordinary diligence 5. Contravention of the tenor of obligation The faithful observance of an obligation according to its tenor is mandated by law; an unexcused failure thereof renders the obligor liable for losses and damages caused thereby.719

716

Deliberate and intentional evasion of the fulfillment of an obligation Art. 1171 Future fraud cannot be waived because it would result to illusory obligation. 718 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 Negligence can be waived unless the nature of the obligation or public policy requires extraordinary diligence as in common carrier. 719 see Art. 1170 717

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6. Legal excuse for breach of obligation – fortuitous event; requisites Fortuitous event720- an event which could not be foreseen or which though foreseen, was inevitable. Requisites: 1. cause is independent of the will of the debtor721 2. the event must be unforeseeable or unavoidable 3. occurrence must be such as to render it impossible for the debtor to fulfill his obligation in a normal manner 4. debtor must be free from any participation in the aggravation of the injury resulting to the creditor722

720

General Rule: No liability in case of fortuitous event. Exceptions: 1. When expressly declared by law (e.g. Article 552(2), 1165(3), 1268, 1942, 2147, 2148 and 2159 of the Civil Code.) 2. When expressly declared by stipulation or contract 3. When the nature of the obligation requires the assumption of risk 4 When the obligor is in default or has promised to deliver the same thing to 2 or more persons who do not have the same interest [Article 1165(3)]. 721 It must not only be the proximate cause but it must be the only and sole cause. 722 Lasam vs. Smith, 45 Phil. 657

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D. Remedies available to creditor in cases of breach 1. Specific Performance723 When what is to be delivered is a determinate thing, the creditor, in addition to the right granted him by Art 1170,724 may compel the debtor to make the delivery.725 a. Substituted performance by a third person on obligation to deliver generic thing and in obligation to do, unless a purely personal act Obligation to give generic thing

Obligation to do

If the thing is indeterminate or generic, he may ask that the obligation be complied with at the expense of the debtor.726

If a person obliged to do something fails to do it, the same shall be executed at his cost. This same rule shall be observed if he does it in contravention of the tenor of the obligation. Furthermore, it may be decreed that what has been done poorly be undone.727

723

in obligation to give specific thing indemnification for damages 725 Art. 1165, par 1; see also ROC Rule 39, Sec 10 726 Art 1165, Par 2 Delivery of anything belonging to the species stipulated will be sufficient. Debtor cannot avoid obligation by paying damages if the creditor insists on the performance. 727 Art. 1167 The court has no discretion to merely award damages to the creditor when the act can be done in spite of the refusal or failure of debtor to do so. Exception: Imposition of personal force or coercion upon the debtor to comply with his obligation tantamount to involuntary servitude and imprisonment for debt 724

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2. Rescission728 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.729 The injured party may choose between the fulfillment and the rescission of the obligation,730 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. 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 1385731 and 1388732 and the Mortgage Law.733 In case both parties have committed a breach of the obligation, the liability of the first infractor shall be equitably tempered by the courts. If it cannot be determined which of the parties first violated the contract, the same shall be deemed extinguished, and each shall bear his own damages.734

728

resolution in reciprocal obligations Only applies to reciprocal obligations, where there is “reciprocity” between the parties i.e. creditor debtor relations arise from the same cause or “identity of cause”. Reciprocal obligations have a “tacit resolutory condition” 729 Power to rescind: Pertains to the injured party, party who did not perform not entitled to insist upon the performance of the contract by the defendant or recover damages by reason of his own breach Rights of injured party subordinated to the rights of a 3rd person to whom bad faith is not imputable Not absolute, not permitted in casual/slight breach, may only be claimed in substantial breach (Song Fo v. Hawaiian Philippines) Rescission requires judicial approval to produce legal effect Exception: object is not yet delivered and obligation has not yet been performed If the obligation has not yet been performed: extrajudicial declaration of party willing to perform would suffice; can refuse to perform if the other party is not yet ready to comply If the injured party has already performed: cannot extrajudicially rescind IF the other party opposes the rescission (otherwise, rescission produces legal effect). In the case the other party impugns rescission, the court comes in either to: a. Declare the rescission as properly made b. Give a period to the debtor in which to perform 730 The remedy is alternative. Party seeking rescission can only elect one between fulfillment and rescission. There can be no partial performance and partial rescission. 731 See Reference 732 ibid 733 Art. 1191 734 Art. 1192

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3. Damages, in any event In case of breach of the obligation,735 exclusive or in addition to specific performance. 4. Subsidiary remedies of creditors a. Accion subrogatoria736 Action which the creditor may exercise in place of the negligent debtor in order to preserve or recover for the patrimony of the debtor the product of such action, and then obtain therefrom the satisfaction of his own credit.737 b. Accion pauliana738 Creditors have the right to set aside or revoke acts which the debtor may have done to defraud them. All acts of the debtor which reduce his patrimony in fraud of his creditors, whether by gratuitous or onerous title, can be revoked by this action. c. Accion directa739 Right of the lessor to go directly to sublessee for unpaid rents of the lessee.740 Right of the laborers or persons who furnish materials for a piece of work undertaken by a contractor to go directly to the owner for any unpaid claims due to the contractor.741 735

Art. 1170; See Reference Recoverable damages include any and all damages that a human being may suffer. Responsibility for damages is indivisible 736 An action against the debtor’s debtor 737 subrogatory action; See Art. 1177 Previous approval of court is not necessary Plaintiff entitled only to so much as is needed to satisfy his credit, any balance shall pertain to the debtor Patrimony of the debtor (includes both present and future property) is liable for the obligations he may contract by being a legal guaranty in favor of his creditors. Hence, he cannot maliciously reduce such guaranty 738 rescissory action An action to rescind contracts entered into by the debtor in fraud of creditors ( Arts. 1177, last sentence and 1381, par. 3, See Reference Payments of pre-existing obligations already due, whether natural or civil, cannot be impugned by an accion pauliana 739 Arts. 1652, 1608, 1729 & 1893; see reference 740 See Art. 1652 741 See Art. 1729

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VII. Kinds of Civil Obligations A. Pure The performance does not depend upon a future or uncertain event, or upon a past event unknown to the parties, which is demandable at once.742 B. Conditional 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.743 1. Suspensive condition744 The happening of the event gives birth to an obligation 2. Resolutory condition745 The happening of the event will extinguish the obligation. 3. Potestative, casual or mixed Potestative

Casual

One w/c depends solely on One where the condition is the will of either one made to depend upon a party.746 third person or upon chance.747

742

Mixed One w/c depends partly upon the will of one of the parties and partly on either chance or the will of a third person.

Art. 1179 Every obligation which contains a resolutory condition shall also be demandable, without prejudice to the effects of the happening of the event. 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 (Art. 1180) 743 Art. 1181 744 condition precedent 745 condition subsequent 746 e.g., "I will give you my plantation in Davao provided you reside in Davao permanently." 747 e.g., "I will give you my land in Pampanga if you will pass the bar exams this year."

175

a. Obligations subject conditions are void

to

potestative

suspensive

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 the will of a third person, the obligation shall take effect.748 4. Effect of the happening of suspensive condition or resolutory condition a) Extent of retroactivity 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. 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. 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.749 5. Effect of improvement, loss or deterioration of specific thing before the happening of a suspensive condition in obligation to do or not to do Rules in case of the improvement, loss or deterioration of the thing during the pendency of the condition: (1) If the thing is lost without the fault of the debtor, the obligation shall be extinguished; (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; (3) When the thing deteriorates without the fault of the debtor, the impairment is to be borne by the creditor;

748 749

Art. 1182 Art. 1187

176

(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; (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.750 6. Effect when a resolutory condition in obligation to do or not to do happens and there is improvement, loss or deterioration of the specific thing The provisions of the second paragraph of Article 1187751 shall be observed as regards the effect of the extinguishment of the obligation.752 C. Obligation with a period or a term753 Obligations for whose fulfillment a day certain has been fixed, which is demandable only when that day comes. Obligations with a resolutory period take effect at once, but terminate upon arrival of the day certain. A day certain is understood to be that which must necessarily come, although it may not be known when. If the uncertainty consists in whether the day will come or not, the obligation is conditional.754

750

Art. 1189 supra 752 Art. 1190, par. 3 753 General rule: If a period is attached in an obligation, the presumption is that it is for the benefit of both parties. The consequence is that the creditor cannot compel the performance before the arrival of the term; the debtor cannot compel acceptance before the arrival of the term. 754 Art. 1193 751

177

1. Presumption that period is for the benefit of both debtor and creditor Whenever in an obligation a period is designated, it is presumed to have been established for the benefit of both the creditor and the debtor, unless from the tenor of the same or other circumstances it should appear that the period has been established in favor of one or of the other.755 2. Effect if suspensive period756 is for the benefit of both debtor and creditor Term is for the benefit of the creditor

Term is for the benefit of the debtor

The creditor can demand performance The creditor cannot demand performance anytime; but the debtor cannot insist on anytime; but the debtor can insist on payment before the period. performance anytime.757

3. Effect if given to debtor alone a) Instances when debtor losses benefit of period (1) When after the obligation has been contracted, he becomes insolvent, unless he gives a guaranty or security for the debt; (2) When he does not furnish to the creditor the guaranties or securities which he has promised; (3) When by his own acts he has 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) When the debtor violates any undertaking, in consideration of which the creditor agreed to the period; (5) When the debtor attempts to abscond.758

755

Art.1196 The obligation has already arisen except that it is not yet demandable 757 Illustrations: "I promise to pay within 60 days." This is a term for the benefit of the debtor. "I promise to pay Clara the sum of P100,000 on or before Oct. 31, 1996." This is a term for the benefit of the debtor. 758 Art. 1198 756

178

4. Resolutory period Obligations with a resolutory period take effect at once, but terminate upon arrival of the day certain.759 5. Definite or indefinite period a. Instances when courts may fix the period If the obligation does not fix a period, but from its nature and the circumstances it can be inferred that a period was intended. The courts shall also fix the duration of the period when it depends upon the will of the debtor. In every case, the courts shall determine such period as may under the circumstances have been probably contemplated by the parties. Once fixed by the courts, the period cannot be changed by them.760 b. Creditor must ask court to set the period before he can demand payment D. Alternative or Facultative761 1. Difference between alternative and facultative obligations762 Alternative

Facultative As to contents of the obligation

There are various prestations all of w/c constitute parts of the obligation

759

Only the principal prestation constitutes the obligation, the accessory being only a means to facilitate payment.

in diem, or resolutory Art. 1197 761 Art. 1199 A person alternatively bound by different prestations shall completely perform one of them. The creditor cannot be compelled to receive part of one and part of the other undertaking. 762 Facultative obligations always involve choice by the debtor. In theory, it is easy to distinguish a facultative obligation from an alternative one. But in practice, it is difficult to distinguish the two. You just have to find out what the parties really intended (Balane) 760

179

As to nullity The nullity of one prestation does not invalidate the obligation, w/c is still in force w/ respect to those w/c have no vice

The nullity of the principal prestation invalidates the obligation and the creditor cannot demand the substitute even when this is valid.

As to choice The right to choose may be given to the Only the debtor can choose the substitute creditor prestation. As to effect of loss Only the impossibility of all the prestations The impossibility of the principal prestation due w/o fault of the debtor extinguishes the is sufficient to extinguish the obligation, obligation even if the substitute is possible.763

2. Effect of loss of specific things or impossibility of performance of alternative, through fault of debtor/creditor or through fortuitous events Choice is debtor's

Choice is the creditor's

a. When only one prestation is left,764 the a. If one or some are lost through fortuitous debtor may perform the one that is left.765 event, the creditor may choose from those remaining.768 b. If the choice is limited through the creditor's own acts, the debtor can ask for b. If one or some are lost through the resolution plus damages.766 debtor's fault, the creditor has choice from the remainder or the value of the things lost c. If everything is lost through the debtor's plus damages.769 fault, the latter is liable to indemnify the creditor for damages.767 c. If all are lost through the debtor's fault, 763

IV Tolentino whether or not the rest of the prestations have been lost through fortuitous event or through the fault of the debtor 765 Art. 1202 766 Art. 1203 767 Art. 1204 768 Art. 1205 (1) 769 Id. (2) 764

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d. If some things are lost through the the choice of the creditor shall fall upon the debtor's fault, the debtor can still choose price of any of them, w/ indemnity for from those remaining. damages.770 e. If all are lost through fortuitous event, d. If some are lost through the creditor's the obligation is extinguished. fault, the creditor may choose from the remainder. f. If all prestations but one are lost through fortuitous event, and the remaining e. If all are lost through fortuitous event, prestation was lost through the debtor's the obligation is extinguished. fault, the latter is liable to indemnify the creditor for damages. f. If all are lost through the creditor's fault, the obligation is extinguished. g. If all but one are lost through the fault of the debtor and the last one was lost through through fortuitous event, the obligation is extinguished.

VIII. Joint and Solidary obligation A. Joint (divisible) obligation 1. Concurrence of two or more creditors and or two or more debtors a. Joint obligation is presumed, unless otherwise indicated by the law or nature of obligation The concurrence of two or more creditors or of two or more debtors in one and the same obligation does not imply that each one of the former has a right to demand, or that each one of the latter is bound to render, entire compliance with the prestation. There is a solidary liability only when the obligation expressly so states, or when the law or the nature of the obligation requires solidarity.771

770 771

Id. (3) Art. 1207

181

b. Obligation presumed to be divided into as many equal shares as there are creditors or debtors The credit or debt or deemed divided into as many shares as there are creditors or debtors to each other, each resulting credit or debt being considered distinct from one another.772 c. Each credit is distinct from one another, therefore a joint debtor cannot be required to pay for the share of another with debtor, although he may pay if he wants to 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.773 d. Insolvency of a joint debtor, others not liable for his share774 B. Joint Indivisible Obligation 1. Obligation cannot be performed in parts but debtors are bound jointly Generally, obligations are indivisible since the integrity of the obligations requires their payment or performance completely.775 2. In case of failure of one joint debtor to perform his part (share), there is default but only guilty debtor shall be liable for damages A joint indivisible obligation gives rise to indemnity for damages from the time anyone of the debtors does not comply with his undertaking. The debtors who may have been ready to fulfill their promises shall not contribute to the indemnity beyond the corresponding portion of the price of the thing or of the value of the service in which the obligation consists.776

772

see Art. 1208 Art. 1209 774 ibid 775 Arts. 1233 and 1248 776 Art. 1224 773

182

C. Solidary obligation 1. Mutual agency among solidary debtors 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.777 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 1219.778 The creditor who may have executed any of these acts, as well as he who collects the debt, shall be liable to the others for the share in the obligation corresponding to them.779 2. Mutual guaranty among solidary debtors 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.780 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 co-debtors 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.781 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

777

Art. 1214 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. 779 Art. 1215 780 Art. 1216 781 Art. 1217 778

183

others, he may avail himself thereof only as regards that part of the debt for which the latter are responsible.782 3. Each one of solidary creditors may do whatever may be useful to the others, but not anything prejudicial to them783 a) Effect of any novation, compensation, confusion or remission of debt executed by a solidary creditor 784

1219.

The obligation is extinguished, without prejudice to the provisions of Article

The creditor who may have executed any of these acts, as well as he who collects the debt, is liable to the others for the share in the obligation corresponding to them.785 D. Divisible and Indivisible Obligations to give definite things and those which are not susceptible of partial performance shall be deemed to be indivisible. 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. However, even though the object or service may be physically divisible, an obligation is indivisible if so provided by law or intended by the parties. In obligations not to do, divisibility or indivisibility shall be determined by the character of the prestation in each particular case.786 E. Obligations with a Penal Clause The penalty shall substitute the indemnity for damages and the payment of interests in case of noncompliance, if there is no stipulation to the contrary. Damages shall be paid if the obligor refuses to pay the penalty or is guilty of fraud in the fulfillment of the obligation. The penalty may be enforced only when it is demandable.787 782

Art. 1222 Art. 1212 784 supra 785 Art. 1215 786 Art. 1225 787 Art. 1226 783

184

Proof of actual damages suffered by the creditor is not necessary in order that the penalty may be demanded. 788 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.789 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.790 IX. Extinguishment of Obligations A. Payment 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. 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.791 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.792 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 it793

788

Art. 1228 Art. 1229 790 Art. 1230 791 Art. 1236 792 Art. 1237 793 Art. 1238 789

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1. Dation in payment Property is alienated to the creditor in satisfaction of a debt in money.794 2. Form of payment The payment of debts in money shall be made in the currency stipulated. 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. In the meantime, the action derived from the original obligation shall be held in abeyance.795 3. Extraordinary inflation or deflation 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.796 4. Application of payment797 He who has various debts of the same kind in favor of one and the same creditor, may declare at the time of making the payment, to which of them the same must be applied. Unless the parties so stipulate, or when the application of payment is made by the party for whose benefit the term has been constituted, application shall not be made as to debts which are not yet due. If the debtor accepts from the creditor a receipt in which an application of the payment is made, the former cannot complain of the same, unless there is a cause for invalidating the contract.798 If the debt produces interest, payment of the principal shall not be deemed to have been made until the interests have been covered.799 794

Art. 1245 Dation in payment is governed by the law on sales because it is as if the creditor is now the vendee,and the debtor becomes now the vendor. 795 Art. 1249 796 Art. 1250 797 the designation of a debt which is being paid by the debtor who has several obligations of the same kind in favor of the creditor to whom the payment is made (quoting Tolentino.) 798 Art. 1252 799 Art. 1253

186

When the payment cannot be applied, or if application cannot be inferred from other circumstances, the debt which is most onerous to the debtor, among those due, shall be deemed to have been satisfied. If the debts due are of the same nature and burden, the payment shall be applied to all of them proportionately.800 5. Tender of Payment and Consignation If the creditor to whom tender of payment has been made refuses without just cause to accept it, the debtor shall be released from responsibility by the consignation of the thing or sum due. Consignation alone shall produce the same effect in the following cases, when: (1) Creditor is absent or unknown, or does not appear at the place of payment; (2) He is incapacitated to receive the payment at the time it is due; (3) Without just cause, he refuses to give a receipt; (4) Two or more persons claim the same right to collect; (5) The title of the obligation has been lost.801 In order that the consignation of the thing due may release the obligor, it must first be announced to the persons interested in the fulfillment of the obligation.802 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.803 The expenses of consignation, when properly made, shall be charged against the creditor.804

800

Art. 1254 Art.1256 802 Art. 1257 803 Art. 1258 804 Art. 1259 801

187

Once the consignation has been duly made, the debtor may ask the judge to order the cancellation of the obligation. Before the creditor has accepted the consignation, or before a judicial declaration that the consignation has been properly made, the debtor may withdraw the thing or the sum deposited, allowing the obligation to remain in force.805 If, the consignation having been made, the creditor should authorize the debtor to withdraw the same, he shall lose every preference which he may have over the thing. The co-debtors, guarantors and sureties shall be released.806 B. Loss of Determinate Thing Due or Impossibility or difficulty of performance The obligation is extinguished if it should be lost or destroyed without the fault of the debtor, and before he has incurred in delay. When by law or stipulation, the obligor is liable even for fortuitous events, the loss of the thing does not extinguish the obligation, and he shall be responsible for damages. The same rule applies when the nature of the obligation requires the assumption of risk.807 The debtor in obligations to do shall also be released when the prestation becomes legally or physically impossible without the fault of the obligor.808 When the service has become so difficult as to be manifestly beyond the contemplation of the parties, the obligor may also be released therefrom, in whole or in part.809

805

Art. 1260 Art. 1261 807 Art. 1262 808 Art. 1266 809 Art. 1267 806

188

C. Condonation or Remission of Debt An act of liberality by virtue of which, without receiving any equivalent, the creditor renounces enforcement of an obligation which is extinguished, in whole or in part.810 1. Express condonations and required formality thereof Express condonation shall comply with the forms of donation.811 2. Implied The delivery of a private document evidencing a credit, made voluntarily by the creditor to the debtor, implies the renunciation of the action which the former had against the latter. If in order to nullify this waiver it should be claimed to be inofficious, the debtor and his heirs may uphold it by proving that the delivery of the document was made in virtue of payment of the debt.812 Whenever the private document in which the debt appears is found in the possession of the debtor, it shall be presumed that the creditor delivered it voluntarily, unless the contrary is proved.813 It is presumed that the accessory obligation of pledge has been remitted when the thing pledged, after its delivery to the creditor, is found in the possession of the debtor, or of a third person who owns the thing.814

810

Four (4) requisites: 1. Debt that is existing. You can remit a debt even before it is due. 2. Renunciation must be gratuitous. If renunciation is for a consideration, the mode of extinguishment may be something else. It may be novation, compromise of dacion en pago. 3. Acceptance by the debtor 4. Capacity of the parties. Condonation or remission is essentially gratuitous, and requires the acceptance by the obligor. It may be made expressly or impliedly. One and the other kind shall be subject to the rules which govern inofficious donations (Art. 1270) 811 The form of donation must be observed. If the condonation involves movables, apply Art. 748. If it involves immovables, apply Art. 749. But note that the creditor may just refuse to collect (w/o observing any form.) In this case, the obligation will be extinguished not by virtue of condonation but by waiver under Art. 6. 812 Art. 1271 813 Art. 1272 814 Art. 1274

189

D. Confusion or Merger of Rights When the characters of creditor and debtor are merged in the same person.815 E. Compensation When two persons, in their own right, are creditors and debtors of each other.816 It is necessary that: (1) Each one of the obligors be bound principally, and that he be at the same time a principal creditor of the other; (2) Both debts consist in a sum of money, or if the things due are consumable, they be of the same kind, and also of the same quality if the latter has been stated; (3) The two (2) debts be due; (4) They be liquidated and demandable; (5) Over neither of them there be any retention or controversy, commenced by third persons and communicated in due time to the debtor.817

815

Art. 1275 Art. 1278 Compensation shall not be proper when one of the debts arises from a depositum or from the obligations of a depositary or of a bailee in commodatum. 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 par. 2 of Article 301 (Art. 1287) Neither shall there be compensation if one of the debts consists in civil liability arising from a penal offense (Art. 1288) 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 (Art. 1289) 817 Art. 1279 816

190

1. Kinds a. Legal compensation 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.818 When all the requisites mentioned above 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.819 b. Agreement The parties may agree upon the compensation of debts which are not yet due.820 c. Voluntary821 d. Judicial 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.822 e. Facultative When compensation is claimable by only one of the parties but not of the other.823

818

Art. 1286 Art. 1290 820 Art. 1282 821 See Agreement, supra 822 Art. 1283 823 e.g., Arts. 1287, 1288 819

191

2. Obligations not compensable a. When one of the debts arises from a depositum or from the obligations of a depositary or of a bailee in commodatum. b. Against a creditor who has a claim for support due by gratuitous title, without prejudice to the provisions of paragraph 2 of Article 301.824 c. If one of the debts consists in civil liability arising from a penal offense.825 F. Novation Obligations may be modified by: (1) Changing their object or principal conditions; (2) Substituting the person of the debtor; (3) Subrogating a third person in the rights of the creditor.826 In order that an obligation may be extinguished by another which substitute the same, it is imperative that it be so declared in unequivocal terms, or that the old and the new obligations be on every point incompatible with each other.827 Novation which consists in substituting a new debtor in the place of the original one, may be made even without the knowledge or against the will of the latter, but not without the consent of the creditor. Payment by the new debtor gives him the rights mentioned in articles 1236 and 1237.828 If the substitution is without the knowledge or against the will of the debtor, the new debtor's insolvency or non-fulfillment of the obligations shall not give rise to any liability on the part of the original debtor.829 The insolvency of the new debtor, who has been proposed by the original debtor and accepted by the creditor, shall not revive the action of the latter against the original 824

Art. 1287 Support in arrears may be compensated and renounced, and the right to demand the same may be transmitted by onerous or gratuitous title (Art. 301, par. 2) 825 Art. 1288 826 Art. 1291 827 Art. 1292 828 Art. 1293 829 Art. 1294

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obligor, except when said insolvency was already existing and of public knowledge, or known to the debtor, when the delegated his debt.830 When the principal obligation is extinguished in consequence of a novation, accessory obligations may subsist only insofar as they may benefit third persons who did not give their consent.831 If the new obligation is void, the original one shall subsist, unless the parties intended that the former relation should be extinguished in any event.832 The novation is void if the original obligation was void, except when annulment may be claimed only by the debtor or when ratification validates acts which are voidable.833 If the original obligation was subject to a suspensive or resolutory condition, the new obligation shall be under the same condition, unless it is otherwise stipulated.834 Subrogation of a third person in the rights of the creditor is either legal or conventional. The former is not presumed, except in cases expressly mentioned in this Code; the latter must be clearly established in order that it may take effect.835 Conventional subrogation of a third person requires the consent of the original parties and of the third person.836 It is presumed that there is legal subrogation: (1) When a 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.837

830

Art. 1295 Art. 1296 832 Art. 1297 833 Art. 1298 834 Art. 1299 835 Art. 1300 836 Art. 1301 837 Art. 1302 831

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Subrogation transfers to the persons subrogated the credit with all the rights thereto appertaining, either against the debtor or against third person, be they guarantors or possessors of mortgages, subject to stipulation in a conventional subrogation.838 A creditor, to whom partial payment has been made, may exercise his right for the remainder, and he shall be preferred to the person who has been subrogated in his place in virtue of the partial payment of the same credit.839

838 839

Art. 1303 Art. 1304

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CONTRACTS I. Essential Requisites (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.840 II. Kinds of Contracts Consensual

Real

Formal or Solemn

Perfected by mere consent Requires delivery of object Requires compliance with and from that moment, the for perfection.841 certain formalities parties are bound not only prescribed by law, such to the fulfillment of what prescribed form being an has been expressly stipulated essential element but also to all consequences which, according to their nature may be in keeping with good faith, usage and law.

1. Donations Movable

Immovable

May be made orally or in writing

It must be made in a public document, specifying therein the property donated and An oral donation requires the simultaneous the value of the charges which the donee delivery of the thing or of the document must satisfy. representing the right donated. If the value of the personal property donated exceeds five thousand pesos (P5,000.00), the donation and the acceptance shall be made in writing. Otherwise, the donation shall be void.842 840

Art. 1381 like deposit, pledge and commodatum 842 Art. 748 841

195

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. 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.843 2. Partnership844 where real property contributed A public instrument is necessary.845 There must be: 1. an inventory of said property 2. signed by the parties; and 3. attached to the public instrument.846 3. Antichresis The amount of the principal and of the interest shall be specified in writing; otherwise, the contract of antichresis is void.847 4. Agency to sell real property or an interest therein The authority of the agent must be in writing; otherwise, the sale is void.848 5. Stipulation to charge interest No interest shall be due unless it has been expressly stipulated in writing.849

843

Art. 749 may be constituted in any form 845 Art. 1771 846 Art. 1773; otherwise, the contract of partnership is void 847 Art. 2134 848 Art. 1874 849 Art. 1956 844

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6. Stipulation limiting common carrier’s duty of extraordinary diligence to ordinary diligence 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; (2) Supported by a valuable consideration other than the service rendered by the common carrier; and (3) Reasonable, just and not contrary to public policy.850 7. Chattel mortgage Personal property is recorded in the Chattel Mortgage Register as 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.851 8. Sale of large cattle Governed by special law852 which requires that the same be in a public instrument. No person, partnership, association, corporation or entity shall engage in the business of buy and sell of large cattle without first securing a permit for the said purpose from the Provincial Commander of the province where it shall conduct such business and the city/municipal treasurer of the place of residence of such person, partnership, association, corporation or entity. The permit shall only be valid in such province.853

850

Art. 1744 Art. 2140 852 Act No. 1147 853 Sec. 5, P.D. 533 851

197

III. Formality 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.854 If the law requires a document or other special form, 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.855 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 are governed by Articles 1403, No. 2, and 1405;856 (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 (P500.00) 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 1405.857

854

Art. 1356 Art. 1357 856 infra 857 Art. 1358 855

198

IV. Defective Contracts A. Rescissible Contracts858 (1) 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; (2) Those agreed upon in representation of absentees, if the latter suffer the lesion stated in the preceding number; (3) Those undertaken in fraud of creditors when the latter cannot in any other manner collect the claims due them; (4) Those which refer to things under litigation if they have been entered into by the defendant without the knowledge and approval of the litigants or of competent judicial authority; (5) All other contracts specially declared by law to be subject to rescission.859 (6) Payments made in a state of insolvency on account of obligations not yet enforceable 1. Difference with Rescission (resolution) under Art. 1191 Rescission in Article 1191

Rescission Proper in Article 1381

It is a principal action retaliatory in It is a subsidiary remedy. character. The only ground is non-performance of There are 5 grounds to rescind. Nonone’s obligation/s or what is incumbent performance by the other party is not upon him. important. It applies only to reciprocal obligation

It applies to both unilateral and reciprocal obligations.

858

Contracts validly agreed upon but, by reason of lesion or economic prejudice may be rescinded in cases established by law. 859 Art. 1381

199

Only a party to the contract may demand Even a 3rd person who is prejudiced by the fulfillment or seek the rescission of the contract may demand the rescission of the contract. contract.

B. Voidable Contracts860 Contracts entered into during a lucid interval are valid. Contracts agreed to in a state of drunkenness or during a hypnotic spell are voidable.861 The incapacity declared in Article 1327862 is subject to the modifications determined by law, and is understood to be without prejudice to special disqualifications established in the laws.863 A contract where consent is given through mistake, violence, intimidation, undue influence, or fraud is voidable.864 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. Mistake as to the identity or qualifications of one of the parties will vitiate consent only when such identity or qualifications have been the principal cause of the contract. A simple mistake of account shall give rise to its correction.865

860

Art. 1409 Those in which all of the essential elements for validity are present, although the element of consent is vitiated either by lack of capacity of one of the contracting parties or by VIMFU. What contracts are voidable: 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 3. By loss of the thing which is the object of the contract through fraud or fault of the person who is entitled to annul the contract. Requisites: a. there must be knowledge of the reason which renders the contract voidable b. such reason must have ceased and c. the injured party must have executed an act which expressly or impliedly conveys an intention to waive his right. 861 Art. 1328 862 See Reference 863 Art. 1329 864 Art. 1330 865 Art. 1331

200

When one of the parties is unable to read, or if the contract is in a language not understood by him, and mistake or fraud is alleged, the person enforcing the contract must show that the terms thereof have been fully explained to the former.866 There is no mistake if the party alleging it knew the doubt, contingency or risk affecting the object of the contract.867 Mutual error as to the legal effect of an agreement when the real purpose of the parties is frustrated, may vitiate consent.868 There is violence when in order to wrest consent, serious or irresistible force is employed. There is 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. To determine the degree of intimidation, the age, sex and condition of the person shall be borne in mind. A threat to enforce one's claim through competent authority, if the claim is just or legal, does not vitiate consent.869 Violence or intimidation shall annul the obligation, although it may have been employed by a third person who did not take part in the contract.870 There is 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. The following circumstances shall be considered: the confidential, family, spiritual and other relations between the parties, or the fact that the person alleged to have been unduly influenced was suffering from mental weakness, or was ignorant or in financial distress.871 There is 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.872

866

Art. 1332 Art. 1333 868 Art. 1334 869 Art. 1335 870 Art. 1336 871 Art. 1337 872 Art. 1338 867

201

Failure to disclose facts, when there is a duty to reveal them, as when the parties are bound by confidential relations, constitutes fraud.873 The usual exaggerations in trade, when the other party had an opportunity to know the facts, are not in themselves fraudulent.874 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.875 Misrepresentation by a third person does not vitiate consent, unless such misrepresentation has created substantial mistake and the same is mutual.876 Misrepresentation made in good faith is not fraudulent but may constitute error.877 In order that fraud may make a contract voidable, it should be serious and should not have been employed by both contracting parties. Incidental fraud only obliges the person employing it to pay damages.878 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. These contracts are binding, unless they are annulled by a proper action in court. They are susceptible of ratification.879 The action for annulment shall be brought within four (4) years. This period shall begin: In cases of intimidation, violence or undue influence, from the time the defect of the consent ceases.

873

Art. 1339 Art. 1340 875 Art. 1341 876 Art. 1342 877 Art. 1343 878 Art. 1344 879 Art. 1390 874

202

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.880 Ratification extinguishes the action to annul a voidable contract.881 Ratification may be effected expressly or tacitly. It is understood that there is a tacit ratification if, with knowledge of the reason which renders the contract voidable and such reason having ceased, the person who has a right to invoke it should execute an act which necessarily implies an intention to waive his right.882 Ratification may be effected by the guardian of the incapacitated person.883 Ratification does not require the conformity of the contracting party who has no right to bring the action for annulment.884 Ratification cleanses the contract from all its defects from the moment it was constituted.885 The action for the annulment of contracts may be instituted by all who are thereby obliged principally or subsidiarily. However, persons who are capable cannot allege the incapacity of those with whom they contracted; nor can those who exerted intimidation, violence, or undue influence, or employed fraud, or caused mistake base their action upon these flaws of the contract.886 An obligation having been annulled, the contracting parties shall restore to each other the things which have been the subject matter of the contract, with their fruits, and the price with its interest, except in cases provided by law. In obligations to render service, the value thereof shall be the basis for damages.887 When the defect of the contract consists in the incapacity of one of the parties, the incapacitated person is not obliged to make any restitution except insofar as he has been benefited by the thing or price received by him.888 880

Art. 1391 Art. 1392 882 Art. 1393 883 Art. 1394 884 Art. 1395 885 Art. 1396 886 Art. 1397 887 Art. 1398 888 Art. 1399 881

203

Whenever the person obliged by the decree of annulment to return the thing cannot do so because it has been lost through his fault, he shall return the fruits received and the value of the thing at the time of the loss, with interest from the same date.889 The action for annulment of contracts shall be extinguished when the thing which is the object thereof is lost through the fraud or fault of the person who has a right to institute the proceedings. If the right of action is based upon the incapacity of any one of the contracting parties, the loss of the thing shall not be an obstacle to the success of the action, unless said loss took place through the fraud or fault of the plaintiff.890 As long as one of the contracting parties does not restore what in virtue of the decree of annulment he is bound to return, the other cannot be compelled to comply with what is incumbent upon him.891

889

Art. 1400 Art. 1401 891 Art. 1402 890

204

C. Unenforceable Contracts892 The following contracts are unenforceable, unless they are ratified: (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. 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;

892

Those which cannot be enforced by proper action in court unless they are ratified What contracts are unenforceable 1. those entered into in the name of another by one without or acting in excess of authority; 2. those where both parties are incapable of giving consent; and 3. those which do not comply with the Statute of Frauds Agreements within the scope of the Statute of Frauds (exclusive list): 1. Agreements not to be performed within one year from the making thereof; 2. Special promise to answer for the debt, default or miscarriage of another; - this does not refer to the original or independent promise of the debtor to his own creditor. It refers rather to a collateral promise. 3. Agreement in consideration of marriage other than a mutual promise to marry; 4. Agreement for the sale of goods, etc. at a price not less than P500.00; 5. Contracts of lease for a period longer than one year; 6. Agreements for the sale of real property or interest therein; and 7. Representation as to the credit of a third person. The contracts/agreements under the Statute of Frauds require that the same be evidenced by some note, memorandum or writing, subscribed by the party charged or by his agent, otherwise, the said contracts shall be unenforceable. The statute of frauds applies only to executory contracts, not to those that are partially or completely fulfilled. Ratification of contracts in violation of the Statute of Frauds 1. Failure to object to the presentation of oral evidence to prove such contracts 2. Acceptance of benefits under these contracts

205

(d) An agreement for the sale of goods, chattels or things in action, at a price not less than five hundred pesos (P500.00), 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 for the leasing for a longer period than one (1) 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.893 Unauthorized contracts are governed by Article 1317894 and the principles of

895

agency.

Contracts infringing the Statute of Frauds, referred to in No. 2 of Article 1403, are ratified by the failure to object to the presentation of oral evidence to prove the same, or by the acceptance of benefit under them.896 When a contract is enforceable under the Statute of Frauds, and a public document is necessary for its registration in the Registry of Deeds, the parties may avail themselves of the right under Article 1357.897 In a contract where both parties are incapable of giving consent, express or implied, ratification by the parent, or guardian, as the case may be, of one of the contracting parties shall give the contract the same effect as if only one of them were incapacitated. If ratification is made by the parents or guardians, as the case may be, of both contracting parties, the contract shall be validated from the inception. 893

Art. 1403 No one may contract in the name of another without being authorized by the latter, or unless he has by law a right to represent him. A contract entered into in the name of another by one who has no authority or legal representation, or who has acted beyond his powers, shall be unenforceable, unless it is ratified, expressly or impliedly, by the person on whose behalf it has been executed, before it is revoked by the other contracting party 895 Art. 1404 896 Art. 1405 897 Art. 1406 If the law requires a document or other special form, 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 (Art. 1357) 894

206

No one may contract in the name of another without being authorized by the latter, or unless he has by law a right to represent him. A contract entered into in the name of another by one who has no authority or legal representation, or who has acted beyond his powers, shall be unenforceable, unless it is ratified, expressly or impliedly, by the person on whose behalf it has been executed, before it is revoked by the other contracting party.898 D. Void Contracts899 (1) Those whose cause, object or purpose is contrary to law, morals, good customs, public order or public policy; (2) Those which are absolutely simulated or fictitious; (3) Those whose cause or object did not exist at the time of the transaction; (4) Those whose object is outside the commerce of men; (5) Those which contemplate an impossible service; (6) Those where the intention of the parties relative to the principal object of the contract cannot be ascertained; (7) 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.900 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.901

898

Art. 1407 Those where all of the requisites of a contract are present but the cause, object or purpose is contrary to law, morals, good customs, public order or public policy, or contract itself is prohibited or declared void by law. 900 Art. 1409 901 Art. 1346 899

207

Comparative table of defective contracts Void

Voidable

Rescissible

Unenforceable

1. Defect is Defect is caused by Defect is caused by caused by lack of vice of consent injury/ damage essential elements either to one of the or illegality parties of to a 3rd person

Defect is caused by lack of form, authority, or capacity of both parties not cured by prescription

2. Do not, as a general rule produce any legal effect

Valid and enforceable until they are annulled by a competent court

Valid and enforceable until they are rescinded by a competent court

Cannot be enforced by a proper action in court

3. Action for the declaration or nullity or inexistence or defense of nullity or inexistence does not prescribe

Action annulment defense annulability prescribe

for Action for rescission or may prescribe of may

Corresponding action for recovery, if there was total or partial performance of the unenforceable contract under No. 1 or 3902 of Article 1403 may prescribe

4. Not cured by Cured prescription prescription 5. Cannot ratified

be Can be ratified

by Cured prescription

by Not cured prescription

Need not be ratified

by

Can be ratified

6. Assailed not Assailed only by a Assailed not only by Assailed only by a only by a contracting party a contracting party contracting party contracting party but even by a third 902

supra

208

but even by a third person whose interest is directly affected

person who prejudiced damaged by contract

is or the

7. Assailed directly Assailed directly or Assailed directly only Assailed directly or or collaterally collaterally collaterally 1. Pactum commissorium It can be found in Article 2088 of the civil code which provides: The creditor cannot appropriate the things given by way of pledge or mortgage, or dispose of them. Any stipulation to the contrary is null and void. Simply put, it is a stipulation in a contract of mortgage of pledge which provides that the mortgagee will automatically own the property mortgaged in case the mortgagor fails to pay the loan. This stipulation is void. 2. Pactum de non alienando A stipulation forbidding the owner from alienating the immovable mortgaged.903 3. Pactum leonina A stipulation which excludes one or more partners from any share in the profits or losses.904

903 904

Art. 2130 Art. 1799

209

V. Effect of Contracts 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.905

905

Art. 1311

210

SALES906 I. Introduction A. Definition of Sales 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. A contract of sale may be absolute or conditional.907 Gross inadequacy of price does not affect a contract of sale, except as it may indicate a defect in the consent, or that the parties really intended a donation or some other act or contract.908 B. Essential Requisites of a Contract of Sale Subject to the provisions of this Title, where goods are sold by a person who is not the owner thereof, and who does not sell them under authority or with the consent of the owner, the buyer acquires no better title to the goods than the seller had, unless the owner of the goods is by his conduct precluded from denying the seller's authority to sell. Nothing in this Title, however, shall affect: (1) The provisions of any factors' act, recording laws, or any other provision of law enabling the apparent owner of goods to dispose of them as if he were the true owner thereof; (2) The validity of any contract of sale under statutory power of sale or under the order of a court of competent jurisdiction; (3) Purchases made in a merchant's store, or in fairs, or markets, in accordance with the Code of Commerce and special laws.909 906

A nominate contract whereby one of the contracting parties obligates himself to transfer the ownership of and to deliver a determinate thing and the other to pay therefor a price certain in money or its equivalent. Delivery and payment in a contract of sale are so interrelated and intertwined with each other that without delivery of the goods there is no corresponding obligation to pay. The two complement each other. It is clear that the two elements cannot be dissociated, for the contract of purchase and sale is essentially a bilateral contract, as it gives rise to reciprocal obligations. (Pio Barretto Sons, Inc. vs. Compania Maritima, 62 SCRA 167). Neither is the delivery of the thing bought nor the payment of the price necessary for the perfection of the contract of sale. Being consensual, it is perfected by mere consent. 907 Art. 1458 908 Art. 1470

211

C. Stages of Contract of Sale 1. Negotiation 2. Perfection – by mere consent; performance may be demanded910 3. Consummation D. Obligations Created When what is to be delivered is a determinate thing, the creditor, in addition to the right granted him by Article 1170,911 may compel the debtor to make the delivery. If the thing is indeterminate or generic, he may ask that the obligation be complied with at the expense of the debtor. 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.912 E. Characteristics of a Contract of Sale 1.

Principal - can stand on its own; unlike accessory contract

2.

Consensual - meeting of minds makes a perfect contract of sale but needs delivery to consummate.

3.

Bilateral - imposes obligation on both parties913

4.

Nominate - law gave it a name

5.

Commutative - with valuable consideration914

6.

Onerous - with valuable consideration

7.

Title & not a mode – title gives rise to an obligation to transfer; it is a mode w/c actually transfers ownership

909

Art. 1505 specific performance 911 Those who in the performance of their obligations are guilty of fraud, negligence, or delay, and those who in any manner contravene the tenor thereof, are liable for damages. 912 Art. 1165 913 obligation of seller – transfer ownership & deliver obligation of buyer – pay price Consequence: power to rescind is implied in bilateral contracts 914 Test: subjective – as long as parties believe in all honesty that he is receiving equal value then it complies with the test & would not be deemed a donation; but must not be absurd. Inadequacy of price or aleatory character not sufficient ground to cancel contract of sale; Inadequacy can show vitiation of consent & sale may be annulled based on vice but not on inadequacy 910

212

F. Sale is Title and Not Mode The contract of sale by itself is not a mode of acquiring ownership. The contact transfers no real rights; it merely causes certain obligations to arise. G. Sale Distinguished From Other Contracts Donation

Sale

Gratuitous

Onerous

Formal contract

Consensual

Governed by law on donation

Governed by law on sales

Barter915

Sale

The consideration is the giving of a it is giving of money as payment thing Both are governed by law on sales; both are species of the genus sales If consideration consists party in money & partly by thing – look at manifest intention. If intention is not clear916 Value of thing is more than amount Value of thing is equal or less than of money amount of money

915

The only point difference between contract of sale and barter is in the element which is present in sale but not in barter, namely: price certain in money or its equivalent 916 Art. 1468

213

Contract for piece of work917

Sale

Goods are to be manufactured specially for a customer and upon special order and not for the general market

Contract for delivery of an article which the vendor in the ordinary course of business manufactures or procures for general market918

The thing transferred is one not in existence and which never would have existed but for the order of the party desiring to acquire it

The thing transferred is one which would have existed and would have been the subject of sale to some other person, even if the order had not been given

The services dominate the contract The primary objective of the even though there is a sale of goods contract is a sale of the involved manufactured item; it is a sale of goods even though the item is manufactured by labor furnished by the seller and upon previous order of the customer Not within the Statute of Frauds

Within the Statute of Frauds

Agency to sell

Sale

Agent not obliged to pay for price, Buyer pays for price of object merely obliged to deliver price received from buyer. Principal remains owner even if Buyer becomes owner of thing object delivered to agent Agent assumes no risk/liability as Seller warrants long as within the authority given 917

Art. 1467 Main factor in decision of the SC: essence of why parties enter into it: a. essence is object – contract of sale b. essence is service – contract for piece of work 918 whether on hand or not

214

May be revoked unilaterally because Not unilaterally revocable fiduciary & even if revoked w/o ground Agent not allowed to profit

Seller receives profit

A personal contract

A real contract919

Agent receives the goods as goods Buyer receives the goods as owner of the principal who retains his ownership over them Agent delivers the price which in Buyer pays the price turn he got from his buyer Agent can return the goods in case Buyer, as a general rule, cannot he is unable to sell the same to a return the object sold third person Agent makes no warranty for which Seller warrants the thing sold he assumes personal liability as long as he acts within his authority and in the name of the seller Agent in dealing with the thing Buyer can deal with the thing sold as received, must act and is bound he pleases being the owner according to the instructions of the principal

919

to give

215

Lease

Sale

Use of thing is for a specified Obligation to absolutely transfer period only with an obligation to ownership of thing return Consideration is rent

Consideration is price

Lessor need not be owner

Seller needs to be owner of thing to transfer ownership

Lease with option to buy: really a contract of sale but designated as lease in name only; it is a sale by installments Dation in Payment920

Sale

Pre-existing credit

No pre-existing credit

Obligations are extinguished

Obligations are created

Consideration of the debtor is the extinguishment of the debt; on the part of the creditor, it is the acquisition of the object offered in lieu of the original credit

Consideration on the part of the seller is the price; on the part of the buyer is the acquisition of the object

Less Freedom in determining the Greater freedom in determining price the price. The payment is received by the Buyer still has to pay the price debtor before the contract is perfected.

920

A contract where property is alienated to satisfy/extinguish obligation to pay debt Novates creditor-debtor relationship into seller-buyer Delivery is required (real contract)

216

H. Contract of Sale/Contract to Sell Contract to sell921

Contract of Sale A contract whereby 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.

A bilateral contract whereby the prospective seller, while expressly reserving the ownership of the subject property despite delivery thereof to the prospective buyer binds himself to sell the said property exclusively to the prospective buyer upon fulfillment of the condition agreed upon, that is, full payment of the purchase price.

Title passes to the buyer upon Ownership is reserved in the seller delivery of the thing sold and is not to pass until full payment of the purchase price Non-payment of the price is a negative resolutory condition and the remedy of the seller is to exact fulfilment or to rescind the contract

Full payment is a positive suspensive condition, the failure of which is not a breach – casual or serious but simply prevents the obligation of the vendor to convey title from having binding force

Vendor loses and cannot recover ownership of the thing sold and delivered until the contract of sale is resolved and set aside

Title remains in the vendor if the vendee does not comply with the condition precedent of making payment at the time specified in the contract

921

Absent a proviso in the contract that the title to the property is reserved in the vendor until full payment of the purchase price or a stipulation giving the vendor the right to unilaterally rescind the contract the moment the vendee fails to pay within the fixed period, the transaction is an absolute contract of sale and not a contract to sell. (Dignos vs. CA [1988])

217

II. Parties to a Contract of Sale A. Capacity of parties All persons who are authorized by law to obligate themselves, may enter into a contract of sale, with modifications. Where necessaries922 are those sold and delivered to a minor or other person without capacity to act, he must pay a reasonable price therefor. 923 The following persons cannot acquire by purchase, even at a public or judicial auction, either in person or through the mediation of another: (1) The guardian, the property of the person or persons who may be under his guardianship; (2) Agents, the property whose administration or sale may have been intrusted to them, unless the consent of the principal has been given; (3) Executors and administrators, the property of the estate under administration; (4) Public officers and employees, the property of the State or of any subdivision thereof, or of any government-owned or controlled corporation, or institution, the administration of which has been intrusted to them; this provision shall apply to judges and government experts who, in any manner whatsoever, take part in the sale; (5) Justices, judges, prosecuting attorneys, clerks of superior and inferior courts, and other officers and employees connected with the administration of justice, the property and rights in litigation or levied upon an execution before the court within whose jurisdiction or territory they exercise their respective functions; this prohibition includes the act of acquiring by assignment and shall apply to lawyers, with respect to the property and rights which may be the object of any litigation in which they may take part by virtue of their profession; (6) Any others specially disqualified by law. The prohibitions in the two preceding articles are applicable to sales in legal redemption, compromises and renunciations.924

922

Refers to Art. 290 which provides: Support is everything that is indispensable for sustenance, dwelling, clothing and medical attendance, according to the social position of the family. Support also includes the education of the person entitled to be supported until he completes his education or training for some profession, trade or vocation, even beyond the age of majority. 923 Art. 1489 924 Art. 1491

218

B. Absolute incapacity The following cannot give consent to a contract: (1) Unemancipated minors; (2) Insane or demented persons, and deaf-mutes who do not know how to write925 The action for the annulment of contracts may be instituted by all who are thereby obliged principally or subsidiarily. However, persons who are capable cannot allege the incapacity of those with whom they contracted; nor can those who exerted intimidation, violence, or undue influence, or employed fraud, or caused mistake base their action upon these flaws of the contract.926 When the defect of the contract consists in the incapacity of one of the parties, the incapacitated person is not obliged to make any restitution except insofar as he has been benefited by the thing or price received by him.927 C. Relative incapacity: Married Persons The husband and the wife cannot sell property to each other, except: (1) When separation of property was agreed upon in the marriage settlements: or (2) When there has been a judicial separation of property between the spouses.928 D. Special disqualifications The prohibitions are applicable to sales in legal redemption, compromises and renunciations.929

925

Art. 1327 Art. 1397 927 Art. 1399 928 Art. 1490 929 Art. 1492 926

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III. Subject Matter A. Requisites of a valid subject matter The thing must be licit and the vendor must have a right to transfer the ownership thereof at the time it is delivered.930 A thing is determinate when it is particularly designated or physical segregated from all others of the same class. The requisite that a thing be determinate is satisfied if at the time the contract is entered into, the thing is capable of being made determinate without the necessity of a new or further agreement between the parties.931 Things having a potential existence may be the object of the contract of sale. The efficacy of the sale of a mere hope or expectancy is deemed subject to the condition that the thing will come into existence. The sale of a vain hope or expectancy is void.932 The goods which form the subject of a contract of sale may be either existing goods, owned or possessed by the seller, or goods to be manufactured, raised, or acquired by the seller after the perfection of the contract of sale, in this Title called "future goods." There may be a contract of sale of goods, whose acquisition by the seller depends upon a contingency which may or may not happen.933 The sole owner of a thing may sell an undivided interest therein.934 In the case of fungible goods, there may be a sale of an undivided share of a specific mass, though the seller purports to sell and the buyer to buy a definite number, weight or measure of the goods in the mass, and though the number, weight or measure of the goods in the mass, and though the number, weight or measure of the goods in the mass is undetermined. By such a sale the buyer becomes owner in common of such a share of the mass as the number, weight or measure bought bears to the number, weight or measure of the mass. 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.935

930

Art. 1459 Art. 1460 932 Art. 1461 933 Art. 1462 934 Art. 1463 935 Art. 1464 931

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Things subject to a resolutory condition may be the object of the contract of sale.936 B. Particular kinds 1. Generic things937 2. Future Goods938 3. Sale of undivided interest or share939 4. Sale of things in litigation940 5. Things subject to a resolutory condition941 IV. Obligations of the Seller to Transfer Ownership A. Sale by a person not the owner at time of delivery The goods which form the subject of a contract of sale may be either existing goods, owned or possessed by the seller, or goods to be manufactured, raised, or acquired by the seller after the perfection of the contract of sale, called "future goods." There may be a contract of sale of goods, whose acquisition by the seller depends upon a contingency which may or may not happen.942 Where goods are sold by a person who is not the owner thereof, and who does not sell them under authority or with the consent of the owner, the buyer acquires no better title to the goods than the seller had, unless the owner of the goods is by his conduct precluded from denying the seller's authority to sell.943 The thing must be licit and the vendor must have a right to transfer the ownership thereof at the time it is delivered.944

936

Art. 1465 see Arts. 1246 & 1409 938 Art. 1462 939 Arts. 1463 & 1464 940 Arts. 1381 & 1385 941 Art. 1465 942 Art. 1462 943 Art. 1505 944 Art. 1459 937

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1. Exceptions (1) The provisions of any factors' act, recording laws, or any other provision of law enabling the apparent owner of goods to dispose of them as if he were the true owner thereof; (2) The validity of any contract of sale under statutory power of sale or under the order of a court of competent jurisdiction; (3) Purchases made in a merchant's store, or in fairs, or markets, in accordance with the Code of Commerce and special laws.945 B. Sale by a person having a voidable title Where the seller of goods has a voidable title thereto, but his title has not been avoided at the time of the sale, the 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.946 The possession of movable property acquired in good faith is equivalent to a title. Nevertheless, one who has lost any movable or has been unlawfully deprived thereof, may recover it from the person in possession of the same. If the possessor of a movable lost or which the owner has been unlawfully deprived, has acquired it in good faith at a public sale, the owner cannot obtain its return without reimbursing the price paid therefor.947 V. Price948 A. Meaning of price 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 vendee and agreed to by him. In order that the price may be considered certain, it shall be sufficient that it be so with reference to another thing certain, or that the determination thereof be left to the judgment of a special person or persons. Should such person or persons be unable or unwilling to fix it, the contract shall be inefficacious, unless the parties subsequently agree upon the price.

945

Art. 1505 Art. 1506 947 Art. 559 948 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 vendee and agreed to by him. 946

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If the third person or persons acted in bad faith or by mistake, the courts may fix the price. Where such third person or persons are prevented from fixing the price or terms by fault of the seller or the buyer, the party not in fault may have such remedies against the party in fault as are allowed the seller or the buyer, as the case may be.949 Gross inadequacy of price does not affect a contract of sale, except as it may indicate a defect in the consent, or that the parties really intended a donation or some other act or contract.950 If the price is simulated, the sale is void, but the act may be shown to have been in reality a donation, or some other act or contract.951 The price of securities, grain, liquids, and other things shall also be considered certain, when the price fixed is that which the thing sold would have on a definite day, or in a particular exchange or market, or when an amount is fixed above or below the price on such day, or in such exchange or market, provided said amount be certain.952 The fixing of the price can never be left to the discretion of one of the contracting parties. However, if the price fixed by one of the parties is accepted by the other, the sale is perfected.953 Where the price cannot be determined, or in any other manner, the contract is inefficacious. However, if the thing or any part thereof has been delivered to and appropriated by the buyer he must pay a reasonable price therefor. What is a reasonable price is a question of fact dependent on the circumstances of each particular case.954

949

Art. 1469 Art. 1470 951 Art. 1471 952 Art. 1472 953 Art. 1473 954 Art. 1474 950

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B. Requisites for a valid price 1. Must be real955 2. Must be in money or its equivalent 3. Must be certain or ascertainable956 at the time of the perfection of the contract 4. Manner of payment provided for C. How price is determined957 It is not necessary that the certainty of the price be actual or determined at the time of the execution of the contract.

955

Real 1. When price stated is one intended by parties If fictitious: no intention with respect to price - VOID If False/simulated: what appears in contract is not the true price a. Valid if there is true consideration b. Void but if none (because it is fictitious) 2. Valuable When not valuable – Void When contract is onerous, presumed to have valuable consideration Nominal consideration w/c is common law concept does not apply (P1.00) 956 1.Sufficient that it is fixed with reference to another thing certain That thing will have on a definite day, or in a particular exchange or market, or when an amount is fixed above or below the price on such day, or in such exchange or market provided said amount be certain 2. Determination be left to judgment of specified person/s If contract states that price is to be determined by 3rd party, contract is already perfected (there is just a suspensive condition – actual fixing of price) 3rd party fixes price in bad faith or mistake – court remedy can be made 3rd party is unable or unwilling to fix price – parties have no cause of action Reason: a. suspensive condition does not happen yet – courts have no jurisdiction b. enforceable contract have not yet arisen – court with no jurisdiction to create contract between parties Result: inefficacious When price cannot be determined in accordance with any of the preceding rules, contract of sale is inefficacious However, when SM delivered, buyer must pay reasonable rice therefore – court can fix price 957 Effect of Failure to determine price: 1. Where contract executory The contract is inefficacious 2. Where the thing has been delivered to and appropriated by the buyer The buyer must pay a reasonable price therefore

224

The price is certain in the following cases: 1. If the parties have fixed or agreed upon a definite amount;958 2. If it be certain with reference to another thing certain 3. If the determination of the price is left to the judgment of a specified person or persons even before such determination 4. In the cases provided under Art. 1472,959 NCC D. Inadequacy of price Lesion or inadequacy of cause does not invalidate a contract, unless there has been fraud, mistake or undue influence.960 Gross inadequacy of price does not affect a contract of sale, except as it may indicate a defect in the consent, or that the parties really intended a donation or some other act or contract.961 E. When no price agreed The contract is inefficacious. However, if the thing or any part thereof has been delivered to and appropriated by the buyer, he must pay a reasonable price therefor. What is a reasonable price is a question of fact dependent on the circumstances of each particular case.962

958

The fixing of the price can never be left to the discretion of one of the contracting parties. However if the price fixed by one of the parties is accepted by the other, the sale is perfected. 959 The price of securities, grain, liquids, and other things shall also be considered certain, when the price fixed is that which the thing sold would have on a definite day, or in a particular exchange or market, or when an amount is fixed above or below the price on such day, or in such exchange or market, provided said amount be certain. 960 Art. 1355 961 Art. 1470 Gross inadequacy of price in ordinary sale does not render contract void unless it is shocking to conscience of man. Except: a. Judicial sale Shocking to conscience of man Higher price can be obtained at re-sale b. Rescissible contracts due to lesion c. Sales with right to repurchase (raises presumption of equitable mortgage) – Remedy is reformation 962 Art. 1474

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F. Manner of payment must be agreed upon Deemed to be an essential requisite because it is part of the presentation of the contract.963 G. Earnest money964 vs. option money Whenever earnest money is given in a contract of sale, it shall be considered as part of the price and as proof of the perfection of the contract.965 Earnest money

Option money

Title passes to the buyer upon delivery of the Ownership is reserved to the seller and is not thing sold to pass until full payment In case of non-payment, an action for In case of non-payment, there can be action specific performance or for rescission can be for specific performance filed by the injured party Part of the purchase price

Money given as a distinct consideration for an option contract

When given, the buyer is bound to pay the The would-be buyer is not required to buy balance Given when there is already a sale

Applies to a sale not yet perfected

963

Integral part of concept of price If there is failure to meet minds as regards term of payment: cash basis Must be certain or at least ascertainable Effect if absent: no contract situation 964 or “Arras” is something of value to show that the buyer was really in earnest, and given to the seller to bind the bargain. It is considered as: a) part of the purchase price b) proof of perfection of the contract 965 Art. 1482

226

VI. Formation of Contract of Sale966 A. Preparatory 1. Offer The contract of sale is perfected at the moment there is a meeting of minds upon the thing which is the object of the contract and upon the price. From that moment, the parties may reciprocally demand performance, subject to the provisions of the law governing the form of contracts.967 2. Option Contract968 A promise to buy and sell a determinate thing for a price certain is reciprocally demandable. An accepted unilateral promise to buy or to sell a determinate thing for a price certain is binding upon the promisor if the promise is supported by a consideration distinct from the price.969 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, except when the option is founded upon a consideration, as something paid or promised.970

966

3 Stages in life of a contract of sale 1. Policitacion/negotiation Stage – offer is floated, acceptance is floated but they do not meet; time parties indicate their interest but no concurrence of offer & acceptance 2. Perfection – concurrence of all requisites; meeting of the minds 3. Consummation – parties perform their respective undertakings 967 Art. 1475 968 A contract granting a privilege in one person, for which he has paid a consideration, which gives him the right to buy certain merchandise, at anytime within the agreed period, at a fixed price. An option without consideration is void and the effect is the same as if there was no option However, in Sanchez vs. Rigos (1972), even though the option was not supported by a consideration, the moment it was accepted, a perfected contract of sale resulted, applying Art. 1324 of the NCC. In view of the ruling of the Supreme Court, the only importance of the consideration for an option is that the option cannot be withdrawn by the grantor after acceptance. In an option to buy, the party who has an option may validly and effectively exercise his right by merely notifying the owner of the former’s decision to buy and expressing his readiness to pay the stipulated price. 969 Art. 1479 970 Art. 1324

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3. Right of First Refusal It is a right of first priority all things and conditions being equal; there should be identity of the terms and conditions to be offered to the optionee and all other prospective buyers, with optionee to enjoy the right of first priority. A deed of sale executed in favor of a third party who cannot be deemed a purchaser in good faith, and which is in violation of the right of first refusal granted to the optionee is not voidable under the Statute of Frauds, such contract is valid but rescissible.971 The basis of the right of first refusal must be the current offer to sell of the seller or offer to purchase of any prospective buyer. Only after the optionee fails to exercise its right of first priority under the same terms and within the period contemplated could the owner validly offer to sell the property to a third person, again, under the same terms as offered to the optionee.972 Option contract

Right of first refusal

Principal contract; stands on its own

Accessory; cannot stand on its own

Needs separate consideration

Does not need separate consideration

Subject matter & price must be valid

There must be subject matter but price not important

Not conditional

Conditional

Not subject to specific performance

Subject to specific performance

4. Mutual Promise to Buy and Sell973 One party accepts the other’s promise to buy and the latter, the former’s promise to sell a determinate thing for a price certain It is reciprocally demandable It requires no consideration distinct from the selling price 971

Guzman Bocaling & Co. vs. Bonnavie; Riviera Filipina, Inc vs. CA, et.al. GR No. 117355, April 5, 2002 Paranaque Kings Enterprises, Inc. vs. CA, GR No. 111538, February 26, 1997 973 This is as good as a perfected sale. No title of dominion is transferred as yet, the parties being given only the right to demand fulfillment or damages 972

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B. Perfection974 Consent is manifested by the meeting of the offer and the acceptance upon the thing and the cause which are to constitute the contract. The offer must be certain and the acceptance absolute. A qualified acceptance constitutes a counter-offer.975 Acceptance made by letter or telegram does not bind the offerer except from the time it came to his knowledge. The contract, in such a case, is presumed to have been entered into in the place where the offer was made.976 Unless it appears otherwise, business advertisements of things for sale are not definite offers, but mere invitations to make an offer.977 Advertisements for bidders are simply invitations to make proposals, and the advertiser is not bound to accept the highest or lowest bidder, unless the contrary appears.978

974

Sale is a consensual contract, hence, delivery and payment are not essential for its perfection General rule: It is perfected at the moment there is meeting of the minds upon a determinate thing (object), and a certain price (consideration), even if neither is delivered. A choice between rescission and fulfilment, with damages in either case) Exception: When the sale is subject to a suspensive condition by virtue of law or stipulation. The terms and conditions of payment are merely accidental, not essential elements of the contract of sale except where the parties themselves stipulate that in addition to the subject-matter and the price, they are essential or material to the contract. 975 Meeting of Minds: 1. Offer – certain 2. Acceptance – absolute Qualified acceptance – merely a counter-offer which needs to be absolutely accepted to give rise to perfected contract of sale Business ads are mere invitations to make an offer except when it appears to be otherwise Acceptance by letter/telegram – binds only at time it came to knowledge of SELLER; prior thereto – offer may still be withdrawn Must be exact terms to be considered absolute When deviations allowed: a. anything that refers to price is material b. small items are insignificant, does not make acceptable unconditional When sale is subject to suspensive condition, no perfected contract of sale yet; becomes perfected only upon happening of condition In sales at auction, perfected when auctioneer announces its perfection by the fall of the hammer or in other customary manner may impose terms under bidder may retract his bid; owner of property sold at auction may impose terms under w/c the auction will proceed & it shall be binding w/n the bidders are aware Place of perfection: where the meeting of minds happen; when acceptance sent by mail, perfection is deemed where the offer is made Performance has nothing to do with perfection stage 976 Art. 1319 977 Art. 1325 978 Art. 1326

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The contract of sale is perfected at the moment there is a meeting of minds upon the thing which is the object of the contract and upon the price. From that moment, the parties may reciprocally demand performance, subject to the provisions of the law governing the form of contracts.979 C. Formalities of the Contract General rule: Sale is a consensual contract and is perfected by mere consent. Exceptions: In order to be enforceable by action, the following must be in writing: 1. Sale of personal property at a price not less than P500 2. Sale of real property or an interest therein 3. Sale of property not to be performed within a year from the date thereof.980 4. “Applicable statute” requires that the contract of sale be in a certain form VII. Transfer of Ownership A. Manner of Transfer The ownership of the thing sold shall be transferred to the vendee upon the actual or constructive delivery thereof.981 The ownership of the thing sold is acquired by the vendee from the moment it is delivered to him in any of the ways specified in Articles 1497 to 1501,982 or in any other manner signifying an agreement that the possession is transferred from the vendor to the vendee.983 The thing sold shall be understood as delivered, when it is placed in the control and possession of the vendee.984 When the sale is made through a public instrument, the execution thereof shall be equivalent to the delivery of the thing which is the object of the contract, if from the deed the contrary does not appear or cannot clearly be inferred.

979

Art. 1475 Art. 1403 (d) (e) 981 Art. 1477 982 See Reference 983 Art. 1496 984 Art. 1497 980

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With regard to movable property, its delivery may also be made by the delivery of the keys of the place or depository where it is stored or kept.985 The delivery of movable property may likewise be made by the mere consent or agreement of the contracting parties, if the thing sold cannot be transferred to the possession of the vendee at the time of the sale, or if the latter already had it in his possession for any other reason.986 There may also be tradition constitutum possessorium.987 With respect to incorporeal property, the provisions of the first paragraph of article 1498 shall govern. In any other case wherein said provisions are not applicable, the placing of the titles of ownership in the possession of the vendee or the use by the vendee of his rights, with the vendor's consent, shall be understood as a delivery.988 B. When delivery does not transfer title Instances where Seller is still the Owner despite Delivery: 1. Sale on trial, approval or satisfaction 2. Contrary intention appears by the term of the contract; 3. Implied reservation of ownership989 C. Kinds of delivery Actual or real Placing the thing under the control and possession of the buyer

Legal constructive990

or

Quasi-tradition

Delivery is Delivery of rights, represented by other credits or incorporeal signs or acts property, made by: indicative thereof a. placing titles of Delivery by the ownership in the execution of a public hands of buyer instrument.991

985

Art. 1498 Art. 1499 987 Art. 1500 988 Art. 1501 989 Art. 1503 990 Three things before ownership may be transferred: 1. The seller must have control over the thing 2. The buyer must be put under control 3. There must be the intention to deliver the thing for purposes of ownership 986

231

Tradition operation of law

by

b. allowing buyer to a. traditio symbolica - to make use of rights effect delivery, the parties make use of a token or symbol to represent the thing delivered b. traditio longa manu – seller pointing out to the buyer the things which are transferred, which at the time must be in sight. c. traditio brevi manu – buyer simply continues in possession of the thing but under title of ownership. d. traditio constitutum possessorium – seller continues in possession but under a different title other than ownership.

991

Gives rise only to a prima facie presumption of delivery which is destroyed when actual delivery is not effected because of a legal impediment (Ten Forty Realty vs. Cruz, 10 Sept. 2003)

232

D. Double Sales992 Rules of preference: 1. Personal Property a. first possessor in good faith 2. Real Property a. first registrant in good faith b. first possessor in good faith c. person with oldest title in good faith993 E. Property Registration Decree 1. Requisites for registration of deed of sale in good faith 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. (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. (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 992

Requisites: 1. two or more transactions must constitute valid sales; 2. they must pertain exactly to the same object or subject matter; 3. they must be bought from the same or immediate seller; AND 4. two or more buyers who are at odds over the rightful ownership of the subject matter must represent conflicting interests. 993 Art. 1544 To be entitled to priority, the second buyer must not only show prior recording of his deed but must have acted in good faith, without knowledge of the existence of another alienation by the vendor to another

233

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 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.994 2. Accompanied by vendors duplicate certificate of title, payment of capital gains tax, and documentary tax registration fees For the services to be rendered by the Register of Deeds, he shall collect the same amount of fees prescribed for similar services for the registration of deeds or instruments concerning registered lands.995 VIII. Risk of Loss A. General rule The following rules shall be observed in case of the improvement, loss or deterioration of the thing during the pendency of the condition: (1) If the thing is lost without the fault of the debtor, the obligation shall be extinguished; (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; (3) When the thing deteriorates without the fault of the debtor, the impairment is to be borne by the creditor; (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;

994 995

Sec. 113, P.D. 1529 ibid

234

(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.996 In an obligation to deliver a generic thing, the loss or destruction of anything of the same kind does not extinguish the obligation.997 B. When loss occurred before perfection Seller bears the loss. C. When loss occurred at time of perfection998 If at the time the contract of sale is perfected, the thing which is the object of the contract has been entirely lost, the contract shall be without any effect. But if the thing should have been lost in part only, the vendee may choose between withdrawing from the contract and demanding the remaining part, paying its price in proportion to the total sum agreed upon.999 Where the parties purport a sale of specific goods, and the goods without the knowledge of the seller have perished in part or have wholly or in a material part so deteriorated in quality as to be substantially changed in character, the buyer may at his option treat the sale: (1) As avoided; or (2) As valid in all of the existing goods or in so much thereof as have not deteriorated, and as binding the buyer to pay the agreed price for the goods in which the ownership will pass, if the sale was divisible.1000

996

Art. 1189 Art. 1263 998 Contract is void or inexistent. 999 Art. 1493 1000 Art. 1494 997

235

D. When loss occurred after perfection but before delivery1001 General rule: Who bears the risk of loss is governed by the stipulations in the contract Exceptions: 1.

2. 3.

when object sold consists of fungible goods for a price fixed according to weight, number or measure seller is guilty of fraud, negligence, default or violation of contractual terms object sold is generic1002 E. When ownership is transferred

General rule: While a contract of sale is consensual, ownership of the thing sold is acquired only upon its delivery, actual or constructive, to the buyer.1003 Exceptions: 1. Contrary stipulation or pactum reservati dominii1004 – a stipulation, usually in sales by installment, whereby, despite delivery of the property sold, ownership remains with the seller until full payment of the price is made. 2. Contract to sell

1001

In the absence of any stipulation: First view: Buyer bears the loss as an exception to the rule of res perit domino. Contrary view: Where the ownership is transferred by delivery, as in our code, the application of the axiom res perit domino, imposes the risk of loss upon the vendor; hence, if the thing is lost by fortuitous event before delivery, the vendor suffers the loss and cannot recover the price from the vendee (Commentaries and Jurisprudence on the Civil Code of the Philippines, Tolentino) 1002 Civil Code of the Philippines, Paras. This view conforms with Manresa’s view. Buyer would have been the one to profit from the thing had it not been lost or destroyed. 1003 Daus vs. Sps. De Leon, 16 June 2003 This is true even if the purchase has been made on credit. Payment of the purchase price is not essential to the transfer of ownership, as long as the property sold has been delivered (Sampaguita Pictures, Inc vs. Jalwindor Manufacturers, Inc. 93 SCRA 420) Nonpayment only creates a right to demand payment or to rescind the contract, or to criminal prosecution in the case of bouncing checks. (EDCA Publishing and Distributing Corp. vs. Santos, 184 SCRA 614) 1004 contractual reservation of title

236

3. Contract of insurance – a perfected contract of sale, even without delivery, vests in the vendee an equitable title, an existing interest over the goods sufficient to be the subject of insurance. Unless otherwise agreed, the goods remain at the seller's risk until the ownership therein is transferred to the buyer, but when the ownership therein is transferred to the buyer the goods are at the buyer's risk whether actual delivery has been made or not, except that: (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.1005

IX. Documents of Title A. Definition "Document of title to goods" includes any bill of lading, dock warrant, "quedan," or warehouse receipt or order for the delivery of goods, or any other 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 indorsement or by delivery, goods represented by such document.1006 B. Purpose of documents of title 1. Evidence of existence & possession of goods described therein 2. Medium by which seller is able to transfer possession of goods C. Negotiable documents of title A document of title in which it is stated that the goods referred to therein will be delivered to the bearer, or to the order of any person named in such document.1007 Those by the terms of which the bailee undertakes to deliver the goods to the bearer and which the bailee undertakes to deliver the goods to the order of a specified person. 1005

Art. 1504 Art. 1636 1007 Art. 1507 1006

237

D. Non-negotiable documents of title person.

Those by the terms of which the goods covered are deliverable to a specified E. Warranties of seller of documents of title (1) The document is genuine; (2) He has a legal right to negotiate or transfer it;

(3) He has knowledge of no fact which would impair the validity or worth of the document; and (4) He has a right to transfer the title to the goods and that the goods are merchantable or fit for a particular purpose, whenever such warranties would have been implied if the contract of the parties had been to transfer without a document of title the goods represented thereby.1008 F. Rules on levy/garnishment of goods A person to whom a document of title has been transferred, but not negotiated, acquires thereby, as against the transferor, the title to the goods, subject to the terms of any agreement with the transferor. If the document is non-negotiable, such person also acquires the right to notify the bailee who issued the document of the transfer thereof, and thereby to acquire the direct obligation of such bailee to hold possession of the goods for him according to the terms of the document. Prior to the notification to such bailee by the transferor or transferee of a nonnegotiable document of title, the title of the transferee to the goods and the right to acquire the obligation of such bailee may be defeated by the levy of an attachment of execution upon the goods by a creditor of the transferor, or 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.1009 If goods are delivered to a bailee by the owner or by a person whose act in conveying the title to them to a purchaser in good faith for value would bind the owner and a negotiable document of title is issued for them they cannot thereafter, while in possession of such bailee, be attached by garnishment or otherwise or be levied under an execution unless the document be first surrendered to the bailee or its negotiation enjoined. The bailee shall in no case be compelled to deliver up the actual possession of the goods until the document is surrendered to him or impounded by the court.1010 1008

Art. 1516 Art. 1514 1010 Art. 1519 1009

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A creditor whose debtor is the owner of a negotiable document of title shall be entitled to such aid from courts of appropriate jurisdiction by injunction and otherwise in attaching such document or in satisfying the claim by means thereof as is allowed at law or in equity in regard to property which cannot readily be attached or levied upon by ordinary legal process.1011 X. Remedies of an Unpaid Seller A. Definition of unpaid seller The seller of goods is deemed to be an unpaid seller: (1) When the whole of the price has not been paid or tendered; (2) 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. 1012 B. Remedies of unpaid seller 1. Possessory lien over the goods 2. Right of stoppage in transitu after he has parted with the possession of the goods and the buyer becomes insolvent 3. Special Right of resale 4. Special Right to rescind the sale 5. Action for the price 6. Action for damages XI. Performance of Contract A. Delivery of thing sold 1. Sale of Movables Where the seller delivers to the buyer a quantity of goods less than he contracted to sell, the buyer may reject them, but if the buyer accepts or retains the goods so delivered, knowing that the seller is not going to perform the contract in full, he must pay for them at the contract rate. If, however, the buyer has used or disposed of the goods delivered before he knows that the seller is not going to perform his contract in full, the buyer shall not be liable for more than the fair value to him of the goods so received.

1011 1012

Art. 1520 Art. 1525

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Where the seller delivers to the buyer a quantity of goods larger than he contracted to sell, the buyer may accept the goods included in the contract and reject the rest. If the buyer accepts the whole of the goods so delivered he must pay for them at the contract rate. Where the seller delivers to the buyer the goods he contracted to sell mixed with goods of a different description not included in the contract, the buyer may accept the goods which are in accordance with the contract and reject the rest. If the subject matter is indivisible, the buyer may reject the whole of the goods. The provisions of this article are subject to any usage of trade, special agreement, or course of dealing between the parties.1013 The vendor is bound to deliver the thing sold and its accessions and accessories in the condition in which they were upon the perfection of the contract. All the fruits shall pertain to the vendee from the day on which the contract was perfected.1014 Any injury to or benefit from the thing sold, after the contract has been perfected, from the moment of the perfection of the contract to the time of delivery, shall be governed by Articles 1163 to 1165, and 1262.1015 This rule shall apply to the sale of fungible things, made independently and for a single price, or without consideration of their weight, number, or measure. Should fungible things be sold for a price fixed according to weight, number, or measure, the risk shall not be imputed to the vendee until they have been weighed, counted, or measured and delivered, unless the latter has incurred in delay.1016 2. Sale of Immovables The obligation to deliver the thing sold includes that of placing in the control of the vendee all that is mentioned in the contract, in conformity with the following rules: If the sale of real estate should be made with a statement of its area, at the rate of a certain price for a unit of measure or number, the vendor shall be obliged to deliver to the vendee, if the latter should demand it, all that may have been stated in the contract; but, should this be not possible, the vendee may choose between a proportional reduction of the price and the rescission of the contract, provided that, in the latter case, the lack in the area be not less than one-tenth of that stated.

1013

Art. 1522 Art. 1537 1015 See Reference 1016 Art. 1480 1014

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The same shall be done, even when the area is the same, if any part of the immovable is not of the quality specified in the contract. The rescission, in this case, shall only take place at the will of the vendee, when the inferior value of the thing sold exceeds one-tenth of the price agreed upon. Nevertheless, if the vendee would not have bought the immovable had he known of its smaller area of inferior quality, he may rescind the sale.1017 The actions arising from Articles 1539 and 15421018 shall prescribe in six months, counted from the day of delivery.1019 3. Inspections and Acceptance Right of inspection

Manifestation of Acceptance

The buyer is entitled to examine the goods to decide whether he will become the owner, and until the examination is completed or waived, he is under no obligation to accept them. He may however waive this right by simply refusing to inspect the goods, taking them as they are or by any other similar act.1020

The buyer is deemed to have accepted the goods when: 1. he intimates to the seller that the has accepted them 2. the goods have been delivered to him and he does any act in relation to them which is inconsistent with the ownership of the seller 3. after the lapse of a reasonable time, he retains the goods without intimating to the seller that he has rejected them. Exercise of acts of ownership over the goods is a manifestation of acceptance, such as making use of them as owner, making alterations in the goods or subjecting it to the process of manufacture. Exception: Buyer’s right to make a test of goods, but only if necessary, to enable him to determine whether to accept or reject the goods

1017

Art. 1539 See reference 1019 Art. 1543 1020 See Art. 1584 1018

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B. Payment of price When may be exercised: 1. Where the ownership has passed to the buyer and he wrongfully neglects or refuses to pay for the price 2. Where the price is payable on a day certain and he wrongfully neglects or refuses to pay for the price, irrespective of the delivery or transfer of title 3. Where the goods cannot readily be resold for a reasonable price and the buyer wrongfully refuses to accept them even before the ownership of the goods has passed, if Article 15961021 is inapplicable. XII. Warranties A. Express warranties A statement or representation made by the seller of goods, contemporaneously and as a 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 insure that certain facts are or shall be as he then represents. Where one party expressly promised that the contingency or some act fixed by the contract shall be performed, like a promise that the goods are of a certain kind and character or that certain state of facts would exist, the promise constitutes a warranty, and failure of which gives rise to an action for its breach. 1022 Any affirmation of fact or any promise by the seller relating to the thing is an express warranty if the natural tendency of such affirmation or promise is to induce the buyer to purchase the same, and if the buyer purchase the thing relying thereon. No affirmation of the value of the thing, nor any statement purporting to be a statement of the seller's opinion only, shall be construed as a warranty, unless the seller made such affirmation or statement as an expert and it was relied upon by the buyer.1023

1021

See Reference 1. it must be an affirmation of fact or any promise by seller relating to the subject matter of sale 2. natural tendency of affirmation or promise is to induce buyer to purchase subject matter 3. buyer purchases the subject matter relying thereon 1023 Art. 1546 1022

242

B. Implied warranties1024 That which the law derives by implication or inference from the nature of the transaction or the relative situation or circumstances of the parties, irrespective of any intention of the seller to create it. a. Warranty against eviction b. Warranty against hidden defects c. Warranty as to Fitness and Merchantability In a contract of sale, unless a contrary intention appears, there is: (1) An implied warranty on the part of the seller that he has a right to sell the thing at the time when the ownership is to pass, and that the buyer shall from that time have and enjoy the legal and peaceful possession of the thing; (2) An implied warranty that the thing shall be free from any hidden faults or defects, or any charge or encumbrance not declared or known to the buyer. This shall not be held to render liable a sheriff, auctioneer, mortgagee, pledgee, or other person professing to sell by virtue of authority in fact or law, for the sale of a thing in which a third person has a legal or equitable interest.1025

C. Effects of warranties Where there is a breach of warranty by the seller, the buyer may, at his election: (1) Accept or keep the goods and set up against the seller, the breach of warranty by way of recoupment in diminution or extinction of the price; (2) Accept or keep the goods and maintain an action against the seller for damages for the breach of warranty; (3) Refuse to accept the goods, and maintain an action against the seller for damages for the breach of warranty; (4) Rescind the contract of sale and refuse to receive the goods or if the goods have already been received, return them or offer to return them to the seller and recover the price or any part thereof which has been paid.

1024

An implied warranty is a natural, not an essential element of a contract, and is deemed incorporated in the contract of sale. It may however, be waived or modified by express stipulation. (De Leon) 1025 Art. 1547

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When the buyer has claimed and been granted a remedy in anyone of these ways, no other remedy can thereafter be granted, without prejudice to the provisions of the second paragraph of Article 1191.1026 Where the goods have been delivered to the buyer, he cannot rescind the sale if he knew of the breach of warranty when he accepted the goods without protest, or if he fails to notify the seller within a reasonable time of the election to rescind, or if he fails to return or to offer to return the goods to the seller in substantially as good condition as they were in at the time the ownership was transferred to the buyer. But if deterioration or injury of the goods is due to the breach or warranty, such deterioration or injury shall not prevent the buyer from returning or offering to return the goods to the seller and rescinding the sale. Where the buyer is entitled to rescind the sale and elects to do so, he shall cease to be liable for the price upon returning or offering to return the goods. If the price or any part thereof has already been paid, the seller shall be liable to repay so much thereof as has been paid, concurrently with the return of the goods, or immediately after an offer to return the goods in exchange for repayment of the price. Where the buyer is entitled to rescind the sale and elects to do so, if the seller refuses to accept an offer of the buyer to return the goods, the buyer shall thereafter be deemed to hold the goods as bailee for the seller, but subject to a lien to secure the payment of any portion of the price which has been paid, and with the remedies for the enforcement of such lien allowed to an unpaid seller by Article 1526.1027 (5) In the case of breach of warranty of quality, such loss, in the absence of special circumstances showing proximate damage of a greater amount, is the difference between the value of the goods at the time of delivery to the buyer and the value they would have had if they had answered to the warranty.1028 D. Effects of waivers Parties may increase or diminish implied warranty against eviction; but effect depends on good faith or bad faith on the part of the seller. 1. seller in bad faith & there is waiver against eviction – null & void 2. buyer without knowledge of a particular risk made general renunciation of warranty – not waiver but merely limits liability of seller in case of eviction1029 3. buyer with knowledge of risk of eviction assumed its consequences & made a waiver – vendor not liable.1030

1026

See Reference Ibid. 1028 Art. 1599 1029 pay value of subject matter at time of eviction 1030 applicable only to waiver of warranty against eviction 1027

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E. Buyer’s options in case of breach of warranty1031 XIII. Breach of Contract A. Remedies of the Seller Actions for breach of the contract of sale of goods shall be governed particularly by the provisions of this Chapter, and as to matters not specifically provided for herein, by other applicable provisions of this Title.1032 In the preceding articles in this Title governing the sale of goods, unless the context or subject matter otherwise requires: (1) "Document of title to goods" includes any bill of lading, dock warrant, "quedan," or warehouse receipt or order for the delivery of goods, or any other 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 indorsement or by delivery, goods represented by such document. "Goods" includes all chattels personal but not things in action or money of legal tender in the Philippines. The term includes growing fruits or crops. "Order" relating to documents of title means an order by indorsement on the documents. "Quality of goods" includes their state or condition. "Specific goods" means goods identified and agreed upon at the time a contract of sale is made. An antecedent or pre-existing claim, whether for money or not, constitutes "value" where goods or documents of title are taken either in satisfaction thereof or as security therefor. (2) A person is insolvent within the meaning of this Title who either has ceased to pay his debts in the ordinary course of business or cannot pay his debts as they become due, whether insolvency proceedings have been commenced or not.

When goods delivered to buyer he cannot rescind sale if he knew of the breach of warranty when he accepted goods without protest if he fails to return or offer to return goods to seller in substantially as good condition as they were at time ownership was transferred When goods deteriorated, buyer can still return them in that condition if such is due to breach or warranty 1031 See C. Effects of Warranties, supra 1032 Art. 1594

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(3) Goods are in a "deliverable state" within the meaning of this Title when they are in such a state that the buyer would, under the contract, be bound to take delivery of them.1033

1. Sale of Movables a. Movables in General – Failure of the vendee to appear to receive delivery or, having appeared, failure to tender the price at the same time, unless, a longer period for its payment has been stipulated i. action to rescind the sale1034 b. Sale of Goods – i. action for the price1035 ii. action for damages1036 B. Recto Law: Sale of Movables on Installment The Recto law1037 provides for remedies of a seller in contracts of sale of personal property by installment, as follows: (1) Exact fulfillment of the obligation, should the vendee fail to pay; (2) Cancel the sale, should the vendee's failure to pay cover two or more installments; (3) Foreclose the chattel mortgage on the thing sold, if one has been constituted, should the vendee's failure to pay cover two or more installments. In this case, he shall have no further action against the purchaser to recover any unpaid balance of the price. Any agreement to the contrary shall be void.1038 The preceding article shall be applied to contracts purporting to be leases of personal property with option to buy, when the lessor has deprived the lessee of the possession or enjoyment of the thing.1039 In the case referred to in the two preceding articles, a stipulation that the installments or rents paid shall not be returned to the vendee or lessee shall be valid insofar as the same may not be unconscionable under the circumstances.1040 1033

Art. 1636 Art. 1593 1035 Art. 1595 1036 Art. 1596 1037 Installment Sales Law 1038 Art. 1484 1039 Art. 1485 1034

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C. Sale of Immovables 1. P.D. 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.1041 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. Where the transaction or contract was entered into prior to the effectivity of Republic Act No. 6552 on August 26, 1972, the defaulting buyer shall be entitled to the corresponding refund based on the installments paid after the effectivity of the law in the absence of any provision in the contract to the contrary.1042 2. Sale of Immovables on Installment1043 It covers sales on installments of residential real estate and financing of such acquisitions. Where the buyer has paid at least two (2) years of installment, the buyer is entitled to the following rights in case he defaults in payments of succeeding installments: 1) To pay, without additional interest, the unpaid installments due within the total grace period earned by him which is fixed at the rate of one month grace period for every one year of installments. 2) If the contract is cancelled, the seller shall refund to the buyer the cash surrender value of the payments on the property equivalent to the 50% of the total payment made every year but not to exceed 90% of the total payments made. Where the buyer has paid less than two years, he shall be entitled to a grace period of 60 days from the date the installment became due. If he fails to pay the installments due at the expiration of the grace period, the seller may cancel the contract after 30 days from 1040

Art. 1486 Sec. 23 1042 Sec. 24 1043 Maceda Law 1041

247

receipt by the buyer of the notice of cancellation, or the demand for rescission of the contract by a notarial act. C. Remedies of the Buyer 1. Sale of Movable When seller fails to deliver, buyer may seek specific performance without giving seller option to retain goods on payment of damages. 2. Sale of Immovables If disturbed in possession or with reasonable grounds to fear disturbance i. Suspend payment In case of subdivision or condo projects: If real estate developer fails to comply with obligations according to approved plan: i. Rescind ii. Suspend payment until seller complies XIV. Extinguishment of the Sale A. Causes Obligations are extinguished by: (1) Payment or performance; (2) Loss of the thing due; (3) Condonation or remission of the debt; (4) Confusion or merger of the rights of creditor and debtor; (5) Compensation; (6) Novation. Other causes: 1. Annulment, 2. Rescission, 3. Fulfillment of a resolutory condition, and

248

4. Prescription.1044 Sales are extinguished by the same causes as all other obligations and by conventional or legal redemption.1045 B. Conventional redemption The right which the vendor reserves to himself, to reacquire the property sold provided he returns to the vendee: a. the price of the sale; b. expenses of the contract; c. any other legitimate payments made therefore and; d. the necessary and useful expenses made on the thing sold; and e. fulfills other stipulations which may have been agreed upon. Conventional redemption shall take place when the vendor reserves the right to repurchase the thing sold, with the obligation to comply with the provisions of Article 16161046 and other stipulations which may have been agreed upon.1047

C. Equitable mortgage One which lacks the proper formalities, form of words, or other requisites prescribed by law for a mortgage, but shows the intention of the parties to make the property subject of the contract as security for a debt and contains nothing impossible or contrary to law.1048

cases:

The contract shall be presumed to be an equitable mortgage, in any of the following (1) When the price of a sale with right to repurchase is unusually inadequate; (2) When the vendor remains in possession as lessee or otherwise;

(3) When upon or after the expiration of the right to repurchase another instrument extending the period of redemption or granting a new period is executed; 1044

Art. 1231 Art. 1600 1046 The vendor cannot avail himself of the right of repurchase without returning to the vendee the price of the sale, and in addition: (1) The expenses of the contract, and any other legitimate payments made by reason of the sale; (2) The necessary and useful expenses made on the thing sold. 1047 Art. 1601 1048 Cachola vs. CA, 208 SCRA 496 1045

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(4) When the purchaser retains for himself a part of the purchase price; (5) When the vendor binds himself to pay the taxes on the thing sold; (6) In any other case where it may be fairly inferred that the real intention of the parties is that the transaction shall secure the payment of a debt or the performance of any other obligation. In any of the foregoing cases, any money, fruits, or other benefit to be received by the vendee as rent or otherwise shall be considered as interest which shall be subject to the usury laws.1049 In case of doubt, a contract purporting to be a sale with right to repurchase shall be construed as an equitable mortgage.1050 The provisions of Article 16021051 shall also apply to a contract purporting to be an absolute sale.1052

D. Distinguish from option to buy Option contract A contract granting a privilege in one person, for which he has paid a consideration, which gives him the right to buy certain merchandise, at anytime within the agreed period, at a fixed price.1053 In an option to buy, the party who has an option may validly and effectively exercise his right by merely notifying the owner of the former’s decision to buy and expressing his readiness to pay the stipulated price. E. Period of redemption The right referred to in article 1601,1054 in the absence of an express agreement, shall last four years from the date of the contract. Should there be an agreement, the period cannot exceed ten years. 1049

Art. 1602 Art. 1603 1051 supra 1052 Art. 1604 1053 An option without consideration is void and the effect is the same as if there was no option. However, in Sanchez vs. Rigos (1972), even though the option was not supported by a consideration, the moment it was accepted, a perfected contract of sale resulted, applying Art. 1324 of the NCC. In view of the ruling of the Supreme Court, the only importance of the consideration for an option is that the option cannot be withdrawn by the grantor after acceptance. 1054 supra 1050

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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.1055 F. Exercise of the right to redeem The vendor cannot avail himself of the right of repurchase without returning to the vendee the price of the sale, and in addition: (1) The expenses of the contract, and any other legitimate payments made by reason of the sale; (2) The necessary and useful expenses made on the thing sold.1056 G. Legal redemption 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.1057 H. Age redemption1058 XV. The Subdivision and Condominium Buyers' Protective Decree1059 XVI. The Condominium Act1060

1055

Art. 1606 Art. 1616 1057 Art. 1619 May be effected against movables or immovables. It must be exercised within thirty (30) days from the notice in writing by the vendor. 1058 ibid 1059 PD 957, see Reference 1060 RA 4726, ibid 1056

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SUCCESSION I. General Provisions

The inheritance includes all the property, rights and obligations of a person which are not extinguished by his death.1061 Succession may be: (1) Testamentary; (2) Legal or intestate; or (3) Mixed.1062 Testamentary succession is that which results from the designation of an heir, made in a will executed in the form prescribed by law.1063 Mixed succession is that effected partly by will and partly by operation of law.1064 A. Definition/What is transmitted Succession is 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.1065 "Decedent" is the general term applied to the person whose property is transmitted through succession, whether or not he left a will. If he left a will, he is also called the testator.1066 The inheritance of a person includes 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.1067

1061

Art. 776 Art. 778 1063 Art. 779 1064 Art. 780 1065 Art. 774 1066 Art. 775 1067 Art. 781 1062

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B. When succession occurs The rights to the succession are transmitted from the moment of the death of the decedent.1068 C. Kinds of Successors – Heirs, Devisees, Legatees – An heir is a person called to the succession either by the provision of a will or by operation of law. Devisees and legatees are persons to whom gifts of real and personal property are respectively given by virtue of a will.1069 II. Testamentary Succession A. Wills 1. In General a. Definition and characteristics A will is an act whereby a person is permitted, with the formalities prescribed by law, to control to a certain degree the disposition of this estate, to take effect after his death.1070 The testator may not make a testamentary disposition in such manner that another person has to determine whether or not it is to be operative.1071 i) Act of making a will a strictly personal act The making of a will is a strictly personal act; it cannot be left in whole or in part to the discretion of a third person, or accomplished through the instrumentality of an agent or attorney.1072 The duration or efficacy of the designation of heirs, devisees or legatees, or the determination of the portions which they are to take, when referred to by name, cannot be left to the discretion of a third person.1073

1068

Art. 777 Art. 782 1070 Art. 783 1071 Art. 787 1072 Art. 784 1073 Art. 785 1069

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a) Exception The testator may entrust to a third person the distribution of specific property or sums of money that he may leave in general to specified classes or causes, and also the designation of the persons, institutions or establishments to which such property or sums are to be given or applied.1074 ii) Rules of Construction and Interpretation1075 If a testamentary disposition admits of different interpretations, in case of doubt, that interpretation by which the disposition is to be operative shall be preferred.1076 When there is an imperfect description, or when no person or property exactly answers the description, mistakes and omissions must be corrected, if the error appears from the context of the will or from extrinsic evidence, excluding the oral declarations of the testator as to his intention; and when an uncertainty arises upon the face of the will, as to the application of any of its provisions, the testator's intention is to be ascertained from the words of the will, taking into consideration the circumstances under which it was made, excluding such oral declarations.1077 The words of a will are to be taken in their ordinary and grammatical sense, unless a clear intention to use them in another sense can be gathered, and that other can be ascertained. Technical words in a will are to be taken in their technical sense, unless the context clearly indicates a contrary intention, or unless it satisfactorily appears that the will was drawn solely by the testator, and that he was unacquainted with such technical sense.1078 The words of a will are to receive an interpretation which will give to every expression some effect, rather than one which will render any of the expressions inoperative; and of two modes of interpreting a will, that is to be preferred which will prevent intestacy.1079

1074

Art. 786 The testator’s intent (animus testandi), as well as giving effect to such intent, is primordial. It is sometimes said that the supreme law in succession is the intent of the testator. All rules of construction are designed to ascertain and give effect to that intention. It is only when the intention of the testator is contrary to law, morals, or public policy that it cannot be given effect. In case of doubt, that interpretation by which the disposition is to be operative shall be preferred. That construction is to be adopted which will sustain and uphold the will in all its parts, if it can be done consistently with the established rules of law. 1076 Art. 788 1077 Art. 789 1078 Art. 790 1079 Art. 791 1075

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The invalidity of one of several dispositions contained in a will does not result in the invalidity of the other dispositions, unless it is to be presumed that the testator would not have made such other dispositions if the first invalid disposition had not been made.1080 Property acquired after the making of a will shall only pass thereby, as if the testator had possessed it at the time of making the will, should it expressly appear by the will that such was his intention.1081 Every devise or legacy shall cover all the interest which the testator could device or bequeath in the property disposed of, unless it clearly appears from the will that he intended to convey a less interest.1082 iii) Law governing formal validity The validity of a will as to its form depends upon the observance of the law in force at the time it is made.1083 2. Testamentary Capacity1084 and Intent All persons who are not expressly prohibited by law may make a will.1085 A married woman may make a will without the consent of her husband, and without the authority of the court.1086 A married woman may dispose by will of all her separate property as well as her share of the conjugal partnership or absolute community property.1087 a. Age Requirement Persons of either sex under eighteen (18) years of age cannot make a will.1088 b. Soundness of Mind 1089

will.

It is essential that the testator be of sound mind at the time of execution of the

1080

Art. 792 Art. 793 1082 Art. 794 1083 Art. 795 1084 Testamentary capacity: 1. All persons who are not expressly prohibited by law 2. 18 years old and above 3. Of sound mind, at the time of its execution 1085 Art. 796 1086 Art. 802 1087 Art. 803 1088 Art. 797 1089 Art. 798 1081

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(i) When testator is deemed to be of sound mind It is not necessary that the testator be in full possession of all his reasoning faculties, or that his mind be wholly unbroken, unimpaired, or unshattered by disease, injury or other cause. It shall be sufficient if the testator was able at the time of making the will to know the nature of the estate to be disposed of, the proper objects of his bounty, and the character of the testamentary act.1090 The burden of proof that the testator was not of sound mind at the time of making his dispositions is on the person who opposes the probate of the will; but if the testator, one month, or less, before making his will was publicly known to be insane, the person who maintains the validity of the will must prove that the testator made it during a lucid interval.1091 (ii) Presumptions Every person is of sound mind, in the absence of proof to the contrary. (iii) Supervening incapacity Does not invalidate an effective will, nor is the will of an incapable validated by the supervening of capacity.1092 3. Form a) Rules governing the formal validity of wills 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. 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. 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.1093

1090

Art. 799 Art. 800 1092 Art. 801 1093 Art. 17 1091

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When a Filipino is in a foreign country, he is authorized to make a will in any of the forms established by the law of the country in which he may be. Such will may be probated in the Philippines.1094 The will of an alien who is abroad produces effect in the Philippines if made with the formalities prescribed by the law of the place in which he resides, or according to the formalities observed in his country, or in conformity with those which this Code prescribes.1095 A will made in the Philippines by a citizen or subject of another country, which is executed in accordance with the law of the country of which he is a citizen or subject, and which might be proved and allowed by the law of his own country, shall have the same effect as if executed according to the laws of the Philippines.1096 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.1097 (i) See law governing substantive validity 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.1098 Real property as well as personal property is subject to the law of the country where it is stipulated.1099 Capacity to succeed is governed by the law of the nation of the decedent.1100 b) Common requirements (i) In Writing (ii) Language/Dialect Requirement Every will must be in writing and executed in a language or dialect known to the testator.1101

1094

Art. 815 Art. 816 1096 Art. 817 1097 Art. 819 1098 Art. 15 1099 Art. 16 1100 Art. 1039 1101 Art. 804 1095

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c) Notarial Wills (i) Arts. 805-806 Requisites for valid notarial will: 1. In writing 2. In a language or dialect known to the testator 3. Subscribed at the end by the testator himself or by the testator’s name written by some other person in his presence, and by his express direction 4. Attested & subscribed by three or more credible witnesses in the presence of the testator and of one another 5. Each and every page, except the last, must be signed by the testator or by the person requested by him to write his name, and by the instrumental witnesses of the will, on the left margin 6. Each and every page of the will must be numbered correlatively in letters placed on the upper part of each page 7. It must contain an attestation clause, stating the following: a. The number of pages used upon which the will is written b. The fact that the testator signed the will and every page, or caused some other person to write his name, under his express direction, in the presence of the instrumental witnesses c. All the instrumental witnesses witnessed and signed the will and all its pages in the presence of the testator and of one another 8. It must be acknowledged before a notary public by the testator and the witnesses.1102 (ii) Special rules for handicapped testators Testator is deaf or a deaf mute

Testator is blind

1. Testator must personally read the will, if The will shall be read to the testator twice – able to do so; 1. Once by one of the subscribing witnesses 2. Otherwise, he shall designate two persons to read it and communicate to him, in some 2. Once by the notary public before whom practicable manner, its contents.1103 the will is acknowledged.1104 1102

Arts. 805-806

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(iii) Substantial Compliance 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 805.1105 (iv) Witnesses to wills Any person of sound mind and of the age of eighteen (18) years or more, and not blind, deaf or dumb, and able to read and write.1106 Disqualified from being witnesses to a will: (1) Any person not domiciled in the Philippines; (2) Those who have been convicted of falsification of a document, perjury or false testimony.1107 If the witnesses attesting the execution of a will are competent at the time of attesting, their becoming subsequently incompetent shall not prevent the allowance of the will.1108 If a person attests the execution of a will, to whom or to whose spouse, or parent, or child, a devise or legacy is given by such will, such devise or legacy shall, so far only as concerns such person, or spouse, or parent, or child of such person, or any one claiming under such person or spouse, or parent, or child, be void, unless there are three other competent witnesses to such will. However, such person so attesting shall be admitted as a witness as if such devise or legacy had not been made or given.1109

1103

Art. 807 Art. 808 1105 Art. 809 1106 Art. 820 Qualifications of witnesses to a notarial will: 1. Of sound mind 2. Of the age of 18 years or more 3. Not blind, deaf or dumb 4. Able to read and write 5. Domiciled in the Philippines 6. Have not been convicted of falsification of a document, perjury or false testimony 1107 Art. 821 1108 Art. 822 1109 Art. 823 1104

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A mere charge on the estate of the testator for the payment of debts due at the time of the testator's death does not prevent his creditors from being competent witnesses to his will.1110 d. Holographic Wills (i) Requirements Must be entirely written, dated, and signed by the hand of the testator himself. It is subject to no other form, and may be made in or out of the Philippines, and need not be witnessed.1111 The dispositions of the testator written below his signature must be dated and signed by him in order to make them valid as testamentary dispositions.1112 When a number of dispositions appearing in a holographic will are signed without being dated, and the last disposition has a signature and a date, such date validates the dispositions preceding it, whatever be the time of prior dispositions.1113 (a) Requirements in case of alterations The testator must authenticate the same by his full signature.1114 (ii) Witnesses Required for Probate It shall be necessary that at least one (1) witness who knows the handwriting and signature of the testator explicitly declare that the will and the signature are in the handwriting of the testator. If the will is contested, at least three of such witnesses shall be required. In the absence of any competent witness, and if the court deem it necessary, expert testimony may be resorted to.1115 e. Joint Wills 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.1116

1110

Art. 824 Art. 810 1112 Art. 812 1113 Art. 813 1114 Art. 814 1115 Art. 811 1116 Art. 818 1111

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Wills, prohibited above, 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.1117 4. Codicils a. Definition and Formal Requirements A codicil is supplement or addition to a will, made after the execution of a will and annexed to be taken as a part thereof, by which disposition made in the original will is explained, added to, or altered.1118 In order that a codicil may be effective, it shall be executed as in the case of a will.1119 5. Incorporate by Reference1120 Requisites: a. The document or paper referred to in the will must be in existence at the time of the execution of the will b. The will must clearly describe and identify the same, stating among other things the number of pages thereof c. It must be identified by clear and satisfactory proof as the document or paper referred to therein d. 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.1121 6. Revocation A will may be revoked by the testator at any time before his death. Any waiver or restriction of this right is void.1122 A revocation done outside the Philippines, by a person who does not have his domicile in this country, is valid when it is done according to the law of the place where the will was made, or according to the law of the place in which the testator had his domicile at

1117

Art. 819 Art. 825 1119 Art. 826 1120 Contemplates only lists of properties, books of accounts, and inventories. Provisions which are in the nature of testamentary dispositions must be contained in the will itself. 1121 Art. 827 1122 Art. 828 1118

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the time; and if the revocation takes place in this country, when it is in accordance with the provisions of this Code.1123 Subsequent wills which do not revoke the previous ones in an express manner, annul only such dispositions in the prior wills as are inconsistent with or contrary to those contained in the later wills.1124 A revocation made in a subsequent will shall take effect, even if the new will should become inoperative by reason of the incapacity of the heirs, devisees or legatees designated therein, or by their renunciation.1125 A revocation of a will based on a false cause or an illegal cause is null and void1126. The recognition of an illegitimate child does not lose its legal effect, even though the will wherein it was made should be revoked.1127 a. Kinds (1) By implication of law;1128 or (2) By some will, codicil, or other writing executed as provided in case of wills;1129 or (3) By burning, tearing, cancelling, 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. If burned, torn, cancelled, or obliterated by some other person, without the express direction of the testator, the will may still be established, and the estate

1123

Art. 829 Art. 831 1125 Art. 832 1126 Art. 833 1127 Art. 834 1128 a. legal separation revokes testamentary provisions in favor of the offending spouse; b. preterition revokes the institution of heir; c. judicial action for recovery of debt revokes a legacy of credit/remission of debt; d. transformation, alienation, or loss of bequeathed property revokes a legacy of such property; e. act of unworthiness by an heir, devisee/legatee revokes testamentary provisions in his favor; f. if both spouses of the subsequent marriage acted in bad faith, said marriage shall be void ab initio and testamentary dispositions made by one in favor of the other are revoked by operation of law (Art. 44, FC); and g. void ab initio or annulled marriages revoke testamentary dispositions made by one spouse in favor of the other (Art. 50, FC). 1129 Which may either be: a. Express – when there is a revocatory clause expressly revoking the previous will or a part thereof b. Implied – when the provisions thereof are partially or entirely inconsistent with those of the previous will. 1124

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distributed in accordance therewith, if its contents, and due execution, and the fact of its unauthorized destruction, cancellation, or obliteration are established.1130 7. Allowance and Disallowance of Wills a. Probate Requirement No will shall pass either real or personal property unless it is proved and allowed. The testator himself may, during his lifetime, petition the court having jurisdiction for the allowance of his will. The Supreme Court shall formulate such additional Rules of Court as may be necessary for the allowance of wills on petition of the testator. Subject to the right of appeal, the allowance of the will, either during the lifetime of the testator or after his death, shall be conclusive as to its due execution.1131 (i) Issues to be Resolved in Probate Proceedings The will shall be disallowed in any of the following cases: (1) The formalities required by law have not been complied with; (2) The testator was insane, or otherwise mentally incapable of making a will, at the time of its execution; (3) It was executed through force or under duress, or the influence of fear, or threats; (4) It was procured by undue and improper pressure and influence, on the part of the beneficiary or of some other person; (5) The signature of the testator was procured by fraud; (6) The testator acted by mistake or did not intend that the instrument he signed should be his will at the time of affixing his signature thereto.1132 While express revocation may be effected by a subsequent will, or a codicil, or a nontestamentary writing executed as provided in case of wills, implied revocation may be effected only by either a subsequent will, or a codicil. 1130 Art. 830 Requisites: a. testamentary capacity at the time of performing the act of destruction; b. intent to revoke (animus revocandi); c. actual physical act of destruction; d. completion of the subjective phase; and e. performed by the testator himself or by some other person in his presence and express direction. (The list is exclusive) 1131 Art. 838

263

(a) Exceptions: when practical considerations demand the intrinsic validity of the will be resolved (ii) Effect of Final Decree of Probate, Res Judicata on Formal Validity Binding upon the whole world;1133 and public policy and sound practice demand that at the risk of occasional errors judgment of courts should become final at some definite date fixed by law. b. Grounds for Denying Probate1134 B. Institution of Heirs An act by virtue of which a testator designates in his will the person or persons who are to succeed him in his property and transmissible rights and obligations.1135 A will shall be valid even though it should not contain an institution of an heir, or such institution should not comprise the entire estate, and even though the person so instituted should not accept the inheritance or should 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.1136 One who has no compulsory heirs may dispose by will of all his estate or any part of it in favor of any person having capacity to succeed. One who has compulsory heirs may dispose of his estate provided he does not contravene the provisions of this Code with regard to the legitime of said heirs.1137 The testator shall designate the heir by his name and surname, and when there are two persons having the same names, he shall indicate some circumstance by which the instituted heir may be known. Even though the testator may have omitted the name of the heir, should he designate him in such manner that there can be no doubt as to who has been instituted, the institution shall be valid.1138 1132

Art. 839 Manalo vs. Paredes, 47 Phil. 938; In re Estates of Johnson, 39 Phil. 156 1134 See Art. 839, supra 1135 Art. 840 The proper test in order to determine the validity of an institution of heir is the possibility of finally ascertaining the identity of the instituted heir by intrinsic or extrinsic evidence. 1136 Art. 841 1137 Art. 842 1138 Art. 843 1133

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An error in the name, surname, or circumstances of the heir shall not vitiate the institution when it is possible, in any other manner, to know with certainty the person instituted. If among persons having the same names and surnames, there is a similarity of circumstances in such a way that, even with the use of other proof, the person instituted cannot be identified, none of them shall be an heir.1139 Every disposition in favor of an unknown person shall be void, unless by some event or circumstance his identity becomes certain. However, a disposition in favor of a definite class or group of persons shall be valid.1140 Heirs instituted without designation of shares shall inherit in equal parts.1141 When the testator institutes some heirs individually and others collectively as when he says, "I designate as my heirs A and B, and the children of C," those collectively designated shall be considered as individually instituted, unless it clearly appears that the intention of the testator was otherwise.1142 If the testator should institute his brothers and sisters, and he has some of full blood and others of half blood, the inheritance shall be distributed equally unless a different intention appears.1143 When the testator calls to the succession a person and his children they are all deemed to have been instituted simultaneously and not successively.1144 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.1145 If the testator has instituted only one heir, and the institution is limited to an aliquot part of the inheritance, legal succession takes place with respect to the remainder of the estate. The same rule applies if the testator has instituted several heirs, each being limited to an aliquot part, and all the parts do not cover the whole inheritance.1146 If it was the intention of the testator that the instituted heirs should become sole heirs to the whole estate, or the whole free portion, as the case may be, and each of them has 1139

Art. 844 Art. 845 1141 Art. 846 1142 Art. 847 1143 Art. 848 1144 Art. 849 1145 Art. 850 1146 Art. 851 1140

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been instituted to an aliquot part of the inheritance and their aliquot parts together do not cover the whole inheritance, or the whole free portion, each part shall be increased proportionally.1147 If each of the instituted heirs has been given an aliquot part of the inheritance, and the parts together exceed the whole inheritance, or the whole free portion, as the case may be, each part shall be reduced proportionally.1148 A voluntary heir who dies before the testator transmits nothing to his heirs. A compulsory heir who dies before the testator, a person incapacitated to succeed, and one who renounces the inheritance, shall transmit no right to his own heirs except in cases expressly provided for in this Code.1149 1. Preterition a. Definition The omission in the testator’s will 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.1150 b. Requisites 1. The heir omitted must be a compulsory heir in the direct line; 2. The omission must be complete and total in character; and 3. The compulsory heir omitted must survive the testator. c. Effects (i) Effects of preterition, devisees only entitled to completion of legitime i. It annuls the institution of heir; ii. The devises and legacies are valid insofar as they are not inofficious; and ii. If the omitted compulsory heir should die before the testator, the institution shall be effectual, without prejudice to the right of representation.1151

1147

Art. 852 Art. 853 1149 Art. 856 1150 Art. 854, 1st par. 1151 Art. 854, 2nd par. 1148

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2. Concept1152 3. Compulsory Heirs in the Direct Line1153 4. Preterition vs. Disposition less than Legitime/Donation inter vivos The share of a child or descendant omitted in a will must first be taken from the part of the estate not disposed of by the will, if any; if that is not sufficient, so much as may be necessary must be taken proportionally from the shares of the other compulsory heirs.1154 Any compulsory heir to whom the testator has left by any title less than the legitime belonging to him may demand that the same be fully satisfied.1155 Testamentary dispositions that impair or diminish the legitime of the compulsory heirs shall be reduced on petition of the same, insofar as they may be inofficious or excessive.1156 To determine the legitime, the value of the property left at the death of the testator shall be considered, deducting all debts and charges, which shall not include those imposed in the will. To the net value of the hereditary estate, shall be added the value of all donations by the testator that are subject to collation, at the time he made them.1157 Donations given to children shall be charged to their legitime. Donations made to strangers shall be charged to that part of the estate of which the testator could have disposed by his last will. Insofar as they may be inofficious or may exceed the disposable portion, they shall be reduced according to the rules established by this Code.1158 Donations which an illegitimate child may have received during the lifetime of his father or mother, shall be charged to his legitime. Should they exceed the portion that can be freely disposed of, they shall be reduced in the manner prescribed by this Code.1159 After the legitime has been determined in accordance with the three preceding articles, the reduction shall be made as follows: 1152

See Definition, supra see Legitime, infra 1154 Art. 855 1155 Art. 906 1156 Art. 907 1157 Art. 908 1158 Art. 909 1159 Art. 910 1153

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(1) Donations shall be respected as long as the legitime can be covered, reducing or annulling, if necessary, the devises or legacies made in the will; (2) The reduction of the devises or legacies shall be pro rata, without any distinction whatever. If the testator has directed that a certain devise or legacy be paid in preference to others, it shall not suffer any reduction until the latter have been applied in full to the payment of the legitime. (3) If the devise or legacy consists of a usufruct or life annuity, whose value may be considered greater than that of the disposable portion, the compulsory heirs may choose between complying with the testamentary provision and delivering to the devisee or legatee the part of the inheritance of which the testator could freely dispose.1160 If the devise subject to reduction should consist of real property, which cannot be conveniently divided, it shall go to the devisee if the reduction does not absorb one-half of its value; and in a contrary case, to the compulsory heirs; but the former and the latter shall reimburse each other in cash for what respectively belongs to them. The devisee who is entitled to a legitime may retain the entire property, provided its value does not exceed that of the disposable portion and of the share pertaining to him as legitime.1161 If the heirs or devisees do not choose to avail themselves of the right granted by the preceding article, any heir or devisee who did not have such right may exercise it; should the latter not make use of it, the property shall be sold at public auction at the instance of any one of the interested parties.1162 The testator may devise and bequeath the free portion as he may deem fit.1163 A compulsory heir may, in consequence of disinheritance, be deprived of his legitime, for causes expressly stated by law.1164 Disinheritance can be effected only through a will wherein the legal cause therefor shall be specified.1165 The burden of proving the truth of the cause for disinheritance shall rest upon the other heirs of the testator, if the disinherited heir should deny it.1166 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 1160

Art. 911 Art. 912 1162 Art. 913 1163 Art. 914 1164 Art. 915 1165 Art. 916 1166 Art. 917 1161

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and legacies and other testamentary dispositions shall be valid to such extent as will not impair the legitime.1167 C. Substitution of Heirs The testator may designate one or more persons to substitute the heir or heirs instituted in case such heir or heirs should die before him, or should not wish, or should be incapacitated to accept the inheritance. A simple substitution, without a statement of the cases to which it refers, shall comprise the three mentioned in the preceding paragraph, unless the testator has otherwise provided.1168 Two or more persons may be substituted for one; and one person for two or more heirs.1169 If 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 are more than one substitute, they shall have the same share in the substitution as in the institution.1170 The substitute shall be subject to the same charges and conditions imposed upon the instituted heir, unless and testator has expressly provided the contrary, or the charges or conditions are personally applicable only to the heir instituted.1171 The following shall not take effect: (1) Fideicommissary substitutions which are not made in an express manner, either by giving them this name, or imposing upon the fiduciary the absolute obligation to deliver the property to a second heir; (2) Provisions which contain a perpetual prohibition to alienate, and even a temporary one, beyond the limit fixed in article 863; (3) Those which impose upon the heir the charge of paying to various persons successively, beyond the limit prescribed in article 863, a certain income or pension; (4) Those which leave to a person the whole or part of the hereditary property in order that he may apply or invest the same according to secret instructions communicated to him by the testator.1172

1167

Art. 918 Art. 859 1169 Art. 860 1170 Art. 861 1171 Art. 862 1172 Art. 867 1168

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The nullity of the fideicommissary substitution does not prejudice the validity of the institution of the heirs first designated; the fideicommissary clause shall simply be considered as not written.1173 The dispositions of the testator declaring all or part of the estate inalienable for more than twenty years are void.1174 1. Definition Substitution is the appointment of another heir so that he may enter into the inheritance in default of the heir originally instituted.1175 The act by which the testator designates the person or persons to take the place of the heir or heirs first instituted.1176 2. Kinds: (a) Simple or common; (b) Brief or compendious; (c) Reciprocal; or (d) Fideicommissary.1177 3. Simple Substitution When the testator designates one or more persons to substitute the heirs/s instituted in case such heir/s should die before him, or should not wish, or should be incapacitated to accept the inheritance 4. Fideicommissary Substitution The fiduciary or first heir instituted is entrusted with the obligation to preserve and to transmit to a second heir the whole or part of the inheritance, provided such substitution does not go beyond one degree from the heir originally instituted, and provided further, that the fiduciary or first heir and the second heir are living at the time of the death of the testator.1178 A fideicommissary substitution can never burden the legitime.1179

1173

Art. 868 Art. 870 1175 Art. 857 1176 Tolentino 1177 Art. 858 1178 Art. 863 Requisites for a fideicommissary substitution: 1174

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Every fideicommissary substitution must be expressly made in order that it may be valid. The fiduciary shall be obliged to deliver the inheritance to the second heir, without other deductions than those which arise from legitimate expenses, credits and improvements, save in the case where the testator has provided otherwise.1180 The second heir shall acquire a right to the succession from the time of the testator's death, even though he should die before the fiduciary. The right of the second heir shall pass to his heirs.1181 A provision whereby the testator leaves to a person the whole or part of the inheritance, and to another the usufruct, shall be valid. If he gives the usufruct to various persons, not simultaneously, but successively, the provisions of Article 8631182 shall apply.1183 D. Conditional Testamentary Dispositions and Testamentary Dispositions with a Term The institution of an heir may be made conditionally, or for a certain purpose or

1184

cause.

The testator cannot impose any charge, condition, or substitution whatsoever upon the legitimes prescribed in this Code. Should he do so, the same shall be considered as not imposed.1185 Impossible conditions and those contrary to law or good customs shall be considered as not imposed and shall in no manner prejudice the heir, even if the testator should otherwise provide.1186 An absolute condition not to contract a first or subsequent marriage shall be considered as not written unless such condition has been imposed on the widow or widower by the deceased spouse, or by the latter's ascendants or descendants.

1. A fiduciary or first heir instituted entrusted with the obligation to preserve and to transmit to a fideicommissary substitute or second heir the whole or part of the inheritance 2. Such substitution must not go beyond one degree from the heir originally instituted 3. The fiduciary or first heir and the second heir 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 1179 Art. 864 1180 Art. 865 1181 Art. 866 1182 supra 1183 Art. 869 1184 Art. 871 1185 Art. 872 1186 Art. 873

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Nevertheless, the right of usufruct, or an allowance or some personal prestation may be devised or bequeathed to any person for the time during which he or she should remain unmarried or in widowhood.1187 Any disposition made upon the condition that the heir shall make some provision in his will in favor of the testator or of any other person shall be void.1188 Any purely potestative condition imposed upon an heir must be fulfilled by him as soon as he learns of the testator's death. This rule shall not apply when the condition, already complied with, cannot be fulfilled again.1189 If the condition is casual or mixed, it shall be sufficient if it happen or be fulfilled at any time before or after the death of the testator, unless he has provided otherwise. Should it have existed or should it have been fulfilled at the time the will was executed and the testator was unaware thereof, it shall be deemed as complied with. If he had knowledge thereof, the condition shall be considered fulfilled only when it is of such a nature that it can no longer exist or be complied with again.1190 A disposition with a suspensive term does not prevent the instituted heir from acquiring his rights and transmitting them to his heirs even before the arrival of the term.1191 If the potestative condition imposed upon the heir is negative, or consists in not doing or not giving something, he shall comply by giving a security that he will not do or give that which has been prohibited by the testator, and that in case of contravention he will return whatever he may have received, together with its fruits and interests.1192 If the heir be instituted under a suspensive condition or term, the estate shall be placed under administration until the condition is fulfilled, or until it becomes certain that it cannot be fulfilled, or until the arrival of the term. The same shall be done if the heir does not give the security required in the preceding article.1193 The appointment of the administrator of the estate mentioned in the preceding article, as well as the manner of the administration and the rights and obligations of the administrator shall be governed by the Rules of Court.1194 1187

Art. 874 Art. 875 1189 Art. 876 1190 Art. 877 1191 Art. 878 1192 Art. 879 1193 Art. 880 1194 Art. 881 1188

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The statement of the object of the institution, or the application of the property left by the testator, or the charge imposed by him, shall not be considered as a condition unless it appears that such was his intention. That which has been left in this manner may be claimed at once provided that the instituted heir or his heirs give security for compliance with the wishes of the testator and for the return of anything he or they may receive, together with its fruits and interests, if he or they should disregard this obligation.1195 When without the fault of the heir, an institution referred to in the preceding article cannot take effect in the exact manner stated by the testator, it shall be complied with in a manner most analogous to and in conformity with his wishes. If the person interested in the condition should prevent its fulfillment, without the fault of the heir, the condition shall be deemed to have been complied with.1196 Conditions imposed by the testator upon the heirs shall be governed by the rules established for conditional obligations in all matters not provided for by this Section.1197 The designation of the day or time when the effects of the institution of an heir shall commence or cease shall be valid. In both cases, the legal heir shall be considered as called to the succession until the arrival of the period or its expiration. But in the first case he shall not enter into possession of the property until after having given sufficient security, with the intervention of the instituted heir.1198

1195

Art. 882 Art. 883 1197 Art. 884 1198 Art. 885 1196

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E. Legitime 1. Definition That part of the testator's property which he cannot dispose of because the law has reserved it for certain heirs who are, therefore, called compulsory heirs.1199 2. Compulsory Heirs1200 and Various Combinations (1) Legitimate children and descendants, with respect to their legitimate parents and ascendants; (2) In default of the foregoing, legitimate parents and ascendants, with respect to their legitimate children and descendants; (3) The widow or widower; [(4) Acknowledged natural children, and natural children by legal fiction;] (5) Other illegitimate children referred to in Article 287. Compulsory heirs mentioned in Nos. 3, 4, and 5 are not excluded by those in Nos. 1 and 2; neither do they exclude one another. In all cases of illegitimate children, their filiation must be duly proved. The father or mother of illegitimate children of the three classes mentioned, shall inherit from them in the manner and to the extent established by this Code.1201 The legitime of legitimate children and descendants consists of one-half of the hereditary estate of the father and of the mother. The latter may freely dispose of the remaining half, subject to the rights of illegitimate children and of the surviving spouse as hereinafter provided.1202 1199

Art. 886 Classes: 1.Primary – those who have precedence over and exclude other compulsory heirs a. Legitimate children and descendants (legitimate), with respect to their legitimate parents and ascendants 2.Secondary – those who succeed only in the absence of the primary heirs a. Legitimate parents and ascendants (legitimate), with respect to their legitimate children and descendants 3.Concurring – those who succeed together with the primary or the secondary compulsory heirs a. Widow or widower (legitimate) b. Illegitimate children and descendants (legitimate or illegitimate) 1201 Art. 887 1202 Art. 888 1200

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The legitime of legitimate parents or ascendants consists of one-half of the hereditary estates of their children and descendants. The children or descendants may freely dispose of the other half, subject to the rights of illegitimate children and of the surviving spouse as hereinafter provided.1203 The legitime reserved for the legitimate parents shall be divided between them equally; if one of the parents should have died, the whole shall pass to the survivor. If the testator leaves neither father nor mother, but is survived by ascendants of equal degree of the paternal and maternal lines, the legitime shall be divided equally between both lines. If the ascendants should be of different degrees, it shall pertain entirely to the ones nearest in degree of either line.1204 If only one legitimate child or descendant of the deceased survives, the widow or widower shall be entitled to one-fourth of the hereditary estate. In case of a legal separation, the surviving spouse may inherit if it was the deceased who had given cause for the same. If there are two or more legitimate children or descendants, the surviving spouse shall be entitled to a portion equal to the legitime of each of the legitimate children or descendants. In both cases, the legitime of the surviving spouse shall be taken from the portion that can be freely disposed of by the testator.1205 If the testator leaves no legitimate descendants, but leaves legitimate ascendants, the surviving spouse shall have a right to one-fourth of the hereditary estate. This fourth shall be taken from the free portion of the estate.1206 If the testator leaves illegitimate children, the surviving spouse shall be entitled to one-third of the hereditary estate of the deceased and the illegitimate children to another third. The remaining third shall be at the free disposal of the testator.1207 The legitime of each of the acknowledged natural children and each of the natural children by legal fiction shall consist of one-half of the legitime of each of the legitimate children or descendants. The legitime of an illegitimate child who is neither an acknowledged natural, nor a natural child by legal fiction, shall be equal in every case to four-fifths of the legitime of an acknowledged natural child.

1203

Art. 889 Art. 890 1205 Art. 892 1206 Art. 893 1207 Art. 894 1204

275

The legitime of the illegitimate children shall be taken from the portion of the estate at the free disposal of the testator, provided that in no case shall the total legitime of such illegitimate children exceed that free portion, and that the legitime of the surviving spouse must first be fully satisfied.1208 Illegitimate children who may survive with legitimate parents or ascendants of the deceased shall be entitled to one-fourth of the hereditary estate to be taken from the portion at the free disposal of the testator.1209 When the widow or widower survives with legitimate children or descendants, and acknowledged natural children, or natural children by legal fiction, such surviving spouse shall be entitled to a portion equal to the legitime of each of the legitimate children which must be taken from that part of the estate which the testator can freely dispose of.1210 If the widow or widower survives with legitimate children or descendants, and with illegitimate children other than acknowledged natural, or natural children by legal fiction, the share of the surviving spouse shall be the same as that provided in the preceding article.1211 When the widow or widower survives with legitimate parents or ascendants and with illegitimate children, such surviving spouse shall be entitled to one-eighth of the hereditary estate of the deceased which must be taken from the free portion, and the illegitimate children shall be entitled to one-fourth of the estate which shall be taken also from the disposable portion. The testator may freely dispose of the remaining one-eighth of the estate.1212 If the only survivor is the widow or widower, she or he shall be entitled to one-half of the hereditary estate of the deceased spouse, and the testator may freely dispose of the other half. If the marriage between the surviving spouse and the testator was solemnized in articulo mortis, and the testator died within three months from the time of the marriage, the legitime of the surviving spouse as the sole heir shall be one-third of the hereditary estate, except when they have been living as husband and wife for more than five years. In the latter case, the legitime of the surviving spouse shall be that specified in the preceding paragraph.1213 When the testator dies leaving illegitimate children and no other compulsory heirs, such illegitimate children shall have a right to one-half of the hereditary estate of the deceased.

1208

Art. 895 Art. 896 1210 Art. 897 1211 Art. 898 1212 Art. 899 1213 Art. 900 1209

276

The other half shall be at the free disposal of the testator.1214 The rights of illegitimate children set forth in the preceding articles are transmitted upon their death to their descendants, whether legitimate or illegitimate.1215 The legitime of the parents who have an illegitimate child, when such child leaves neither legitimate descendants, nor a surviving spouse, nor illegitimate children, is one-half of the hereditary estate of such illegitimate child. If only legitimate or illegitimate children are left, the parents are not entitled to any legitime whatsoever. If only the widow or widower survives with parents of the illegitimate child, the legitime of the parents is one-fourth of the hereditary estate of the child, and that of the surviving spouse also one-fourth of the estate.1216 Summary of Legitimes of Compulsory Heirs: Surviving relatives

Legitimate Surviving children & spouse descendants Legitimate ½ (divided children alone by the # of children) 1 legitimate child ½ ¼ surviving spouse Legitimate children Surviving spouse

½ (divided Same as the by no. of share @ legit children) child

Legitimate children Illegitimate children

½

1 legitimate child ½ surviving spouse illegitimate children

Illegitimate children

½ of the share of @ legit child ¼ (preferred)

½ of the share of @ legit child

2 or more ½ (divided Same as the ½ of the legitimate by no. of share of @ share of @ children surviving children) legit child legit child spouse Illegitimate 1214

Art. 901 Art. 902 1216 Art. 903 1215

277

Legitimate Illegitimate parents & parents ascendants

children Legitimate parents alone Legitimate parents Illegitimate children Legitimate parents and Surviving spouse

½ ¼

¼

Legitimate parents Surviving spouse Illegitimate children Illegitimate children alone

1/8

Illegitimate children Surviving spouse Surviving spouse alone

1/3

Illegitimate parents alone Illegitimate parents Surviving spouse

½

½

¼

½

½ (divided by no. of children) 1/3 (divided by no. of children)

½ or 1/3 if marriage in articulo mortis ½ ¼

¼

The testator cannot deprive his compulsory heirs of their legitime, except in cases expressly specified by law. Neither can he impose upon the same any burden, encumbrance, condition, or substitution of any kind whatsoever.1217 Every renunciation or compromise as regards a future legitime between the person owing it and his compulsory heirs is void, and the latter may claim the same upon the death of the former; but they must bring to collation whatever they may have received by virtue of the renunciation or compromise.1218

1217 1218

Art. 904 Art. 905

278

Any compulsory heir to whom the testator has left by any title less than the legitime belonging to him may demand that the same be fully satisfied.1219 Testamentary dispositions that impair or diminish the legitime of the compulsory heirs shall be reduced on petition of the same, insofar as they may be inofficious or excessive.1220 To determine the legitime, the value of the property left at the death of the testator shall be considered, deducting all debts and charges, which shall not include those imposed in the will. To the net value of the hereditary estate, shall be added the value of all donations by the testator that are subject to collation, at the time he made them.1221 Donations given to children shall be charged to their legitime. Donations made to strangers shall be charged to that part of the estate of which the testator could have disposed by his last will. Insofar as they may be inofficious or may exceed the disposable portion, they shall be reduced according to the rules.1222 Donations which an illegitimate child may have received during the lifetime of his father or mother, shall be charged to his legitime. Should they exceed the portion that can be freely disposed of, they shall be reduced in the manner prescribed.1223 After the legitime has been determined in accordance with the three preceding articles, the reduction shall be made as follows: (1) Donations shall be respected as long as the legitime can be covered, reducing or annulling, if necessary, the devises or legacies made in the will; (2) The reduction of the devises or legacies shall be pro rata, without any distinction whatever. If the testator has directed that a certain devise or legacy be paid in preference to others, it shall not suffer any reduction until the latter have been applied in full to the payment of the legitime.

1219

Art. 906 Art. 907 1221 Art. 908 1222 Art. 909 1223 Art. 910 1220

279

(3) If the devise or legacy consists of a usufruct or life annuity, whose value may be considered greater than that of the disposable portion, the compulsory heirs may choose between complying with the testamentary provision and delivering to the devisee or legatee the part of the inheritance of which the testator could freely dispose.1224 If the devise subject to reduction should consist of real property, which cannot be conveniently divided, it shall go to the devisee if the reduction does not absorb one-half of its value; and in a contrary case, to the compulsory heirs; but the former and the latter shall reimburse each other in cash for what respectively belongs to them. The devisee who is entitled to a legitime may retain the entire property, provided its value does not exceed that of the disposable portion and of the share pertaining to him as legitime.1225 If the heirs or devisees do not choose to avail themselves of the right granted by the preceding article, any heir or devisee who did not have such right may exercise it; should the latter not make use of it, the property shall be sold at public auction at the instance of any one of the interested parties.1226 The testator may devise and bequeath the free portion as he may deem fit.1227 3. Reserva Troncal1228 The reservation by virtue of which an ascendant who inherits from his descendant any property which the latter may have acquired by gratuitous title from another ascendant, 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.1229

1224

Art. 911 Art. 912 1226 Art. 913 1227 Art. 914 1228 Requisites 1) that the property was acquired by a descendant from an ascendant or from a brother or sister by gratuitous title 2) that said descendant died without an issue 3) that the property is inherited by another ascendant by operation of law 4) that there are relatives within the 3rd degree belonging to the line from which said property came 1229 Art. 891 It constitutes as an exception to both the system of legitime and the order of intestate succession. 1225

280

4. Disinheritance1230 It is the act by which the testator, for just cause, deprives a compulsory heir of his right to the legitime. a. Disinheritance for cause Sufficient causes for the disinheritance of children and descendants, legitimate as well as illegitimate: (1) 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) A child or descendant 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; (3) A child or descendant has been convicted of adultery or concubinage with the spouse of the testator; (4) A child or descendant by fraud, violence, intimidation, or undue influence causes the testator to make a will or to change one already made; (5) Refusal without justifiable cause to support the parent or ascendant who disinherits such child or descendant; (6) Maltreatment of the testator by word or deed, by the child or descendant; (7) When a child or descendant leads a dishonorable or disgraceful life; (8) Conviction of a crime which carries with it the penalty of civil interdiction.1231

1230

Requisites for 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 2) It must be for a cause designated by law 3) It must be made in 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 disinherited should deny it 6) It must unconditional 7) It must be total 1231 Art. 919

281

Summary of causes of disinheritance: GROUNDS FOR DISINHERITANCE

CHILDREN/ DESCENDANTS

PARENTS/ ASCENDANTS

SPOUSE

UNWORTHINESS

1

Guilty/convicted of * attempt against life of testator/spouse/ ascendant/descenda nt

*

*

*

2

Accused * testator/decedent of crime punishable by imprisonment of more than 6 years, found groundless, false

*

*

*

3

Causes * testator/decedent to make will or change one by fraud, violence, intimidation, or undue influence

*

*

*

4

Unjustified refusal * to support testator

*

*

5

Convicted of * adultery or concubinage with spouse of testator/decedent

*

6

Maltreatment

of * 282

*

testator by word and deed 7

Leading dishonorable disgraceful life

a * or

8

Conviction of crime * which carries penalty of civil interdiction

9

Abandonment of children or inducing children to live corrupt and immoral life or attempted against virtue

*

10

Loss of authority

parental

*

11

Attempt by one parent against life of the other unless there is reconciliation between parents

*

12

Spouses given cause for legal separation

13

Failure to report violent death of decedent within one month, unless authorities have already taken action

*

*

*

*

283

14

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

*

15

Falsifies or forges a supposed will of the decedent

*

(i) Reconciliation 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.1232 (ii) Rights of descendants of person disinherited 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.1233 b. Disinheritance without cause 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.1234 5. Legacies and Devisees All things and rights which are within the commerce of man maybe bequeathed or devised.1235 A testator may charge with legacies and devises not only his compulsory heirs but also the legatees and devisees.

1232

Art. 922 Art. 923 1234 Art. 918 1235 Art. 924 1233

284

The latter shall be liable for the charge only to the extent of the value of the legacy or the devise received by them. The compulsory heirs shall not be liable for the charge beyond the amount of the free portion given them.1236 When the testator charges one of the heirs with a legacy or devise, he alone shall be bound. Should he not charge anyone in particular, all shall be liable in the same proportion in which they may inherit.1237 If two or more heirs take possession of the estate, they shall be solidarily liable for the loss or destruction of a thing devised or bequeathed, even though only one of them should have been negligent.1238 The heir who is bound to deliver the legacy or devise shall be liable in case of eviction, if the thing is indeterminate and is indicated only by its kind.1239 If the testator, heir, or legatee owns only a part of, or an interest in the thing bequeathed, the legacy or devise shall be understood limited to such part or interest, unless the testator expressly declares that he gives the thing in its entirety.1240 The legacy or devise of a thing belonging to another person is void, if the testator erroneously believed that the thing pertained to him. But if the thing bequeathed, though not belonging to the testator when he made the will, afterwards becomes his, by whatever title, the disposition shall take effect.1241 If the testator orders that a thing belonging to another be acquired in order that it be given to a legatee or devisee, the heir upon whom the obligation is imposed or the estate must acquire it and give the same to the legatee or devisee; but if the owner of the thing refuses to alienate the same, or demands an excessive price therefor, the heir or the estate shall only be obliged to give the just value of the thing.1242 The legacy or devise of a thing which at the time of the execution of the will already belonged to the legatee or devisee shall be ineffective, even though another person may have some interest therein. If the testator expressly orders that the thing be freed from such interest or encumbrance, the legacy or devise shall be valid to that extent.1243

1236

Art. 925 Art. 926 1238 Art. 927 1239 Art. 928 1240 Art. 929 1241 Art. 930 1242 Art. 931 1243 Art. 932 1237

285

If the thing bequeathed belonged to the legatee or devisee at the time of the execution of the will, the legacy or devise shall be without effect, even though it may have subsequently alienated by him. If the legatee or devisee acquires it gratuitously after such time, he can claim nothing by virtue of the legacy or devise; but if it has been acquired by onerous title he can demand reimbursement from the heir or the estate.1244 If the testator should bequeath or devise something pledged or mortgaged to secure a recoverable debt before the execution of the will, the estate is obliged to pay the debt, unless the contrary intention appears. The same rule applies when the thing is pledged or mortgaged after the execution of the will. Any other charge, perpetual or temporary, with which the thing bequeathed is burdened, passes with it to the legatee or devisee.1245 The legacy of a credit against a third person or of the remission or release of a debt of the legatee shall be effective only as regards that part of the credit or debt existing at the time of the death of the testator. In the first case, the estate shall comply with the legacy by assigning to the legatee all rights of action it may have against the debtor. In the second case, by giving the legatee an acquittance, should he request one. In both cases, the legacy shall comprise all interests on the credit or debt which may be due the testator at the time of his death.1246 The legacy referred to shall lapse if the testator, after having made it, should bring an action against the debtor for the payment of his debt, even if such payment should not have been effected at the time of his death. The legacy to the debtor of the thing pledged by him is understood to discharge only the right of pledge.1247 A generic legacy of release or remission of debts comprises those existing at the time of the execution of the will, but not subsequent ones.1248 A legacy or devise made to a creditor shall not be applied to his credit, unless the testator so expressly declares.

1244

Art. 933 Art. 934 1246 Art. 935 1247 Art. 936 1248 Art. 937 1245

286

In the latter case, the creditor shall have the right to collect the excess, if any, of the credit or of the legacy or devise.1249 If the testator orders the payment of what he believes he owes but does not in fact owe, the disposition shall be considered as not written. If as regards a specified debt more than the amount thereof is ordered paid, the excess is not due, unless a contrary intention appears. The foregoing provisions are without prejudice to the fulfillment of natural obligations.1250 In alternative legacies or devises, the choice is presumed to be left to the heir upon whom the obligation to give the legacy or devise may be imposed, or the executor or administrator of the estate if no particular heir is so obliged. If the heir, legatee or devisee, who may have been given the choice, dies before making it, this right shall pass to the respective heirs. Once made, the choice is irrevocable. In the alternative legacies or devises, except as herein provided, the provisions of this Code regulating obligations of the same kind shall be observed, save such modifications as may appear from the intention expressed by the testator.1251 A legacy of generic personal property shall be valid even if there be no things of the same kind in the estate. A devise of indeterminate real property shall be valid only if there be immovable property of its kind in the estate. The right of choice shall belong to the executor or administrator who shall comply with the legacy by the delivery of a thing which is neither of inferior nor of superior quality.1252 Whenever the testator expressly leaves the right of choice to the heir, or to the legatee or devisee, the former may give or the latter may choose whichever he may prefer.1253 If the heir, legatee or devisee cannot make the choice, in case it has been granted him, his right shall pass to his heirs; but a choice once made shall be irrevocable. 1254

1249

Art. 938 Art. 939 1251 Art. 940 1252 Art. 941 1253 Art. 942 1254 Art. 943 1250

287

A legacy for education lasts until the legatee is of age, or beyond the age of majority in order that the legatee may finish some professional, vocational or general course, provided he pursues his course diligently. A legacy for support lasts during the lifetime of the legatee, if the testator has not otherwise provided. If the testator has not fixed the amount of such legacies, it shall be fixed in accordance with the social standing and the circumstances of the legatee and the value of the estate. If the testator or during his lifetime used to give the legatee a certain sum of money or other things by way of support, the same amount shall be deemed bequeathed, unless it be markedly disproportionate to the value of the estate.1255 If a periodical pension, or a certain annual, monthly, or weekly amount is bequeathed, the legatee may petition the court for the first installment upon the death of the testator, and for the following ones which shall be due at the beginning of each period; such payment shall not be returned, even though the legatee should die before the expiration of the period which has commenced.1256 If the thing bequeathed should be subject to a usufruct, the legatee or devisee shall respect such right until it is legally extinguished.1257 The legatee or devisee acquires a right to the pure and simple legacies or devises from the death of the testator, and transmits it to his heirs.1258 If the legacy or devise is of a specific and determinate thing pertaining to the testator, the legatee or devisee acquires the ownership thereof upon the death of the testator, as well as any growing fruits, or unborn offspring of animals, or uncollected income; but not the income which was due and unpaid before the latter's death. From the moment of the testator's death, the thing bequeathed shall be at the risk of the legatee or devisee, who shall, therefore, bear its loss or deterioration, and shall be benefited by its increase or improvement, without prejudice to the responsibility of the executor or administrator.1259 If the bequest should not be of a specific and determinate thing, but is generic or of quantity, its fruits and interests from the time of the death of the testator shall pertain to the legatee or devisee if the testator has expressly so ordered.1260

1255

Art. 944 Art. 945 1257 Art. 946 1258 Art. 947 1259 Art. 948 1260 Art. 949 1256

288

If the estate should not be sufficient to cover all the legacies or devises, their payment shall be made in the following order: (1) Remuneratory legacies or devises; (2) Legacies or devises declared by the testator to be preferential; (3) Legacies for support; (4) Legacies for education; (5) Legacies or devises of a specific, determinate thing which forms a part of the estate; (6) All others pro rata.1261 The thing bequeathed shall be delivered with all its accessories and accessories and in the condition in which it may be upon the death of the testator.1262 The heir, charged with a legacy or devise, or the executor or administrator of the estate, must deliver the very thing bequeathed if he is able to do so and cannot discharge this obligation by paying its value. Legacies of money must be paid in cash, even though the heir or the estate may not have any. The expenses necessary for the delivery of the thing bequeathed shall be for the account of the heir or the estate, but without prejudice to the legitime.1263 The legatee or devisee cannot take possession of the thing bequeathed upon his own authority, but shall request its delivery and possession of the heir charged with the legacy or devise, or of the executor or administrator of the estate should he be authorized by the court to deliver it.1264 The legatee or devisee cannot accept a part of the legacy or devise and repudiate the other, if the latter be onerous. Should he die before having accepted the legacy or devise, leaving several heirs, some of the latter may accept and the others may repudiate the share respectively belonging to them in the legacy or devise.1265 The legatee or devisee of two legacies or devises, one of which is onerous, cannot renounce the onerous one and accept the other. If both are onerous or gratuitous, he shall 1261

Art. 950 Art. 951 1263 Art. 952 1264 Art. 953 1265 Art. 954 1262

289

be free to accept or renounce both, or to renounce either. But if the testator intended that the two legacies or devises should be inseparable from each other, the legatee or devisee must either accept or renounce both. Any compulsory heir who is at the same time a legatee or devisee may waive the inheritance and accept the legacy or devise, or renounce the latter and accept the former, or waive or accept both.1266 If the legatee or devisee cannot or is unwilling to accept the legacy or devise, or if the legacy or devise for any reason should become ineffective, it shall be merged into the mass of the estate, except in cases of substitution and of the right of accretion.1267 The legacy or devise shall be without effect: (1) If the testator transforms the thing bequeathed in such a manner that it does not retain either the form or the denomination it had; (2) If the testator by any title or for any cause alienates the thing bequeathed or any part thereof, it being understood that in the latter case the legacy or devise shall be without effect only with respect to the part thus alienated. If after the alienation the thing should again belong to the testator, even if it be by reason of nullity of the contract, the legacy or devise shall not thereafter be valid, unless the reacquisition shall have been effected by virtue of the exercise of the right of repurchase; (3) If the thing bequeathed is totally lost during the lifetime of the testator, or after his death without the heir's fault. Nevertheless, the person obliged to pay the legacy or devise shall be liable for eviction if the thing bequeathed should not have been determinate as to its kind, in accordance with the provisions of Article 928.1268 A mistake as to the name of the thing bequeathed or devised, is of no consequence, if it is possible to identify the thing which the testator intended to bequeath or devise.1269 A disposition made in general terms in favor of the testator's relatives shall be understood to be in favor of those nearest in degree.1270

1266

Art. 955 Art. 956 1268 Art. 957 1269 Art. 958 1270 Art. 959 1267

290

III. Legal or Intestate Succession A. General Provisions Legal or intestate succession1271 takes place: 1. If a person dies without a will 2. If a person dies with a void will 3. If a person dies with a will which has subsequently lost its validity 4. When the will does not institute an heir to, or dispose of all the property belonging to the testator;1272 5. If the suspensive condition attached to the institution of the heir does not happen or is not fulfilled 6. If the heir dies before the testator, 7. If the heir repudiates the inheritance, there being no substitution, and no right of accretion takes place 8. When the heir instituted is incapable of succeeding, except in cases provided in the Code.1273 In default of testamentary heirs, the law vests the inheritance in the legitimate and illegitimate relatives of the deceased, in the surviving spouse, and in the State.1274 In every inheritance, the relative nearest in degree excludes the more distant ones, saving the right of representation when it properly takes place. Relatives in the same degree shall inherit in equal shares, subject to the provisions of Article 10061275 with respect to relatives of the full and half blood, and of Article 987, par. 2,1276 concerning division between the paternal and maternal lines.1277 1271

Fundamental underlying principles in legal or intestate succession: 1. Rule of Proximity – the relative nearest in degree excludes the farther one 2. Rule of Equal Division – the relatives who are in the same degree shall inherit in equal shares 1272 Legal succession shall take place only with respect to the property of which the testator has not disposed 1273 Art. 960 1274 Art. 961 1275 Should brother and sisters of the full blood survive together with brothers and sisters of the half blood, the former shall be entitled to a share double that of the latter. 1276 Should there be more than one of equal degree belonging to the same line they shall divide the inheritance per capita; should they be of different lines but of equal degree, one-half shall go to the paternal and the other half to the maternal ascendants. In each line the division shall be made per capita. 1277 Art. 962

291

1. Relationship Proximity of relationship is determined by the number of generations. Each generation forms a degree.1278 A series of degrees forms a line, which may be either direct or collateral. A direct line is that constituted by the series of degrees among ascendants and descendants. A collateral line is that constituted by the series of degrees among persons who are not ascendants and descendants, but who come from a common ancestor.1279 The direct line is either descending or ascending. The former unites the head of the family with those who descend from him. The latter binds a person with those from whom he descends.1280 In the line, as many degrees are counted as there are generations or persons, excluding the progenitor. In the direct line, ascent is made to the common ancestor. Thus, the child is one degree removed from the parent, two from the grandfather, and three from the greatgrandparent. In the collateral line, ascent is made to the common ancestor and then descent is made to the person with whom the computation is to be made. Thus, a person is two degrees removed from his brother, three from his uncle, who is the brother of his father, four from his first cousin, and so forth.1281 Full blood relationship is that existing between persons who have the same father and the same mother. Half-blood relationship is that existing between persons who have the same father, but not the same mother, or the same mother, but not the same father.1282 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, save the right of representation when it should take place.1283

1278

Art. 963 Art. 964 1280 Art. 965 1281 Art. 966 1282 Art. 967 1283 Art. 968 1279

292

If the inheritance should be repudiated by the nearest relative, should there be one only, or by all the nearest relatives called by law to succeed, should there be several, those of the following degree shall inherit in their own right and cannot represent the person or persons repudiating the inheritance.1284 2. Right of Representation Representation is a 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.1285 The representative is called to the succession by the law and not by the person represented. The representative does not succeed the person represented but the one whom the person represented would have succeeded.1286 The right of representation takes place in the direct descending line, but never in the ascending. In the collateral line, it takes place only in favor of the children of brothers or sisters, whether they be of the full or half blood.1287 In order that representation may take place, it is necessary that the representative himself be capable of succeeding the decedent.1288 Whenever there is succession by representation, the division of the estate shall be made per stirpes, in such manner that the representative or representatives shall not inherit more than what the person they represent would inherit, if he were living or could inherit.1289 When children of one or more brothers or sisters of the deceased survive, they shall inherit from the latter by representation, if they survive with their uncles or aunts. But if they alone survive, they shall inherit in equal portions.1290 A person may represent him whose inheritance he has renounced.1291 Heirs who repudiate their share may not be represented.1292

1284

Art. 969 Art. 970 1286 Art. 971 1287 Art. 972 1288 Art. 973 1289 Art. 974 1290 Art. 975 1291 Art. 976 1292 Art. 977 1285

293

B. Order of Intestate Succession Succession pertains, in the first place, to the descending direct line.1293 Legitimate children and their descendants succeed the parents and other ascendants, without distinction as to sex or age, and even if they should come from different marriages. An adopted child succeeds to the property of the adopting parents in the same manner as a legitimate child.1294 The children of the deceased shall always inherit from him in their own right, dividing the inheritance in equal shares.1295 Should children of the deceased and descendants of other children who are dead, survive, the former shall inherit in their own right, and the latter by right of representation.1296 The grandchildren and other descendants shall inherit by right of representation, and if any one of them should have died, leaving several heirs, the portion pertaining to him shall be divided among the latter in equal portions.1297 If illegitimate children survive with legitimate children, the shares of the former shall be in the proportions prescribed by article 895.1298 In case of the death of an adopted child, leaving no children or descendants, his parents and relatives by consanguinity and not by adoption, shall be his legal heirs.1299 In default of legitimate children and descendants of the deceased, his parents and ascendants shall inherit from him, to the exclusion of collateral relatives.1300 The father and mother, if living, shall inherit in equal shares. Should one only of them survive, he or she shall succeed to the entire estate of the

1301

child.

In default of the father and mother, the ascendants nearest in degree shall inherit.

1293

Art. 978 Art. 979 1295 Art. 980 1296 Art. 981 1297 Art. 982 1298 Art. 983 1299 Art. 984 1300 Art. 985 1301 Art. 986 1294

294

Should there be more than one of equal degree belonging to the same line they shall divide the inheritance per capita; should they be of different lines but of equal degree, onehalf shall go to the paternal and the other half to the maternal ascendants. In each line the division shall be made per capita.1302 In the absence of legitimate descendants or ascendants, the illegitimate children shall succeed to the entire estate of the deceased.1303 If, together with illegitimate children, there should survive descendants of another illegitimate child who is dead, the former shall succeed in their own right and the latter by right of representation.1304 The hereditary rights granted by the two preceding articles to illegitimate children shall be transmitted upon their death to their descendants, who shall inherit by right of representation from their deceased grandparent.1305 If legitimate ascendants are left, the illegitimate children shall divide the inheritance with them, taking one-half of the estate, whatever be the number of the ascendants or of the illegitimate children.1306 An illegitimate child has no right to inherit ab intestato from the legitimate children and relatives of his father or mother; nor shall such children or relatives inherit in the same manner from the illegitimate child.1307 If an illegitimate child should die without issue, either legitimate or illegitimate, his father or mother shall succeed to his entire estate; and if the child's filiation is duly proved as to both parents, who are both living, they shall inherit from him share and share alike.1308 In default of the father or mother, an illegitimate child shall be succeeded by his or her surviving spouse who shall be entitled to the entire estate. If the widow or widower should survive with brothers and sisters, nephews and nieces, she or he shall inherit one-half of the estate, and the latter the other half.1309 In the absence of legitimate descendants and ascendants, and illegitimate children and their descendants, whether legitimate or illegitimate, the surviving spouse shall inherit the entire estate, without prejudice to the rights of brothers and sisters, nephews and nieces, should there be any, under Article 1001.1310 1302

Art. 987 Art. 988 1304 Art. 989 1305 Art. 990 1306 Art. 991 1307 Art. 992 1308 Art. 993 1309 Art. 994 1310 Art. 995 1303

295

If a widow or widower and legitimate children or descendants are left, the surviving spouse has in the succession the same share as that of each of the children.1311 When the widow or widower survives with legitimate parents or ascendants, the surviving spouse shall be entitled to one-half of the estate, and the legitimate parents or ascendants to the other half.1312 If a widow or widower survives with illegitimate children, such widow or widower shall be entitled to one-half of the inheritance, and the illegitimate children or their descendants, whether legitimate or illegitimate, to the other half.1313 When the widow or widower survives with legitimate children or their descendants and illegitimate children or their descendants, whether legitimate or illegitimate, such widow or widower shall be entitled to the same share as that of a legitimate child.1314 If legitimate ascendants, the surviving spouse, and illegitimate children are left, the ascendants shall be entitled to one-half of the inheritance, and the other half shall be divided between the surviving spouse and the illegitimate children so that such widow or widower shall have one-fourth of the estate, and the illegitimate children the other fourth.1315 Should brothers and sisters or their children survive with the widow or widower, the latter shall be entitled to one-half of the inheritance and the brothers and sisters or their children to the other half.1316 In case of a legal separation, if the surviving spouse gave cause for the separation, he or she shall not have any of the rights granted in the preceding articles.1317 If there are no descendants, ascendants, illegitimate children, or a surviving spouse, the collateral relatives shall succeed to the entire estate of the deceased in accordance with the following articles.1318 Should the only survivors be brothers and sisters of the full blood, they shall inherit in equal shares.1319 Should brothers and sisters survive together with nephews and nieces, who are the children of the descendant's brothers and sisters of the full blood, the former shall inherit per capita, and the latter per stirpes.1320 1311

Art. 996 Art. 997 1313 Art. 998 1314 Art. 999 1315 Art. 1000 1316 Art. 1001 1317 Art. 1002 1318 Art. 1003 1319 Art. 1004 1320 Art. 1005 1312

296

Should brother and sisters of the full blood survive together with brothers and sisters of the half blood, the former shall be entitled to a share double that of the latter.1321 In case brothers and sisters of the half blood, some on the father's andsome on the mother's side, are the only survivors, all shall inherit in equal shares without distinction as to the origin of the property.1322 Children of brothers and sisters of the half-blood shall succeed per capita or per stirpes, in accordance with the rules laid down for brothers and sisters of the full blood.1323 Should there be neither brothers nor sisters nor children of brothers or sisters, the other collateral relatives shall succeed to the estate. The latter shall succeed without distinction of lines or preference among them by reason of relationship by the whole blood.1324 The right to inherit ab intestato shall not extend beyond the fifth degree of relationship in the collateral line.1325 In default of persons entitled to succeed, the State shall inherit the whole estate.1326 In order that the State may take possession of the property mentioned in the preceding article, the pertinent provisions of the Rules of Court must be observed.1327 After the payment of debts and charges, the personal property shall be assigned to the municipality or city where the deceased last resided in the Philippines, and the real estate to the municipalities or cities, respectively, in which the same is situated. If the deceased never resided in the Philippines, the whole estate shall be assigned to the respective municipalities or cities where the same is located. Such estate shall be for the benefit of public schools, and public charitable institutions and centers, in such municipalities or cities. The court shall distribute the estate as the respective needs of each beneficiary may warrant. The court, at the instance of an interested party, or on its own motion, may order the establishment of a permanent trust, so that only the income from the property shall be used.1328 1321

Art. 1006 Art. 1007 1323 Art. 1008 1324 Art. 1009 1325 Art. 1010 1326 Art. 1011 1327 Art. 1012 1328 Art. 1013 1322

297

If a person legally entitled to the estate of the deceased appears and files a claim hereto with the court within five (5) years from the date the property was delivered to the State, such person shall be entitled to the possession of the same, or if sold, the municipality or city shall be accountable to him for such part of the proceeds as may not have been lawfully spent.1329 Order of legal or intestate succession: Legitimate child

Illegitimate child

Adopted Child

1

Legitimate child and legitimate child and legitimate child and legitimate descendants legitimate descendants legitimate descendants

2

Legitimate parents and illegitimate children and illegitimate children and legitimate ascendants legitimate or illegitimate legitimate or illegitimate descendants descendants

3

Illegitimate children and illegitimate parents legitimate or illegitimate descendants

legitimate or illegitimate parents and legitimate ascendants, adoptive parents

4

Surviving spouse

surviving spouse

surviving spouse

5

Legitimate nephews, nieces

siblings, illegitimate nephews, nieces

6

Legitimate relatives

7

State

siblings, siblings, nephews, nieces

collateral State

State

Concurrence in legal or intestate succession INTESTATE HEIR EXCLUDES Legitimate children Ascendants, and Legitimate collaterals and state descendants Illegitimate 1329

children Illegitimate

EXCLUDED BY No one

parents, No one

Art. 1014

298

CONCURS WITH Surviving spouse Illegitimate children Surviving spouse

and Descendants

collaterals and state

Legitimate parents Collaterals and state and legitimate ascendants Illegitimate parents Surviving spouse

Siblings, nieces

Legitimate children

Legitimate children and legitimate parents Illegitimate children and surviving spouse

Collaterals and state

Legitimate children Surviving spouse and illegitimate children Collaterals other than No one Legitimate children siblings, nephews and Illegitimate children nieces Legitimate parents and Illegitimate parents

nephews All other collaterals Legitimate children, Surviving spouse and state illegitimate children, Legitimate parents and illegitimate parents

Other collaterals Collateral remoter in Legitimate children Collaterals in within 5th degree degree and state Illegitimate children same degree Legitimate parents Illegitimate parents and Surviving spouse State

No one

Everyone

the

No one

A more detailed summary of intestate shares: 1. Legitimate children and legitimate descendants alone INTESTATE HEIR

SHARE AS LEGITIME

Legitimate children

½

SHARE AS DISPOSAL ½

Total

½

½

FREE TOTAL SHARE 1

INTESTATE

1

2. One legitimate child and surviving spouse INTESTATE HEIR

SHARE AS LEGITIME

Legitimate child

½

SHARE AS DISPOSAL

299

FREE TOTAL SHARE ½

INTESTATE

Surviving spouse

¼

¼

½

Total

¾

¼

1

3. Legitimate children and surviving spouse INTESTATE HEIR

SHARE AS LEGITIME

Legitimate children

½

Surviving spouse

Same as share of @ Legitimes to be No. of children plus legitimate child divided equally the surviving spouse between total no. of (see above) children plus the surviving spouse

Total

Varies on children

no.

SHARE AS FREE DISPOSAL Remaining portion of estate after paying legitimes

of Varies on children

no.

TOTAL INTESTATE SHARE Whole estate divided equally between total number of children plus the surviving spouse

of 1

4. Legitimate children and illegitimate children INTESTATE HEIR

SHARE AS LEGITIME

SHARE AS DISPOSAL

FREE TOTAL SHARE

Legitimate children

½

Remaining portion of Whole estate divided estate after paying by the ratio of 2:1 for legitimes each legitimate child as compared to the illegitimate child

Illegitimate children

½ share of legitimate child

Total

Varies on no. of Varies on no. of children children

@ Legitimes to be divided by the ratio of 2 for @ legitimate child, 1 for @ illegitimate child

300

INTESTATE

1 for @ illegitimate child provided that legitimes wouldn’t be impaired

5. One legitimate child, illegitimate child, and surviving spouse INTESTATE HEIR

SHARE AS LEGITIME

SHARE AS FREE DISPOSAL Remaining portion of estate after paying legitimes to be divided by the ratio of 2:1 for @ legitimate child and @ illegitimate child, respectively

TOTAL INTESTATE SHARE Whole estate divided by the ratio of 2 @ legitimate child

Legitimate child

½

Illegitimate child

½ share of legitimate child

Surviving spouse

¼

TOTAL

Varies depending on Varies depending on 1 no. of illegitimate no. of illegitimate children children

@ 1 for @ illegitimate 1 for @ illegitimate child (see above) child Same share as legitimate child

a Legitimes wouldn’t be impaired

6. Legitimate children, illegitimate children and surviving spouse INTESTATE HEIR

SHARE AS LEGITIME

SHARE AS FREE DISPOSAL Remaining portion of estate, if any after paying legitimes to be divided by the ratio of 2 for @ legitimate child

Legitimate children

½

Illegitimate children

½ share of @ legit 1 for @ illegitimate 1 for @ illegitimate child child (see above) child (see above)

Surviving spouse

¼

Total

Varies depending on Varies depending on 1 no. of illegitimate no. of illegitimate children children

Same share as a legitimate child, provided legitimes are not impaired

301

TOTAL INTESTATE SHARE Whole estate divided by the ratio of 2:1 for @ legitimate child and illegitimate child respectively

Same share as a legitimate child, provided legitimes are not impaired

7. Legitimate parents alone INTESTATE HEIR

SHARE AS LEGITIME

Legitimate parents Total

½ ½

SHARE AS DISPOSAL ½ ½

FREE TOTAL SHARE 1 1

INTESTATE

FREE TOTAL SHARE ½ ½

INTESTATE

8. Legitimate parents and illegitimate children INTESTATE HEIR

SHARE AS LEGITIME

SHARE AS DISPOSAL

Legitimate parents Illegitimate children

½ ¼

¼

Total

¾

¼

1

9. Legitimate parents and surviving spouse INTESTATE HEIR

SHARE AS LEGITIME

SHARE AS DISPOSAL

FREE TOTAL SHARE ½

Legitimate parents

½

Surviving spouse

¼

¼

½

Total

¾

¼

1

INTESTATE

10. Legitimate parents, surviving spouse and illegitimate children INTESTATE HEIR

SHARE AS LEGITIME

Legitimate parents

½

Surviving spouse

1/8

Illegitimate children

¼

Total

7/8

SHARE AS DISPOSAL 1/8

FREE TOTAL SHARE ½

INTESTATE

¼ ¼

1/8

1

11. Illegitimate children alone INTESTATE HEIR

SHARE AS LEGITIME

Illegitimate alone Total

½

children ½

SHARE AS DISPOSAL ½ ½

302

FREE TOTAL SHARE 1 1

INTESTATE

12. Illegitimate children and surviving spouse INTESTATE HEIR

SHARE AS LEGITIME

Illegitimate children

1/3

SHARE AS DISPOSAL 1/6

FREE TOTAL SHARE ½

Surviving spouse

1/3

1/6

½

Total

2/3

1/3

1

INTESTATE

13. Surviving spouse INTESTATE HEIR

SHARE AS LEGITIME

Surviving spouse

½ or 1/3

SHARE AS DISPOSAL ½ or 1/3

Total

½ or 1/3

½ or 1/3

FREE TOTAL SHARE 1

INTESTATE

1

14. Illegitimate parents alone INTESTATE HEIR

SHARE AS LEGITIME

Illegitimate parents

½

SHARE AS DISPOSAL ½

Total

½

½

FREE TOTAL SHARE 1

INTESTATE

1

15. Illegitimate parents and surviving spouse INTESTATE HEIR

SHARE AS LEGITIME

Illegitimate parents

¼

SHARE DISPOSAL ¼

Surviving spouse

¼

¼

½

Total

½

½

1

AS

FREE TOTAL SHARE ½

INTESTATE

16. Siblings, nephews and nieces alone INTESTATE HEIR

SHARE AS LEGITIME

Siblings, nieces TOTAL

½

nephews, ½

SHARE DISPOSAL ½ ½

303

AS

FREE TOTAL SHARE 1 1

INTESTATE

17. Surviving spouse, siblings, nephews and nieces INTESTATE HEIR

SHARE AS LEGITIME

Surviving spouse

½

Siblings, nieces Total

nephews, ½

304

SHARE DISPOSAL

AS

FREE TOTAL SHARE ½

½

½

½

1

INTESTATE

IV. Provisions Common to Testate and Intestate Succession A. Right of Accretion 1. Definition and Requisites Accretion 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 the one who renounces or cannot receive his share, or who died before the testator, is added or incorporated to that of his coheirs, co-devisees, or co-legatees.1330 In order that the right of accretion may take place in a testamentary succession, it shall be necessary: (1) That two or more persons be called to the same inheritance, or to the same portion thereof, pro indiviso; and (2) That one of the persons thus called die before the testator, or renounce the inheritance, or be incapacitated to receive it.1331 B. Capacity to Succeed by Will or Intestacy 1. Persons Incapable of Succeeding (1) 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; (2) The relatives of such priest or minister of the gospel within the fourth degree, the church, order, chapter, community, organization, or institution to which such priest or minister may belong; (3) A guardian with respect to testamentary dispositions given by a ward in his favor before the final accounts of the guardianship have been approved, 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; (4) Any attesting witness to the execution of a will, the spouse, parents, or children, or any one claiming under such witness, spouse, parents, or children; (5) Any physician, surgeon, nurse, health officer or druggist who took care of the testator during his last illness; (6) Individuals, associations and corporations not permitted by law to inherit.1332 1330

Art. 1015 Art. 1016 1332 Art. 1027 1331

305

The following donations shall be void: (1) Those made between persons who were guilty of adultery or concubinage at the time of the donation; (2) Those made between persons found guilty of the same criminal offense, in consideration thereof; (3) Those made to a public officer or his wife, descendants and ascendants, by reason of his office. In the case referred to in No. 1, the action for declaration of nullity may be brought by 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.1333 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.1334

1333 1334

Art. 739 Art. 1032

306

2. Unworthiness vs. Disinheritance Unworthiness

Disinheritance

A person cannot succeed for reasons A testamentary disposition by which a provided for by law.1335 person is deprived of, or excluded from, the inheritance to which he has a right.

C. Acceptance and Repudiation of the Inheritance The acceptance or repudiation of the inheritance is an act which is purely voluntary and free.1336 The effects of the acceptance or repudiation shall always retroact to the moment of the death of the decedent.1337 No person may accept or repudiate an inheritance unless he is certain of the death of the person from whom he is to inherit, and of his right to the inheritance.1338 Any person having the free disposal of his property may accept or repudiate an inheritance. Any inheritance left to minors or incapacitated persons may be accepted by their parents or guardians. Parents or guardians may repudiate the inheritance left to their wards only by judicial authorization. The right to accept an inheritance left to the poor shall belong to the persons designated by the testator to determine the beneficiaries and distribute the property, or in their default, to those mentioned in Article 1030.1339 The lawful representatives of corporations, associations, institutions and entities qualified to acquire property may accept any inheritance left to the latter, but in order to repudiate it, the approval of the court shall be necessary.1340 Public official establishments can neither accept nor repudiate an inheritance without the approval of the government.1341 A married woman of age may repudiate an inheritance without the consent of her husband.1342 1335

supra Art. 1041; see Reference for Art. 1030 1337 Art. 1042 1338 Art. 1043 1339 Art. 1044 1340 Art. 1045 1341 Art. 1046 1336

307

Deaf-mutes who can read and write may accept or repudiate the inheritance personally or through an agent. Should they not be able to read and write, the inheritance shall be accepted by their guardians. These guardians may repudiate the same with judicial approval.1343 Acceptance may be express or tacit. An express acceptance must be made in a public or private document. A tacit acceptance is one resulting from acts by which the intention to accept is necessarily implied, or which one would have no right to do except in the capacity of an heir. Acts of mere preservation or provisional administration do not imply an acceptance of the inheritance if, through such acts, the title or capacity of an heir has not been assumed.1344 An inheritance is deemed accepted: (1) If the heirs sells, donates, or assigns his right to a stranger, or to his co-heirs, or to any of them; (2) If the heir renounces the same, even though gratuitously, for the benefit of one or more of his co-heirs; (3) If he renounces it for a price in favor of all his co-heirs indiscriminately; but if this renunciation should be gratuitous, and the co-heirs in whose favor it is made are those upon whom the portion renounced should devolve by virtue of accretion, the inheritance shall not be deemed as accepted.1345 The repudiation of an inheritance shall be made in a public or authentic instrument, or by petition presented to the court having jurisdiction over the testamentary or intestate proceedings.1346 If the heir repudiates the inheritance to the prejudice of his own creditors, the latter may petition the court to authorize them to accept it in the name of the heir.1347 The acceptance shall benefit the creditors only to an extent sufficient to cover the amount of their credits. The excess, should there be any, shall in no case pertain to the renouncer, but shall be adjudicated to the persons to whom it may belong.

1342

Art. 1047 Art. 1048 1344 Art. 1049 1345 Art. 1050 1346 Art. 1051 1347 Art. 1052 1343

308

If the heir should die without having accepted or repudiated the inheritance his right shall be transmitted to his heirs.1348 Should there be several heirs called to the inheritance, some of them may accept and the others may repudiate it.1349 If a person, who is called to the same inheritance as an heir by will and ab intestato, repudiates the inheritance in his capacity as a testamentary heir, he is understood to have repudiated it in both capacities. Should he repudiate it as an intestate heir, without knowledge of his being a testamentary heir, he may still accept it in the latter capacity.1350 The acceptance or repudiation of an inheritance, once made, is irrevocable, and cannot be impugned, except when it was made through any of the causes that vitiate consent, or when an unknown will appears.1351 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.1352 D. Collation To determine the legitime, the value of the property left at the death of the testator shall be considered, deducting all debts and charges, which shall not include those imposed in the will. To the net value of the hereditary estate, shall be added the value of all donations by the testator that are subject to collation, at the time he made them.1353 Donations given to children shall be charged to their legitime. Donations made to strangers shall be charged to that part of the estate of which the testator could have disposed by his last will. Insofar as they may be inofficious or may exceed the disposable portion, they shall be reduced according to the rules established by this Code.1354 1348

Art. 1053 Art. 1054 1350 Art. 1055 1351 Art. 1056 1352 Art. 1057 1353 Art. 908 1354 Art. 909 1349

309

Donations which an illegitimate child may have received during the lifetime of his father or mother, shall be charged to his legitime. Should they exceed the portion that can be freely disposed of, they shall be reduced.1355 Every compulsory heir, who succeeds with other compulsory heirs, must bring into the mass of the estate any property or right which he may have received from the decedent, during the lifetime of the latter, by way of donation, or any other gratuitous title, in order that it may be computed in the determination of the legitime of each heir, and in the account of the partition.1356 Collation shall not take place among compulsory heirs if the donor should have so expressly provided, or if the donee should repudiate the inheritance, unless the donation should be reduced as inofficious.1357 E. Partition and Distribution of Estate 1. Partition The separation, division and assignment of a thing held in common among those to whom it may belong. The thing itself may be divided, or its value.1358 Should a person make partition of his estate by an act inter vivos, or by will, such partition shall be respected, insofar as it does not prejudice the legitime of the compulsory heirs. A parent who, in the interest of his or her family, desires to keep any agricultural, industrial, or manufacturing enterprise intact, may avail himself of the right granted him in this article, by ordering that the legitime of the other children to whom the property is not assigned, be paid in cash.1359 2. Partition inter vivos 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.

1355

Art. 910 Art. 1061 1357 Art. 1062 1358 Art. 1079 It includes every act which is intended to put an end to indivision among co-heirs, and legatees or devisees, although it should purport to be a sale, exchange, compromise, or any other transaction. It is not subject to any form. 1359 Art. 1080 1356

310

3. Effects of Partition A partition legally made confers upon each heir the exclusive ownership of the property adjudicated to him.1360 A partition may be rescinded or annulled for the same causes as contracts.1361 The action for rescission on account of lesion shall prescribe after four years from the time the partition was made.1362 A partition made with preterition of any of the compulsory heirs shall not be rescinded, unless it be proved that there was bad faith or fraud on the part of the other persons interested; but the latter shall be proportionately obliged to pay to the person omitted the share which belongs to him.1363 A partition which includes a person believed to be an heir, but who is not, shall be void only with respect to such person.1364

1360

Art. 1091 Art. 1097 1362 Art. 1100 1363 Art. 1104 1364 Art. 1105 1361

311

PARTNERSHIP I. Contract of partnership1365 A. 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. B. Elements 1. Consensual; 2. Contribution of money, property or industry to a common fund; 3. Subject must be a lawful one; 4. An intention of dividing the profit among the partners; 5. A desire to formulate an active union; 1366 6. A new personality, that of the firm – must arise, distinct from the separate personality of each of the members. C. Rules to determine existence1367 1. General rule: Persons who are not partners as to each other are not partners as to third persons. Exception: Partnership by estoppel 2. Co-ownership of a property does not itself establish a partnership, even though the co-owners share in the profits derived from the incident of joint ownership.

1365

A partnership has a juridical personality which is separate and distinct from that of the partners. A partnership may sue and be sued in its name or by its duly authorized representatives. A managing partner of the partnership may execute all acts of administration including the right to sue debtors of the partnership in the case of their failure to pay their obligation when it becomes demandable. (Tai Tong Chuache & Co. vs. Insurance Commission 158 SCRA 336 [1988]) 1366 affectio societatis 1367 Art. 1769

312

3. Sharing of gross returns alone does not indicate a partnership, whether or not the persons sharing them have a joint or common right or interest in any property from which the returns are derived. 4. Receipt of share in the profits is a strong presumptive evidence of partnership. However, no such inference will be drawn if such profits were received in payment: (a) as a debt by installments or otherwise; (b) as wages of an employee or 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; and (e) as the consideration for the sale of a goodwill of a business or other property by installments or otherwise. D. How partnership is formed General rule: No special form is required for the validity or existence of the contract of partnership. Exceptions: 1. Where immovable property or real rights are contributed, the partnership contract shall be void unless: a. It is reduced to writing in a public instrument1368 . b. An inventory of the property contributed is made, signed by the parties and attached to the public instrument.1369 2. Where the contract is by its terms not to be performed within a year from the making thereof, such partnership contract is covered by the statute of frauds and thus requires a written agreement to be enforceable. 3. Where the contract of partnership has a capital of 3,000 pesos or more, in money or property, it shall appear in a public instrument and must be recorded in the Office of the 1368

Art. 1771 Art.1773 A partnership contract which states that the partnership is established to operate a fishpond is not rendered void because no inventory of the fishpond was made (where it did not clearly appear in the articles of partnership that the real property had been contributed by anyone of the partners). (Agad vs. Mabolo and Mabolo Agad and Co., 23 SCRA 1223[1968]) 1369

313

Securities and Exchange Commission. However, a partnership has a juridical personality even in case of failure to comply with this requirement. E. Partnership term Unlimited in the sense that no time limit is fixed by law; may be agreed upon.1370 F. Universal vs. Particular; General vs. Limited Universal property1371

partnership

of

all

present

The partners contribute all the property which actually belong 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.

Particular partnership One which has for its object determinate things, their use and fruits, or a specific undertaking, or the exercise of a profession or vocation.

Universal partnership of profits1372 Comprises all that the partners may acquire by their industry or work during the existence of the partnership and the usufruct of movable or immovable property which each of the partners may possess at the time of the celebration of the contract.

1370

expressly or impliedly In a universal partnership of all present property, the property which belongs 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 the profits which they may acquire therewith. A stipulation for the common enjoyment of any other profits may also be made; but the properties which the partners may acquire subsequently by inheritance, legacy or donation cannot be included in such stipulation, except the fruits thereof. Where the articles of partnership do not specify the nature of the universal partnership, whether it is one of “present property” or of “profits” only, it will be presumed that the parties intended merely a partnership of profits. Future properties cannot be contributed. Thus, property subsequently acquired by (1) inheritance, (2) legacy or (3) donation cannot be included by stipulation except the fruits thereof 1372 Movable or immovable property which each of the partners may posses at the time of the celebration of the contract shall continue to pertain exclusively to each, only the usufruct passing to the partnership. Persons who are prohibited from giving each other any donation or advantage cannot enter into a universal partnership. (Art. 739, Art. 87, Family Code) Profits acquired by their partners through chance (i.e. lottery) without employment of any physical or intellectual efforts are not included. 1371

314

General partnership

Limited partnership

Consist of general partners who are liable pro rata and subsidiarily and sometimes solidarily with their separate property for partnership debts.

One formed by two or more persons having as members one or more general partners and one or more limited partners, the latter not being personally liable for the obligations of the partnership.

G. Partnership by estoppel1373 Arises when a person, by words spoken or written or by conduct, represents himself or consents to another representing him to anyone, as partner in an existing partnership, or with one or more persons not actual partners; he is liable to any such person to whom such representation has been made, who has, on the faith of such representation given credit to the actual or apparent partnership.1374 H. Partnership v. Joint Venture Joint Venture1375

Partnership

Contemplates a general business with some Formed for the execution of a single degree of continuity transaction and is thus of temporary nature It is hardly distinguishable from partnership, since their elements are similar, i.e. community of interest in the business, sharing of profits and losses, and a mutual right of control.

1373

Elements to establish liability as a partner on ground of estoppel: 1.Defendant represented himself as partner/represented by others as such and not denied/refuted by defendant 2. Plaintiff relied on such representation 3. Statement of defendant not refuted 1374 Art 1825 It does not create a partnership as between the alleged partners. A contract, express or implied is essential to the creation of partnership. The law considers them partners and the association as a partnership insofar as it is favorable to third persons. However, partnership liability is created only in favor of persons who on the faith of such representation given credit to the actual or apparent partnership 1375 In Kilosbayan, Incorporated vs. Guingona, Jr. 232 SCRA 110 [1994], the court defined a joint venture as an association of persons or companies jointly undertaking some commercial enterprise; generally all contribute assets and share risks. Its requisites are: a. A community of interest in the performance of the subject matter; b. A right to direct and govern the policy in connection therewith; c. Duty to share profits and losses.

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I. Professional partnership Partnerships formed by persons for the sole purpose of exercising their common profession, no part of the income of which is derived from engaging in any trade or business. J. Management1376 A. When the manner of management has been provided for in the partnership agreement When a managing partner has been appointed: 1. Appointment in the articles of partnership a. Power is irrevocable without just or lawful cause i. to remove him for just cause, vote of partners representing controlling interest is necessary ii. to remove him without just cause or for an unjust cause, there must be unanimity including his own vote b. Extent of power i. if he acts in good faith, he may do all acts of administration, despite opposition of his partners ii. if in bad faith, he cannot. 2. Appointment other than in the articles of partnership cause

a. Power to act may be revoked at any time, with or without just

b. Extent of power: as long as he remains manager, he can perform all acts of administration, but if others oppose and he persists, he can be removed

1376

Arts. 1800-1803

316

When two or more managing partners have been entrusted with the management of partnership: 1. Without specification of their respective duties and without stipulation requiring unanimity of action General rule: Each managing partner may execute all acts of administration Exception: If any of the managing partners should oppose, a. Decision of the majority of the managing partners shall prevail b. In case of a tie, decision of the partners representing the controlling interest shall prevail 2. With stipulation requiring unanimity of action General rule: Unanimous consent of all the managing partners shall be necessary for the validity of the acts and absence or inability of any managing partner cannot be alleged Exception: When there is an imminent danger of grave or irreparable injury to the partnership, partner may act alone without the consent of the partner who is absent or under disability B. When manner of management has not been agreed upon a. All partners shall be considered managers and agents b. Unanimous consent required for alteration of immovable property

317

II. Rights and obligations of partnership The partnership can, in general: a) enter into contracts b) acquire and possess property of all kinds c) incur obligations d) bring civil and criminal actions e) be adjudged insolvent even if the individual members be each financially solvent

f) bear risk of loss1377 g) reimburse1378 h) operate under firm name1379 i) bound by partner’s admission1380

1377

Partnership bears the risk: when what is contributed is a fungible thing, thing which can’t be kept without deteriorating, if the thing was contributed to be sold, and contributions are appraised in the inventory (Art. 1795, CC) 1378 3 obligations of the partnership: 1. refund disbursements with legal interest 2. answer for obligations contracted in good faith in the partnership’s interest 3. answer for risks (Art. 1796, CC) Partner = agent. Being a mere agent, he isn’t personally liable as long as he’s not at fault (Art. 1912, CC) and acted within the scope of his authority. But unlike an ordinary agent, the paying partner doesn’t have the right of retention if he isn’t paid. 1379 Every partnership shall operate under a firm name (Art. 1815, CC) to distinguish the partnership from other entities & from the individual partners. Non-members whose names were used: don’t have the rights of a partner but are liable to 3rd persons without notice as partners (Art. 1815, CC). They become partners by estoppel (PNB v. Lo). Use of deceased partner’s name in law firm: permissible as long as it’s indicated in the firm’s communications that the partner is deceased (Rule 3.02, CPR) Other rules: 1. a person continuing the partnership after a dissolution uses the firm name/name of deceased partner as part of the name: deceased partner’s individual property isn’t liable for debts contracted (Art. 1840, CC) 2. the limited partner’s surname shall not appear in the firm name unless a. it’s also the surname of a general partner b. before the limited partner became such, the business had been carried on under a name in which his surname appeared (Art. 1846, CC) 1380 Requisites to be admissible against the partnership: 1. it must be connected with partnership affairs 2. it’s within the scope of the partner’s authority (Art. 1820, CC) as may be just and equitable under the circumstances according to capital contribution. 3. Purely industrial partner not liable for losses Exception: when a partner makes admissions for himself only without purporting to act for the partnership

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j) bound by notice to partner1381 k) liable for wrongful act of partner1382 III. Rights and obligations of partners among themselves Rights: 1. Property rights a) His rights in the specific partnership property b) His interest in the partnership c) His right to participate in the management 2. Right to reimbursement for amounts advanced to the partnership and to indemnification for risks in consequence of management 3. Right to associate with another person in his share 4. Right of access and inspection of partnership books 5. Right to true and full information of all things affecting the partnership 6. Right to a formal account of partnership affairs under certain circumstances1383 7. Right to have partnership dissolved under certain conditions. Obligations: 1.

Obligation with respect to contribution of property a) To contribute what had been promised

Admission by a former partner not admissible in evidence against the partnership. (Congco vs. Trillana) 1381 Notice to the firm: 1. Notice to a partner while already a partner 2. Knowledge is acquired by a partner who’s acting in a particular matter, WON a partner at the time as long as he still remembers the partnership matter 3. The partner who acquired it has reason to believe that it be the subject of the business, and could’ve communicated it to the acting partner (Art. 1821, CC) 1382 Extent of liability for wrongful acts, omissions of a partner: firm is liable to the same extent as the partner (Art. 1822, CC). Misapplication of money/property resulting in losses: if loss is suffered by the 3rd person who delivered the money/property, the partnership is solidarily liable with the misappropriating partner (Art. 1823, CC). 1383 The ten (10) year period to demand an accounting by a partner begins at the dissolution of the partnership.

319

b) To answer for eviction in case the partnership is deprived of determinate property contributed c) To answer to the partnership for the fruits of the property the contribution of which is delayed, from the date they should have been contributed to the time of actual delivery d) To preserve the property with the diligence of a good father of a family pending delivery to the partnership e) To indemnify the partners for any damages caused to it by the retention of the same or by delay in its contribution. 2. Obligations with respect to contribution of money and money converted to personal use a) To contribute on the date due the amount he has undertaken to contribute to the partnership b) To reimburse any amount he may have taken from the partnership coffers and converted to his own personal use c) To pay the agreed or legal interest, if he fails to pay his contribution on time or in case he takes any amount from the common fund and converted to his own personal use d) To indemnify the partnership for the damages caused to it by the delay in the contribution or the conversion of any sum for his personal benefit. 3. Obligation Not to Engage in Other Business for Himself Industrial partner- cannot engage in any business for himself unless the partnership expressly permits him to do so. The other partners have the remedy of either excluding the erring partner from the firm or of availing themselves of the benefits which he may have obtained.1384 Capitalist partner- The prohibition extends only to any operation which is of the same kind of business in which the partnership is engaged unless there is a stipulation to the contrary.

1384

The prohibition is absolute and applies whether the industrial partner is to engage in the same business in which the partnership is engaged or in any kind of business. It is clear that the reason for the prohibition exists in both cases, which is to prevent any conflict of interest between the industrial partner and the partnership and to insure faithful compliance by said partner with his prestation (Evangelista & Co. vs. Abad Santos, 51 SCRA 416, 1973)

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4. Obligation to Contribute Additional Capital As a general rule, a capitalist partner is not bound to contribute to the partnership more than what he agreed to contribute but in case of an imminent loss of the business, and there is no agreement to the contrary, he is under obligation to contribute an additional share to save the venture. If he refuses to contribute, he shall be obliged to sell his interest in the partnership to other partners. 5. Obligation of Managing Partner who Collects Debt Where a person is separately indebted to the partnership and to the managing partner at the same time, any sum received by the managing partner shall be applied to the two credits in proportion to their amounts, except where he received it entirely for the account of the partnership, in which case the whole sum shall be applied to the partnership credit only. 6. Obligation of Partner Who Receives Share in Partnership Credit A partner who receives, in whole or in part, his share in the partnership, when the others have not collected theirs, shall be obliged, if the debtor should thereafter become insolvent, to bring to the partnership capital what he received even though he may have given receipt for his share only.1385 7. Obligation of Partner for Damages to Partnership Every partner is responsible to the partnership for damages suffered by it through his fault. He cannot compensate them with the profits and benefits which he may have earned for the partnership by his industry. 8. Duty 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 of any partner under legal disability. profits

9. Obligation to account for any benefit and hold as trustee unauthorized personal

Every partner must account to the partnership for any benefit, and hold as trustee for it any profits derived by him without the consent of the other partners from any transaction connected with the formation, conduct, liquidation of the partnership or form any use by him of its property.

1385

Requisites for application of rule: 1) A partner has received, in whole or in part, his share in the partnership credit 2) The other partners have not collected their shares. 3) The partnership debtor has become insolvent.

321

IV. Obligations of Partnership/Partners to Third Persons Liability for contractual obligations1386 All partners, including industrial partners, are personally liable with all their property. Their individual liability is pro rata and subsidiary, unless otherwise stipulated Liability of partnership for acts of partners a. Acts for apparently carrying on in the usual way the business of the partnership General rule: Act binds the partnership. Exception: Partnership is not bound if: i. acting partner has in fact no authority and ii. the third person knows that the acting partner has no authority b. Acts of Strict Dominion or Ownership1387 General rule: Act does not bind the partnership. Exception: Partnership is bound if: i.

the act is authorized by all the partners; or

ii.

they have abandoned the business

c. Acts in contravention of a restriction on authority Partnership is not liable to third persons having actual or presumptive knowledge of the restrictions Liability arising from partner’s tort or breach of trust a. Where, by any wrongful act or omission of any partner acting in the ordinary course of business of the partnership or with authority of his co-partners, loss or injury is caused to any person, not being a partner in the partnership1388 b. Where one partner, acting within the scope of his apparent authority, receives money or property of a third person and misapplies it1389

1386

Art. 1816 Acts which are not apparently for carrying on in the usual way the business of the partnership 1388 Art. 1822 1389 Art. 1823 1387

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c. Where the partnership, in the course of its business, receives money or property and it is misapplied by any partner while it is in the custody of the partnership1390 V. Dissolution Change in the relation of the partners caused by any partner ceasing to be associated in carrying on the business.1391 It is the point in time when the partners cease to carry on the business together. It represents the demise of a partnership. Dissolution is caused: (1) Without violation of the agreement between the partners: (a) By the termination of the definite term or particular undertaking specified in the agreement; (b) By the express will of any partner, who must act in good faith, when no definite term or particular is specified; (c) 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 or after the termination of any specified term or particular undertaking; (d) By the expulsion of any partner from the business bona fide in accordance with such a power conferred by the agreement between the partners; (2) 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; (3) 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; (4) 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 1390

Ibid Criminal liability of partnership: Partnership liability does not extend to criminal liability where the wrongdoing is regarded as individual in character. But where the crime is statutory, especially when it involves a fine rather than imprisonment, criminal liability may be imposed All partners are solidarily liable with the partnership for any penalty or damage arising from a partnership tort or breach of trust 1391 Art. 1828

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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; (5) By the death of any partner; (6) By the insolvency of any partner or of the partnership; (7) By the civil interdiction of any partner; (8) By decree of court under the following article. VI. Limited partnership A. Definition One formed by two or more persons having as members one or more general partners and one or more limited partners, the latter not being personally liable for the obligations of the partnership. B. How limited partnership is formed/amended1392 Formation

Amendment

1. Certificate of articles of the limited 1. Change in name of partnership, amount/character of contribution of ltd. partnership must state the ff. matters: Partner a. Name of partnership + word 2. Substitution of limited partner "ltd." b. Character of business

3. Admission of additional limited partner

1392

A strict compliance with the legal requirements is not necessary. It is sufficient that there is substantial compliance in good faith. If there is no substantial compliance, the partnership becomes a general partnership as far as third persons are concerned, in which all the members are liable as general partners. (Jo Chung Cang vs. Pacific Commercial Co., 45 Phil. 142 [1923]. However, a firm which fails to substantially comply with the formal requirements of a limited partnership is a general partnership only as to its relations to third persons. The firm is a limited partnership, subject to all rules applicable to such partnership; and as between the partners they are bound by their agreement; and that all the limited partner’s relations to his co-partners and their obligations to him growing out of the relation remain unimpaired. As to third persons or creditors guilty of estoppel, the firm shall not be treated as a general partnership despite lack of substantial compliance to the requirements of a limited partnership. If creditors deal with the firm as a limited partnership, they will be estopped from insisting that there is no such partnership, or that the terms of the partnership were not sufficiently stated in the notice of its formation. (40 Am. Jur. 476.)

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c. Location of principal place of 4. business 5. d. Name/place of residence of members e. Term for partnership is to exist f. Amount of cash/value property contributed

Admission of general partner Death, insolvency, insanity, civil interdiction of general partner & business is continued

6. Change in character of business of

7. False/erroneous statement in certificate

8. Change in time as stated in the certificate for dissolution of partnership/return of h. Time agreed upon to return contribution contribution of limited partner 9. Time is fixed for dissolution of i. Sharing of profits/other partnership. Return of contribution if no compensation orig. time specified g. Additional contributions

j.

Right of limited partner (if given) 10. Change in other statement in certificate to substitute an assignee

k. Right

to

admit

additional

partners 2. Such certificate must be filed for record in the Office of the Securities and Exchange Commission. C. Rights and obligations of a limited partner Rights: 1. To have the partnership books kept at the principal place of business of the partnership 2. To inspect, at a reasonable hour, partnership books and copy any of them 3. To demand true and full information of the things affecting the partnership 4. To demand a formal account of the partnership affairs whenever circumstances render it just and reasonable 5. To ask for dissolution and winding up by decree of court 6. To receive a share in the profits or other compensation by way of income provided that the partnership assets are in excess of partnership liabilities after such payment 7. To receive the return of his contribution provided: a) All the liabilities of the partnership have been paid or the partnership assets are sufficient to pay partnership liabilities 325

b) The consent of all the members has been obtained1393 c) The certificate is cancelled or so amended as to set forth the withdrawal or reduction Obligation: To contribute cash or property to the partnership but not services.

1393

Exception: When the return of the contribution may be rightfully demanded: 1) On the dissolution of the partnership 2) Upon the arrival of the date specified in the certificate for the return 3) After he has given 6 months’ notice in writing to all other partners, if no time is specified in the certificate there for the return of the contribution or for the dissolution of the partnership

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AGENCY1394 I. Definition of agency A contract whereby a person1395 binds himself to render some service or to do something in representation or on behalf of another1396 with the consent or authority of the latter.1397 II. Powers A. To bind principal1398 The agent who acts as such is not personally liable to the party with whom he contracts, unless he expressly binds himself or exceeds the limits of his authority without giving such party sufficient notice of his powers.1399 If the agent contracts in the name of the principal, exceeding the scope of his authority, and the principal does not ratify the contract, it shall be void if the party with whom the agent contracted is aware of the limits of the powers granted by the principal. In this case, however, the agent is liable if he undertook to secure the principal's ratification.1400 If a duly authorized agent acts in accordance with the orders of the principal, the latter cannot set up the ignorance of the agent as to circumstances whereof he himself was, or ought to have been, aware.1401 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.1402 1394

General rule: There are no formal requirements governing the appointment of an agent. The agent’s authority may be oral or written. It may be in a public or private writing. Exception: When the law requires a specific form 1395 agent 1396 principal 1397 Art. 1868 1398 General Rule: The principal is not bound by the acts of the agent beyond his limited powers. Exceptions: 1. Where the principal’s acts have contributed to deceive the third person in good faith; 2. Where the limitations upon the power created by him could not have been known by the third person; 3. Where the principal has placed in the hands of the agent instruments signed by him in blank (Strong vs. Gutierrez Repide, 6 Phil. 680 [1906]) 4. Where the principal has ratified the acts of the agent. 1399 Art. 1897 1400 Art. 1898 1401 Art. 1899 1402 Art. 1900

327

A third person cannot set up the fact that the agent has exceeded his powers, if the principal has ratified, or has signified his willingness to ratify the agent's acts.1403 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.1404 B. Exception If an agent acts in his own name, the principal has no right of action against the persons with whom the agent has contracted; neither have such persons against the principal. In such case, the agent is the one directly bound in favor of the person with whom he has contracted, as if the transaction were his own, except when the contract involves things belonging to the principal. The provisions shall be understood to be without prejudice to the actions between the principal and agent.1405 III. Express vs. Implied Agency Express Implied1406 One where the agent has been actually One which is implied from the authorized by the principal, either orally or in writing; 1. acts of the principal- from his silence or lack of action, or his failure to repudiate the agency knowing that another person is acting on his behalf without authority. 2. Acts of the agent- when he carries out the agency, or from his silence or inaction according to the circumstances.

1403

Art. 1901 Art. 1902 1405 Art. 1883 1406 The principal is still bound by the acts of the agent just as in case of express agency 1404

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IV. Agency by estoppel 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 in good faith, and in the honest belief that he is what he appears to be.1407 V. General vs. Special Agency General Agency

Special Agency

One which comprises all the business of the One which comprises one or more specific principal transactions VI. Agency couched in general terms One which is created in general terms and is deemed to comprise only acts of administration. VII. Agency requiring special power of attorney The scope of the agent’s authority is what appears in the written terms of the power of attorney. 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 the written power of attorney.1408 VIII. Agency by operation of law The concept is essentially one of estoppel and has been explained in this manner: "The principal is bound by the acts of his agent with the apparent authority which he knowingly permits the agent to assume, or which he holds the agent out to the public as possessing. 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.1409

1407

Cuison vs. CA, GR.88531, October 26, 1993 Siredy Enterprises, Inc. vs. CA, et al. GR 129039, September 27, 2002 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; except private or secret orders. 1409 Irving v. Doctors Hospital of Lake Worth, Inc., 415 So. 2d 55 (1982), quoting Arthur v. St. Peters Hospital, 169 N.J. 575, 405 A. 2d 443 (1979) 1408

329

IX. Rights and Obligations of Principal The principal must comply with all the obligations which the agent may have contracted within the scope of his authority. As for any obligation wherein the agent has exceeded his power, the principal is not bound except when he ratifies it expressly or tacitly.1410 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.1411 The principal must advance to the agent, should the latter so request, the sums necessary for the execution of the agency. Should the agent have advanced them, the principal must reimburse him therefor, even if the business or undertaking was not successful, provided the agent is free from all fault. The reimbursement shall include interest on the sums advanced, from the day on which the advance was made.1412 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 on his part.1413 The agent may retain in pledge the things which are the object of the agency until the principal effects the reimbursement and pays the indemnity set forth in the two preceding articles.1414 If two or more persons have appointed an agent for a common transaction or undertaking, they shall be solidarily liable to the agent for all the consequences of the agency.1415 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, without prejudice to the provisions of Article 1544.1416 Agency by estoppel is defined as "one created by operation of law and established by proof of such acts of the principal as reasonably lead third persons to the conclusion of its existence. Arises where principal by negligence in failing to supervise agent’s affairs, allows agent to exercise powers not granted to him, thus justifying others in believing the agent possesses requisite authority 1410 Art. 1910 1411 Art. 1911 1412 Art. 1912 1413 Art. 1913 1414 Art. 1914 1415 Art. 1915 1416 Art. 1916

330

In the case referred to in the preceding article, if the agent has acted in good faith, the principal shall be liable in damages to the third person whose contract must be rejected. If the agent acted in bad faith, he alone shall be responsible.1417 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 the expenses would be borne by the agent, or that the latter would be allowed only a certain sum.1418 X. Irrevocable agency An agency cannot be revoked if a bilateral contract depends upon it, or if it is the means of fulfilling an obligation already contracted, or if a partner is appointed manager of a partnership in the contract of partnership and his removal from the management is unjustifiable.1419 The agent may withdraw from the agency by giving due notice to the principal. If the latter should suffer any damage by reason of the withdrawal, the agent must indemnify him therefor, unless the agent should base his withdrawal upon the impossibility of continuing the performance of the agency without grave detriment to himself. 1420 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.1421 The agency shall remain in full force and effect even after the death of the principal, if it has been constituted in the common interest of the latter and of the agent, or in the interest of a third person who has accepted the stipulation in his favor.1422

1417

Art. 1917 Art. 1918 1419 Art. 1927 1420 Art. 1928 1421 Art. 1929 1422 Art. 1930 1418

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XI. Modes of extinguishment 1. Expiration of the period 2. Death, civil interdiction, insanity or insolvency of the principal or of the agent 3. Withdrawal of the agent1423 4. Accomplishment of the object or the purpose of the agency 5. Revocation 6. Dissolution of the firm or corporation, which entrusted or accepted the agency COMPROMISE I. Definition A contract whereby the parties, by making reciprocal concessions, avoid a litigation or put an end to one already commenced.1424 II. Void Compromise No compromise upon the following questions shall be valid: (1) The civil status of persons; (2) The validity of a marriage or a legal separation; (3) Any ground for legal separation; (4) Future support; (5) The jurisdiction of courts; (6) Future legitime 1425 III. Effect The effect and authority of res judicata; but there shall be no execution except in compliance with a judicial compromise.1426 If one of the parties fails or refuses to abide by the compromise, the other party may either enforce the compromise or regard it as rescinded and insist upon his original demand.1427

1423

Agent may withdraw by giving notice to the principal, but must indemnify the principal for damages that he may suffer by reason of such withdrawal. 1424 Art. 2028 1425 Art. 2035 1426 Art. 2037 1427 Art. 2041

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CREDIT TRANSACTIONS I. Loan A. Commodatum1428 vs. Mutuum1429 Commodatum

Mutuum

When the bailor1430 delivers to the bailee1431 a non-consumable thing so that the latter may use it for a certain time and return the identical thing.

Where the lender delivers to the borrower money or other consumable thing upon the condition that the latter shall pay the same amount of the same kind and quality.

Object Non-consumable

Consumable Cause

Gratuitous

May or may not be gratuitous Purpose

Use or temporary possession

Consumption Subject Matter

Real or personal property

Only personal property

1428

Kinds: a. Ordinary Commodatum – use by the borrower of the thing is for a certain period of time b. Precarium - one whereby the bailor may demand the thing loaned at will and it exists in the following cases: i. neither the duration nor purpose of the contract is stipulated ii. the use of the thing is merely tolerated by the owner 1429 A contract whereby one party delivers to another, money or other consumable thing with the understanding that the same amount of the same kind and quality shall be paid. (Art. 1953) The mere issuance of the checks does not result in the perfection of the contract of loan. The Civil Code provides that the delivery of bills of exchange and mercantile documents, such as checks, shall produce the effect of payment only when they have been encashed (Gerales vs. CA 218 SCRA 638). It is only after the checks have produced the effect of payment that the contract of loan may be deemed perfected. The obligation is “to pay” and not to return because the consumption of the thing loaned is the distinguishing character of the contract of mutuum from that of commodatum. No estafa is committed by a person who refuses to pay his debt or denies its existence. 1430 lender 1431 borrower

333

Ownership of the thing Retained by the bailor

Passes to the debtor Thing to be returned

Exact thing loaned

Equal amount of the same kind and quality Who bears risk of loss

Bailor

Debtor When to return

In case of urgent need, even before Only after the expiration of the the expiration of the term term

B. Obligations of Bailor and Bailee Obligations of the Bailee Obligations of the bailor:1432 1. To pay for the ordinary expenses for the 1. To respect the duration of the loan use and preservation of the thing loaned.1433 General rule: 2. To be liable for the loss of the thing even if it should be through a fortuitous event in Allow the bailee the use of the thing the following cases: loaned for the duration of the period stipulated or until the accomplishment of the a. when he keeps it longer than the purpose for which the commodatum was period stipulated, or after the instituted. accomplishment of its use Exceptions: b. when he lends or leases it to third persons who are not members of his a. In case of urgent need in which case household bailee may demand its return or temporary use; c. when the thing loaned has been delivered with appraisal of its value b. The bailor may demand immediate return of the thing if the bailee commits any d. when, being able to save either of the act of ingratitude specified in Art. 765.1437 thing borrowed or his own things, he chose to save the latter; or 2. To refund to the bailee extraordinary expenses for the preservation of the thing 1432 1433

Arts. 1946 – 1952 Art. 1941

334

loaned, provided the bailee brings the same e. when the bailee devoted the thing for to the knowledge of the bailor before any purpose different from that for incurring them, except when they are so which it has been loaned1434 urgent that the reply to the notification cannot be awaited without danger. 3. To be liable for the deterioration of thing loaned 3. To be liable to the bailee for damages for known hidden flaws.1438 (a) if expressly stipulated; (b) if guilty of fault or negligence; or (c) if he devotes the thing to any purpose different from that for which it has been loaned 4. To pay for extraordinary expenses arising from the actual use of the thing by the bailee, which shall be borne equally by both the bailor and the bailee, even though the bailee acted without fault, unless there is a stipulation to the contrary1435 5. To return the thing loaned1436

1437

supra Art. 1942 1435 Art. 1949, par. 2 1436 The bailee has no right to retain the thing loaned as security for claims he has against the bailor even for extraordinary expenses except for a claim for damages suffered because of the flaws of the thing loaned. However, the bailee’s right extends no further than retention of the thing loaned until he is reimbursed for the damages suffered by him. He cannot lawfully sell the thing to satisfy such damages without court’s approval. In case there are two or more bailees, their obligation shall be solidary. 1438 Requisites: a. There is flaw or defect in the thing loaned; b. The flaw or defect is hidden; c. The bailor is aware thereof; d. He does not advise the bailee of the same; and e. The bailee suffers damages by reason of said flaw or defect If the above requisites concur, the bailee has the right of retention for damages. The bailor cannot exempt himself from the payment of expenses or damages by abandoning the thing to the 1434

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C. Interest and the suspension of usury law General rule: Unpaid interest shall not earn interest. Exceptions: 1. when judicially demanded 2. when there is an express stipulation1439 Guidelines for the application of proper interest rates: 1. If there is stipulation: that rate shall be applied 2. The following are the rules of thumb for the application/imposition of interest rates: a. When an obligation, regardless of its source, i.e., law, contracts, quasicontracts, delicts or quasi-delicts is breached, the contravenor can be held liable for damages. b. 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: i. When the obligation breached consists of payment of a sum of money,1440 the interest shall be that which is stipulated or agreed upon by the parties. In absence of an agreement, the rate shall be the legal rate 1441 computed from default.1442 ii. In other cases, the rate of interest shall be six percent (6%) per annum.1443 iii. 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 i or ii 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.1444

1439

Must be in writing in view of Art. 1956 loan or forbearance of money 1441 i.e. 12% per annum 1442 The interest due shall itself earn legal interest from the time it is judicially demanded 1443 No interest, however, shall be adjudged on unliquidated claims or damages except when or until the demand can be established with reasonable certainty. When the demand cannot be established, the interest shall begin to run only from the date of the judgment of the court is made. 1444 Eastern Shipping Lines vs. CA, July 12, 1994 1440

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Central Bank Circular No. 416 fixing the rate of interest at 12% per annum deals with loans, forbearance of any money, goods or credits and judgments involving such loans, or forbearance in the absence of express agreement to such rate Interest as indemnity for damages is payable only in case of default or nonperformance of the contract. As they are distinct claims, they may be demanded separately.1445 Validity of unconscionable interest rate in a loan: The Supreme Court in Sps. Solangon vs. Jose Salazar,1446 said that since the usury law had been repealed by CB Cir. No. 905 there is no more maximum rate of interest and the rate will just depend on the mutual agreement of the parties1447. But the Supreme Court said that nothing in said circular grants lenders carta blanche authority to raise interest rates to level which will either enslave their borrowers or lead to a hemorrhaging of their assets 1448. In Medel vs. CA,1449, it was ruled that while stipulated interest of 5.5% per month on a loan is usurious pursuant to CB Circular No. 905, the same must be equitably reduced for being iniquitous, unconscionable and exorbitant. It is contrary to morals1450. It was reduced to 12% per annum in consonant with justice and fair play. II. Deposit1451 A contract constituted from the moment a person receives a thing belonging to another, with the obligation of safely keeping it and of returning the same. A. Voluntary deposit One wherein the 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.1452 B. Necessary deposit One made in compliance with a legal obligation, or on the occasion of any calamity, or by travellers in hotels and inns,1453 or by travellers with common carriers.1454

1445

Sentinel Insurance Co., Inc. vs. CA, 182 SCRA 517 G.R. No. 125944, June 29, 2001 1447 citing Lim Law vs. Olympic Sawmill Co., 129 SCRA 439 1448 citing Almeda vs. CA, 256 SCRA 292) 1449 299 SCRA 481 1450 contra bonos mores 1451 The chief difference between a voluntary deposit and a necessary deposit is that in the former, the depositor has a complete freedom in choosing the depositary, whereas in the latter, there is lack of free choice in the depositor. 1452 Arts. 1968 – 1995 1453 Arts. 1996 - 2004 1454 Arts. 1734 – 1735 1446

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C. Judicial deposit1455 When an attachment or seizure of property in litigation is ordered. III. Guaranty and Suretyship A. Nature and extent of guaranty Extent of Guarantor’s liability1456

Nature

A contract whereby a person1457 binds 1. Where the guaranty definite: himself to the creditor to fulfill the It is limited to the principal debt, to the obligation of the principal debtor in case the exclusion of accessories. latter fail to do so. 2. Where guaranty indefinite or simple: It shall comprise not only the principal obligation, but also all its accessories, including the judicial costs, provided with respect to the latter, that the guarantor shall only be liable for those costs incurred after he has been judicially required to pay.

B. Effects of guaranty When there are two or more guarantors of the same debtor and for the same debt, the one among them who has paid may demand of each of the others the share which is proportionally owing from him. If any of the guarantors should be insolvent, his share shall be borne by the others, including the payer, in the same proportion. The provisions shall not be applicable, unless the payment has been made by virtue of a judicial demand or unless the principal debtor is insolvent.1458 The co-guarantors may set up against the one who paid, the same defenses which would have pertained to the principal debtor against the creditor, and which are not purely personal to the debtor.1459 A sub-guarantor, in case of the insolvency of the guarantor for whom he bound himself, is responsible to the co-guarantors in the same terms as the guarantor.1460 1455

Sequestration Art. 2055 1457 guarantor 1458 Art. 2073 1459 Art. 2074 1460 Art. 2075 1456

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C. Extinguishment of guaranty 1. Release in favor of one of the guarantors, without the consent of the others, benefits all to the extent of the share of the guarantor to whom it has been granted;1461 2. If the creditor voluntarily accepts immovable or other properties in payment of the debt, even if he should afterwards lose the same through eviction or conveyance of property;1462 3. Whenever by some act of the creditor, the guarantors even though they are solidarily liable cannot be subrogated to the rights, mortgages and preferences of the former;1463 4. For the same causes as all other obligations;1464 2. When the principal obligation is extinguished; 6. Extension granted to the debtor by the creditor without the consent of the guarantor.1465 D. Legal and judicial bonds1466 Judicial bonds constitute merely a special class of contracts of guaranty by the fact that they are given “in virtue… of a judicial order.” 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 admitted in lieu thereof.1467 IV. Pledge A. Definition A contract wherein the debtor delivers to the creditor or to a third person a movable or document evidencing incorporeal rights for the purpose of securing 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.

1461

Art. 2078 Art. 2077 1463 Art. 2080 1464 Art. 1231 1465 Art. 2079 1466 Bond - an undertaking that is sufficiently secured, and not cash or currency Bondsman - a surety offered in virtue of a provision of law or a judicial order. He must have the qualifications required of a guarantor and in special laws like the Rules of Court. (Art. 2082) 1467 Art 2083 1462

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B. Kinds 1. Conventional /Voluntary – created by contract 2. Legal – created by operation of law C. Essential requirements 1. Secures the fulfillment of a principal obligation; 2. Pledgor, mortgagor, antichretic debtor must be the absolute owner of the thing pledged or mortgaged; and 3. Pledgor, mortgagor, antichretic debtor must have free disposal of their property, or be legally authorized for such purpose. 4. Possession of the thing pledged must be transferred to the creditor or a third person by agreement;1468 5. It can only cover movable property and incorporeal rights evidenced by documents of title and the instruments proving the right pledged shall be delivered to the creditor, and if negotiable must be endorsed;1469 and 6. The description of the thing pledged and the date must appear in a public instrument to bind third persons, but not for the validity of the contract.1470 D. Obligations of pledge Obligations of pledgor

Obligations of pledgee

1. To advise the pledgee of the flaws of the 1. Take care of the thing with the diligence thing.1471 of a good father of a family.1473 2. Not to demand the return of the thing 2. Not to use thing unless authorized or by until after full payment of the debt, including the owner or its preservation requires its interest due thereon and expenses incurred use.1474 for its preservation.1472 3. Not to deposit the thing with a 3rd person unless so stipulated.1475

1468

Art. 2093 Art. 2094 1470 Art. 2096 1471 Art. 2101 1472 Art. 2105 1473 Art. 2099 1474 Art. 2104 1475 Art. 2100 1469

340

4. Responsibility for acts of agents and employees as regards the thing.1476 5. To advise pledgor of danger to the thing.1477 6. To advise pledgor of the result of the public auction1478

E. Rights of pledgor 1. To demand return in case of reasonable grounds to fear destruction or impairment of the thing without the pledgee’s fault, subject to the duty of replacement1479 2. To bid and be preferred at the public auction1480 3. To alienate the thing pledged provided the pledgee consents to the sale1481 4. To ask that the thing pledged be deposited1482 F. Perfection In addition to the requisites prescribed in article 2085, it is necessary, in order to constitute the contract of pledge, that the thing pledged be placed in the possession of the creditor, or of a third person by common agreement.1483 A pledge shall not take effect against third persons if a description of the thing pledged and the date of the pledge do not appear in a public instrument.1484 G. Foreclosure The creditor to whom the credit has not been satisfied in due time, may proceed before a Notary Public to the sale of the thing pledged. This sale shall be made at a public auction, and with notification to the debtor and the owner of the thing pledged in a proper case, stating the amount for which the public sale is to be held. If at the first auction the thing is not sold, a second one with the same formalities shall be held; and if at the second 1476

Ibid. Art. 2107 1478 Art. 2116 1479 ibid 1480 Art. 2113 1481 Art. 2097 1482 Arts. 2104 & 2106 1483 Art. 2093 1484 Art. 2096 1477

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auction there is no sale either, the creditor may appropriate the thing pledged. In this case he shall be obliged to give an acquittance for his entire claim.1485 The sale of the thing pledged shall extinguish the principal obligation, whether or not the proceeds of the sale are equal to the amount of the principal obligation, interest and expenses in a proper case. If the price of the sale is more than said amount, the debtor shall not be entitled to the excess, unless it is otherwise agreed. If the price of the sale is less, neither shall the creditor be entitled to recover the deficiency, notwithstanding any stipulation to the contrary.1486 H. Pledge by Operation of Law Pledges created by operation of law, such as those referred to in Articles 546, 1731, and 19941487, are governed by the foregoing articles on the possession, care and sale of the thing as well as on the termination of the pledge. However, after payment of the debt and expenses, the remainder of the price of the sale shall be delivered to the obligor.1488 A thing under a pledge by operation of law may be sold only after demand of the amount for which the thing is retained. The public auction shall take place within one month after such demand. If, without just grounds, the creditor does not cause the public sale to be held within such period, the debtor may require the return of the thing.1489 I. Distinguished from Chattel Mortgage In a contract of sale of personal property the price of which is payable in installments, the vendor may exercise any of the following remedies: (1) Exact fulfillment of the obligation, should the vendee fail to pay; (2) Cancel the sale, should the vendee's failure to pay cover two or more installments; (3) Foreclose the chattel mortgage on the thing sold, if one has been constituted, should the vendee's failure to pay cover two or more installments. In this case, he shall have no further action against the purchaser to recover any unpaid balance of the price. Any agreement to the contrary shall be void.1490 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.1491 1485

Art. 2112 Art. 2115 1487 See Reference 1488 Art. 2121 1489 Art. 2122 1490 Art. 1484 1491 Art. 2140 1486

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V. Real Mortgage A. Definition and characteristics A contract whereby the debtor secures to the creditor the fulfilment of a principal obligation, specially subjecting to such security immovable property or real rights over immovable property in case the principal obligation is not complied with at the time stipulated. Characteristics: 1. Real 2. Accessory - its consideration is that of the principal contract from which it receives life. 3. Subsidiary 4. Unilateral – it creates only an obligation on the part of the creditor who must free the property from the encumbrance once the obligation is fulfilled. B. Essential requisites 1. It can cover only immovable property and alienable real rights imposed upon immovable;1492 2. It must appear in a public instrument1493; and 3. Registration in the registry of property is necessary to bind third persons, but not for the validity of the contract1494. C. Foreclosure The remedy available to the mortgagee by which he subjects the mortgaged property to the satisfaction of the obligation to secure that for which the mortgage was given.

1492

Art. 2124 Art. 2125 1494 Art. 2125 1493

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VI. Antichresis A. Definition and characteristics A contract whereby the creditor acquires the right to receive the fruits of an immovable of the debtor, with the obligation to apply them to the payment of the interest, if owing, and thereafter to the principal of his credit..1495 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, i.e., “in writing.”1496 B. Obligations of antichretic creditor 1. To pay taxes and charges on the estate, including necessary expenses1497 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 VII. Chattel Mortgage A. Definition and characteristics A contract by virtue of which personal property is recorded in the Chattel Mortgage Register as a security for the performance of an obligation.1498 Characteristics 1. Accessory contract – it is for the purpose of securing the performance of a principal obligation 2. Formal contract – registration in the Chattel Mortgage Register is indispensable for its validity 3. Unilateral contract – it produces only obligations on the part of the creditor to free the thing from the encumbrance on fulfillment of the obligation. 1495

Art 2132) Art 2134 1497 Creditor may avoid said obligation by: a. compelling debtor to reacquire enjoyment of the property or b. by stipulation to the contrary 1498 Art. 2140 1496

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B. Registration The registration of the chattel mortgage is an effective and binding notice to other creditors of its existence and creates a real right or a lien which, being recorded, follows the chattel wherever it goes. The registration gives the mortgagee symbolical possession.1499 VIII. Quasi-Contracts A. Negotiorum Gestio Arises whenever a person voluntarily takes charge of the agency or management of the business or property of another without any power or authority from the latter. B. Solutio Indebiti Arises whenever a person unduly delivers a thing through mistake to another who has no right to demand it. IX. Concurrence and Preference of Credits1500 A. Meaning of concurrence and preference Concurrence of Credits

Preference of Credit

Possession by two or more creditors of equal Right held by a creditor to be preferred in rights or privileges over the same property or the payment of his claim above others out of all of the property of the debtor the debtor’s assets

1499

Northern Motors, Inc. vs. Coquia, 68 SCRA 374 Effect of failure to register chattel mortgage in the chattel mortgage registry: Article 2140 makes the recording in the Chattel Mortgage Register an essential requisite but if the instrument is not recorded, the mortgage is nevertheless binding between the parties. But the person in whose favor the law establishes a mortgage has no other right than to demand the execution and the recording of the document. 1500 The rules on preference of credits apply only when two or more creditors have separate and distinct claims against the same debtor who has insufficient property. Preference creates no lien on property, and, therefore, gives no interest in property, specific or general, to the preferred creditor but a preference in application of the proceeds after the sale. (Molina vs. Somes, 31 Phil. 76) The preferential right of credit attains significance only after the properties of the debtor have been inventoried and liquidated, and the claims held by his various creditors have been established. (DBP vs. NLRC, 183 SCRA 328)

345

B. Preferred Credits on Specific Movables Those 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.1501 If there are two 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 thereof.1502 C. Exempt Property 1. Present property – those provided under Arts. 155 and 205 of the Family Code, Sec. 13, Rule 39 of the Rules of Court,1504 and Sec. 118 of the Public Land Act1505 1503

2. Future property – a debtor who obtains a discharge from his debts on account of his insolvency, is not liable for the unsatisfied claims of his creditors with said property subject to certain exceptions expressly provided by law.1506 3. Property under legal custody and those owned by municipal corporations necessary for governmental purposes D. Classification of credits With reference to specific movable property of the debtor, the following claims or liens shall be preferred: (1) Duties, taxes and fees due thereon to the State or any subdivision thereof; (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;

1501

Art. 2246 Art. 2247 1503 See Reference 1504 Ibid. 1505 Ibid. 1506 Secs. 68, 69, The Insolvency Law [Act No. 1956] 1502

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(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; (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; (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; (10) Credits for lodging and supplies usually furnished to travellers 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; (11) Credits for seeds and expenses for cultivation and harvest advanced to the debtor, upon the fruits harvested; (12) Credits for rent for one year, upon the personal property of the lessee existing on the immovable leased and on the fruits of the same, but not on money or instruments of credit; (13) Claims in favor of the depositor if the depositary has wrongfully sold the thing deposited, upon the price of the sale. 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.1507 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: (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; 1507

Art. 2241

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(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; (9) Claims of donors or real property for pecuniary charges or other conditions imposed upon the donee, upon the immovable donated; (10) Credits of insurers, upon the property insured, for the insurance premium for two years.1508 The claims or credits enumerated in the two preceding articles shall be considered as mortgages or pledges of real or personal property, or liens within the purview of legal provisions governing insolvency. Taxes mentioned in No. 1, article 2241, and No. 1, article 2242, shall first be satisfied.1509 With reference to other property, real and personal, of the debtor, the following claims or credits shall be preferred in the order named: (1) 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; (2) Credits for services rendered the insolvent by employees, laborers, or household helpers for one year preceding the commencement of the proceedings in insolvency; (3) 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; (4) 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; (5) Credits and advancements made to the debtor for support of himself or herself, and family, during the last year preceding the insolvency; 1508 1509

Art. 2242 Art. 2243

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(6) Support during the insolvency proceedings, and for three months thereafter; (7) Fines and civil indemnification arising from a criminal offense; (8) 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; (9) Taxes and assessments due the national government, other than those mentioned in articles 2241, No. 1, and 2242, No. 1;1510 (10) Taxes and assessments due any province, other than those referred to in articles 2241, No. 1, and 2242, No. 1;1511 (11) Taxes and assessments due any city or municipality, other than those indicated in articles 2241, No. 1, and 2242, No. 1;1512 (12) Damages for death or personal injuries caused by a quasi-delict; (13) Gifts due to public and private institutions of charity or beneficence; (14) 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.1513 Credits of any other kind or class, or by any other right or title not comprised in the four preceding articles, shall enjoy no preference.1514

1510

supra ibid 1512 ibid 1513 Art. 2244 1514 Art. 2245 1511

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E. Order of preference of credits Those 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.1515 If there are two 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 thereof.1516 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.1517 If there are two 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 assessments upon the immovable property or real right.1518 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 the other credits.1519 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: (1) In the order established in Article 2244;1520 (2) Common credits referred to in Article 22451521 shall be paid pro rata regardless of dates.1522

1515

Art. 2246 Art. 2247 1517 Art. 2248 1518 Art. 2249 1519 Art. 2250 1520 supra 1521 ibid 1522 Art. 2251 1516

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X. Insolvency Law A. Definition of insolvency The relative condition of man’s assets and liabilities that the former, if all made immediately available, would not be sufficient to discharge the latter.1523 B. Suspension of payments Proceedings for suspension of payments seek the postponement of the debts of a debtor who possesses sufficient property to cover his debts, but foresees the impossibility of meeting them when they respectively fall due.1524 The debtor has sufficient properties in value to meet his debts but there is not enough cash; thus, he cannot pay his debts as they fall due. He can ask for the suspension of payments of his debts for a given period within which to convert some of his properties to cash so that he can pay his debts. C. Voluntary insolvency The situation of a debtor who, having debts exceeding P1,000 cannot discharge all of them with all of his existing assets, and who, as a consequence, voluntarily goes to court to have himself declared as an insolvent so that his assets may be equitably distributed among his creditors. D. Involuntary insolvency Instituted by three (3) or more resident creditors for an individual debtor whose credits aggregating not less than P1,000 accrued in the Philippines against a debtor who has committed any of the acts of insolvency.

1523 1524

Philippine Commercial Law by C. Villanueva, 1998 Ed., p.729 Sec. 2

351

LEASE I. Lease of things One of the parties binds himself to give to another the enjoyment or use of a thing for a price certain and for a period which may be definite or indefinite. However, no lease for more than ninety-nine years shall be valid.1525 II. Lease of work or services One of the parties binds himself to execute a piece of work or to render to the other some service for a price certain, but the relations of principal and agent does not exist between them.1526 III. Lease of Rural and Urban lands A. Qualified persons Those not covered within the scope as provided for under Articles 1490 and 1491 1527 of the Civil Code.1528 B. Registration Every lease of real estate may be recorded in the Registry of Property. Unless a lease is recorded, it shall not be binding upon third persons.1529 C. Prohibitions The lessee cannot assign the lease without the consent of the lessor, unless there is a stipulation to the contrary.1530 IV. Rights and obligations of lessor and lessee When in the contract of lease of things there is no express prohibition, the lessee may sublet the thing leased, in whole or in part, without prejudice to his responsibility for the performance of the contract toward the lessor.1531 Without prejudice to his obligation toward the sublessor, the sublessee is bound to the lessor for all acts which refer to the use and preservation of the thing leased in the manner stipulated between the lessor and the lessee.1532 1525

Art. 1643 Art. 1644 1527 See Reference 1528 Art. 1646 1529 Art. 1648 1530 Art. 1649 1531 Art. 1650 1526

352

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 extra-judicial demand by the lessor. 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 payments were effected in virtue of the custom of the place.1533 The lessor is obliged: (1) To deliver the thing which is the object of the contract in such a condition as to render it fit for the use intended; (2) To make on the same during the lease all the necessary repairs in order to keep it suitable for the use to which it has been devoted, unless there is a stipulation to the contrary; (3) To maintain the lessee in the peaceful and adequate enjoyment of the lease for the entire duration of the contract.1534 If the thing leased is totally destroyed by a fortuitous event, the lease is extinguished. If the destruction is partial, the lessee may choose between a proportional reduction of the rent and a rescission of the lease.1535 The lessor of a business or industrial establishment may continue engaging in the same business or industry to which the lessee devotes the thing leased, unless there is a stipulation to the contrary.1536 The lessee is obliged: (1) To pay the price of the lease according to the terms stipulated; (2) To use the thing leased as a diligent father of a family, devoting it to the use stipulated; and in the absence of stipulation, to that which may be inferred from the nature of the thing leased, according to the custom of the place; (3) To pay expenses for the deed of lease.1537 The lessee may suspend the payment of the rent in case the lessor fails to make the necessary repairs or to maintain the lessee in peaceful and adequate enjoyment of the property leased.1538 1532

Art. 1651 Art. 1652 1534 Art. 1654 1535 Art. 1655 1536 Art. 1656 1537 Art. 1657 1533

353

If the lessor or the lessee should not comply with the obligations set forth in articles 1654 and 1657,1539 the aggrieved party may ask for the rescission of the contract and indemnification for damages, or only the latter, allowing the contract to remain in force.1540 If a dwelling place or any other building intended for human habitation is in such a condition that its use brings imminent and serious danger to life or health, the lessee may terminate the lease at once by notifying the lessor, even if at the time the contract was perfected the former knew of the dangerous condition or waived the right to rescind the lease on account of this condition.1541 If during the lease it should become necessary to make some urgent repairs upon the thing leased, which cannot be deferred until the termination of the lease, the lessee is obliged to tolerate the work, although it may be very annoying to him, and although during the same, he may be deprived of a part of the premises. If the repairs last more than forty days the rent shall be reduced in proportion to the time - including the first forty days - and the part of the property of which the lessee has been deprived. When the work is of such a nature that the portion which the lessee and his family need for their dwelling becomes uninhabitable, he may rescind the contract if the main purpose of the lease is to provide a dwelling place for the lessee.1542 The lessee is obliged to bring to the knowledge of the proprietor, within the shortest possible time, every usurpation or untoward act which any third person may have committed or may be openly preparing to carry out upon the thing leased. He is also obliged to advise the owner, with the same urgency, of the need of all repairs included in No. 2 of article 1654.1543 In both cases the lessee shall be liable for the damages which, through his negligence, may be suffered by the proprietor. If the lessor fails to make urgent repairs, the lessee, in order to avoid an imminent danger, may order the repairs at the lessor's cost.1544 The lessee shall return the thing leased, upon the termination of the lease, as he received it, save what has been lost or impaired by the lapse of time, or by ordinary wear and tear, or from an inevitable cause.1545

1538

Art. 1658 supra 1540 Art. 1659 1541 Art. 1660 1542 Art. 1662 1543 supra 1544 Art. 1663 1539

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In the absence of a statement concerning the condition of the thing at the time the lease was constituted, the law presumes that the lessee received it in good condition, unless there is proof to the contrary.1546 The lessee is responsible for the deterioration or loss of the thing leased, unless he proves that it took place without his fault. This burden of proof on the lessee does not apply when the destruction is due to earthquake, flood, storm or other natural calamity.1547 The lessee is liable for any deterioration caused by members of his household and by guests and visitors.1548 The bailor shall refund the extraordinary expenses during the contract for the preservation of the thing loaned, provided the bailee brings the same to the knowledge of the bailor before incurring them, except when they are so urgent that the reply to the notification cannot be awaited without danger. If the extraordinary expenses arise on the occasion of the actual use of the thing by the bailee, even though he acted without fault, they shall be borne equally by both the bailor and the bailee, unless there is a stipulation to the contrary.1549 V. Special rules for lease of rural/urban lands The lessee shall have no right to a reduction of the rent on account of the sterility of the land leased, or by reason of the loss of fruits due to ordinary fortuitous events; but he shall have such right in case of the loss of more than one-half of the fruits through extraordinary and unforeseen fortuitous events, save always when there is a specific stipulation to the contrary. Extraordinary fortuitous events are understood to be: fire, war, pestilence, unusual flood, locusts, earthquake, or others which are uncommon, and which the contracting parties could not have reasonably foreseen.1550 Neither does the lessee have any right to a reduction of the rent if the fruits are lost after they have been separated from their stalk, root or trunk.1551 The lease of a piece of rural land, when its duration has not been fixed, is understood to have been for all the time necessary for the gathering of the fruits which the whole estate

1545

Art. 1665 Art. 1666 1547 Art. 1667 1548 Art. 1668 1549 Art. 1949 1550 Art. 1680 1551 Art. 1681 1546

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leased may yield in one year, or which it may yield once, although two or more years have to elapse for the purpose.1552 The outgoing lessee shall allow the incoming lessee or the lessor the use of the premises and other means necessary for the preparatory labor for the following year; and, reciprocally, the incoming lessee or the lessor is under obligation to permit the outgoing lessee to do whatever may be necessary for the gathering or harvesting and utilization of the fruits, all in accordance with the custom of the place.1553 Land tenancy on shares shall be governed by special laws, the stipulations of the parties, the provisions on partnership and by the customs of the place.1554 The tenant on shares cannot be ejected except in cases specified by law.1555 VI. Household service Household service shall always be reasonably compensated. Any stipulation that household service is without compensation shall be void. Such compensation shall be in addition to the house helper's lodging, food, and medical attendance.1556 The head of the family shall furnish, free of charge, to the house helper, suitable and sanitary quarters as well as adequate food and medical attendance.1557 If the house helper is under the age of eighteen years, the head of the family shall give an opportunity to the house helper for at least elementary education. The cost of such education shall be a part of the house helper's compensation, unless there is a stipulation to the contrary.1558 No contract for household service shall last for more than two years. However, such contract may be renewed from year to year.1559 The house helper's clothes shall be subject to stipulation. However, any contract for household service shall be void if thereby the house helper cannot afford to acquire suitable clothing.1560 The head of the family shall treat the house helper in a just and humane manner. In no case shall physical violence be used upon the house helper.1561

1552

Art. 1682 Art. 1683 1554 Art. 1684 1555 Art. 1685 1556 Art. 1689 1557 Art. 1690 1558 Art. 1691 1559 Art. 1692 1560 Art. 1693 1553

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House helpers shall not be required to work more than ten hours a day. Every house helper shall be allowed four days' vacation each month, with pay.1562 In case of death of the house helper, the head of the family shall bear the funeral expenses if the house helper has no relatives in the place where the head of the family lives, with sufficient means therefor.1563 If the period for household service is fixed neither the head of the family nor the house helper may terminate the contract before the expiration of the term, except for a just cause. If the house helper is unjustly dismissed, he shall be paid the compensation already earned plus that for fifteen days by way of indemnity. If the house helper leaves without justifiable reason, he shall forfeit any salary due him and unpaid, for not exceeding fifteen days.1564 If the duration of the household service is not determined either by stipulation or by the nature of the service, the head of the family or the house helper may give notice to put an end to the service relation, according to the following rules: (1) If the compensation is paid by the day, notice may be given on any day that the service shall end at the close of the following day; (2) If the compensation is paid by the week, notice may be given, at the latest on the first business day of the week, that the service shall be terminated at the end of the seventh day from the beginning of the week; (3) If the compensation is paid by the month, notice may be given, at the latest, on the fifth day of the month, that the service shall cease at the end of the month.1565 Upon the extinguishment of the service relation, the house helper may demand from the head of the family a written statement on the nature and duration of the service and the efficiency and conduct of the house helper.1566 VII. Contract of labor A. Obligation in case of death/injury of laborers 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 a fortuitous cause, if the death or personal injury arose out of and in the course of the employment. The employer is also liable for compensation if the employee contracts any illness or disease caused by such 1561

Art. 1694 Art. 1695 1563 Art. 1696 1564 Art. 1697 1565 Art. 1698 1566 Art. 1699 1562

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employment or as the 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. 1567 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 selection or supervision of the plaintiff's fellow worker.1568 VIII. Contract for piece of work By the contract for a piece of work the contractor binds himself to execute a piece of work for the employer, in consideration of a certain price or compensation. The contractor may either employ only his labor or skill, or also furnish the material.1569 If the contractor agrees to produce the work from material furnished by him, he shall deliver the thing produced to the employer and transfer dominion over the thing. This contract shall be governed by the following articles as well as by the pertinent provisions on warranty of title and against hidden defects and the payment of price in a contract of sale.1570 The contract shall execute the work in such a manner that it has the qualities agreed upon and has no defects which destroy or lessen its value or fitness for its ordinary or stipulated use. Should the work be not of such quality, the employer may require that the contractor remove the defect or execute another work. If the contract fails or refuses to comply with this obligation, the employer may have the defect removed or another work executed, at the contractor's cost.1571 An agreement waiving or limiting the contractor's liability for any defect in the work is void if the contractor acted fraudulently.1572 If the contractor bound himself to furnish the material, he shall suffer the loss if the work should be destroyed before its delivery, save when there has been delay in receiving it.1573 The contractor who has undertaken to put only his work or skill, cannot claim any compensation if the work should be destroyed before its delivery, unless there has been delay in receiving it, or if the destruction was caused by the poor quality of the material,

1567

Art. 1711 Article 1712 1569 Art. 1713 1570 Art. 1714 1571 Art. 1715 1572 Art. 1716 1573 Art. 1717 1568

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provided this fact was communicated in due time to the owner. If the material is lost through a fortuitous event, the contract is extinguished.1574 Acceptance of the work by the employer relieves the contractor of liability for any defect in the work, unless: (1) The defect is hidden and the employer is not, by his special knowledge, expected to recognize the same; or (2) The employer expressly reserves his rights against the contractor by reason of the defect.1575 The price or compensation shall be paid at the time and place of delivery of the work, unless there is a stipulation to the contrary. If the work is to be delivered partially, the price or compensation for each part having been fixed, the sum shall be paid at the time and place of delivery, in the absence if stipulation.1576 If, in the execution of the work, an act of the employer is required, and he incurs in delay or fails to perform the act, the contractor is entitled to a reasonable compensation. The amount of the compensation is computed, on the one hand, by the duration of the delay and the amount of the compensation stipulated, and on the other hand, by what the contractor has saved in expenses by reason of the delay or is able to earn by a different employment of his time and industry.1577 If the work cannot be completed on account of a defect in the material furnished by the employer, or because of orders from the employer, without any fault on the part of the contractor, the latter has a right to an equitable part of the compensation proportionally to the work done, and reimbursement for proper expenses made.1578 The engineer or architect who drew up the plans and specifications for a building is liable for damages if within fifteen years from the completion of the structure, the same should collapse by reason of a defect in those plans and specifications, or due to the defects in the ground. The contractor is likewise responsible for the damages if the edifice falls, within the same period, on account of defects in the construction or the use of materials of inferior quality furnished by him, or due to any violation of the terms of the contract. If the engineer or architect supervises the construction, he shall be solidarily liable with the contractor.1579 Acceptance of the building, after completion, does not imply waiver of any of the cause of action by reason of any defect mentioned in the preceding paragraph. 1574

Art. 1718 Art. 1719 1576 Art. 1720 1577 Art. 1721 1578 Art. 1722 1579 Art. 1723 1575

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The action must be brought within ten years following the collapse of the building. The contractor who undertakes to build a structure or any other work for a stipulated price, in conformity with plans and specifications agreed upon with the landowner, can neither withdraw from the contract nor demand an increase in the price on account of the higher cost of labor or materials, save when there has been a change in the plans and specifications, provided: (1) Such change has been authorized by the proprietor in writing; and (2) The additional price to be paid to the contractor has been determined in writing by both parties.1580 The owner may withdraw at will from the construction of the work, although it may have been commenced, indemnifying the contractor for all the latter's expenses, work, and the usefulness which the owner may obtain therefrom, and damages.1581 When a piece of work has been entrusted to a person by reason of his personal qualifications, the contract is rescinded upon his death. In this case the proprietor shall pay the heirs of the contractor in proportion to the price agreed upon, the value of the part of the work done, and of the materials prepared, provided the latter yield him some benefit. The same rule shall apply if the contractor cannot finish the work due to circumstances beyond his control.1582 The contractor is responsible for the work done by persons employed by him.1583 The contractor is liable for all the claims of laborers and others employed by him, and of third persons for death or physical injuries during the construction.1584 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.1585 1580

Art. 1724 Art. 1725 1582 Art. 1726 1583 Art. 1727 1584 Art. 1728 1581

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If it is agreed that the work shall be accomplished to the satisfaction of the proprietor, it is understood that in case of disagreement the question shall be subject to expert judgment. If the work is subject to the approval of a third person, his decision shall be final, except in case of fraud or manifest error.1586 He who has executed work upon a movable has a right to retain it by way of pledge until he is paid.1587

1585

Art. 1729 Art. 1730 1587 Art. 1731 1586

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LAND TITLES AND DEEDS I. Torrens System A. Concept and Background A system for registration of land under which, upon the landowner’s application, the court may, after appropriate proceedings, direct the issuance of a certificate of title. The Torrens system does not create or vest title. It only confirms and records title already existing and vested. It does not protect a usurper from the true owner. It cannot be a shield for the commission of fraud. It does not permit one to enrich himself at the expense of another1588 In order to establish a system of registration by which title recorded became absolute, indefeasible and imprescriptible, Act No. 496, otherwise known as the Land Registration Act, was passed and took effect on February 1, 1903. Rights acquired under this system are guaranteed by the government which provides an assurance fund to answer for damages to be suffered by persons thru the operation of this system. This method is also known as the Torrens system of land registration.1589 There are two (2) laws ancillary to Act No. 496. These are the Cadastral Law of February 11, 19131590 and the Public Land Law of December 1, 19361591 which have been subsequently amended by later legislations. Presidential Decree No. 1529 was issued to cope with the growing need of updating the Land Registration Act, to codify the various other laws relative to registration of real property and real rights, and to further strengthen the Torrens system. Land Registration Act No. 496 of February 1, 1903 has not been repealed or abrogated but rather, “all laws, decrees, orders, rules and regulations or parts thereof, in conflict with any provisions of this decree are hereby repealed or modified accordingly.”1592 B. Certificate of Title This is the true copy of the decree of registration or the transcription thereof and like the decree shall also be signed by LRA Administrator1593 It takes effect upon the date of entry thereof, and the land covered thereby becomes registered land on that date.

1588

Angeles vs. Samia, 66 Phil. 444 (1938) Act 496 has been amended by P.D. 1529 which was enacted on June 11, 1978 1590 Act 2259 1591 Com. Act No. 141 1592 Sec. 20, P.D. No. 1529 1593 Sec. 39, ibid 1589

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II. Regalian Doctrine A. Concept 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 natural resources belong to the state. With the exception of agricultural lands, all other natural resources shall not be alienated.1594 B. Effects Under the Regalian doctrine, all lands of the public domain belong to the State, which is the source of any asserted right to ownership of land. All lands not otherwise appearing to be clearly within private ownership are presumed to belong to the State.1595 C. Concept of native title, time immemorial possession Native Title - refers to pre-conquest rights to lands and domains which, as far back as memory reaches, have been held under a claim of private ownership by ICCs/IPs, have never been public lands and are thus indisputably presumed to have been held that way since before the Spanish Conquest.1596 III. Citizenship Requirement A. Individuals and corporations Alienable lands of the public domain: Only Filipino citizens may acquire not more than 12 hectares by purchase, homestead or grant, or lease not more than 500 hectares. Private corporations may lease not more than 1,000 hectares for 25 years renewable for another 25 years.

1594

Sec. 2, Art. XII, 1987 Constitution Spouses Reyes et at. v. CA, 295 SCRA 296, September 10, 1998; Cacho v. CA, 269 SCRA 159, March 3,1997 1596 See R.A. 8371 1595

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IV. Original Registration1597 A. Who may apply 1. Under PD 1529 a. 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; b. Those who have acquired ownership of private lands by prescription under the provisions of existing laws; c. Those who have acquired ownership of private lands or abandoned river beds by right of accession or accretion; and law.

d. Those who have acquired ownership of land in any other manner provided for by 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. A trustee on behalf of the principal may apply for original registration of any land held in trust by him, unless prohibited by the instrument creating the trust.1598

1597

Takes place when the title to land is made of public record for the first time in the name of its lawful owner. Under the Torrens system, it refers to the registration procedure from the filing of the application to the issuance of the original certificate of title in pursuance of the decree of registration. Kinds of Original Registration 1. Voluntary – by filing with the proper court a) Under P.D. No. 1529 (Property Registration Decree) b) Under Sec. 48 of CA No. 141, Public Land Act 2. Involuntary – cadastral proceedings Compulsory registration initiated by the government, to adjudicate ownership of land Involuntary on the part of the claimants but they are compelled to substantiate their claim or interest through an answer 1598 Sec. 14 All these persons must be natural-born Filipino Citizens. However, by way of exception, juridical persons may apply for registration of leased agricultural and disposable lands not exceeding 1,000 hectares in area for a period of 25 years and renewable for not more than 25 years. (Sec. 3, Chapter XII, 1987 Constitution)

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2. Under CA 141 (a) Those who prior to the transfer of sovereignty from Spain to the prior United States have applied for the purchase, composition or other form of grant of lands of the public domain under the laws and royal decrees then in force and have instituted and prosecuted the proceedings in connection therewith, but have with or without default upon their part, or for any other cause, not received title therefor, if such applicants or grantees and their heirs have occupied and cultivated said lands continuously since the filing of their applications. (b) Those who by themselves or through their predecessors in interest have been in open, continuous, exclusive, and notorious possession and occupation of agricultural lands of the public domain, under a bona fide claim of acquisition or ownership, for at least thirty years immediately preceding the filing of the application for confirmation of title except when prevented by war or force majeure. These shall be conclusively presumed to have performed all the conditions essential to a Government grant and shall be entitled to a certificate of title under the provisions of this chapter. (c) Members of the national cultural minorities who by themselves or through their predecessors-in-interest have been in open, continuous, exclusive and notorious possession and occupation of lands of the public domain suitable to agriculture, whether disposable or not, under a bona fide claim of ownership for at least 30 years shall be entitled to the rights granted in sub-section (b) hereof. 3. Under RA 8371 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.1599

Notwithstanding the prohibition in the 1973 and 1987 Constitutions against private corporations holding lands of the public domain except by lease, still a private corporation may institute confirmation proceedings under Section 48(b) of Public Land Act if, at the time of institution of the registration proceedings, the land was already private land. (Dir. of Lands vs. IAC and ACME Plywood, 146 SCRA 509) 1599 Sec. 53 (b)

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B. Registration process and requirements Registration process

Requisites of an Application for Original Registration

1. Survey of the land by the Bureau of Lands 1. The application must be in writing, signed or a duly licensed private surveyor;1600 and sworn to by the applicant or by someone duly authorized in his behalf; and if there is 2. Filing of Application for Registration by more than one applicant, the application the applicant;1601 shall be signed and sworn to by and in behalf of each. The full name, citizenship, status, 3. Setting of date for initial hearing by the residence and post office address of the court; applicant must be stated therein. 4. Transmittal of Application and date of initial hearing together with all documents or other evidences attached thereto by the Clerk of Court to the Land Registration Authority;

2. The application must contain the description of the land; the number of parcels and location threof; the nature of title thereto; encumbrances, if any; occupants thereon; names and addresses of adjoining 5. Publication of Notice of Filing of owners, if known; assessed value of the Application and date and place of hearing property, and the length of possession. once in the Official Gazette and once in a newspaper of general circulation in the 3. The application must be accompanied Philippines;1602 with a tracing cloth plan approved by the Bureau of Lands together with two (2) blue 6. Service of Notice upon contiguous print copies of the same; three (3) copies of owners, occupants and those known to have the technical description; three (3) copies of interest in the property by the sheriff; the surveyor’s certificate; the certificate of the last assessment of the property in 7. Filing of Answer or Opposition to quadruplicate or, if none, the affidavit of its Application by any person whether named in market value; and all muniments of title in the notice or not; the possession of applicant or applicants. 8. Hearing of the case by the court;1603 9. Promulgation of judgment by the court; 10. Issuance of decree or order by the court 1600

Must be drawn in a tracing cloth plan Approved only by the Director of Land Management (authority of LRA to approve such plan was withdrawn by P.D. 239 dated July 9, 1983) 1601 Always at the RTC of the province, city or municipality where property is situated. 1602 It is at this point that the court acquires jurisdiction over the subject matter This is done by the Administrator who acts as the clerk of court 1603 Republication or amendment of technical description of land is necessary when there is substantial increase of the area of the land. If increase is merely minimal, no republication is needed. (Benin vs. Tuason, 57 SCRA 531)

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declaring the decision final and instructing the Land Registration Authority to issue a Decree of Confirmation and Registration;1604 11. Entry of Decree in the Land Registration Authority;1605 12. Sending of copy of Decree to the corresponding Register of Deeds; and Transcription of Decree in the registration book and issuance of Owner’s Duplicate Original Certificate of Title of the applicant by the Register of Deeds upon payment of the prescribed fees.

1604

it is not the court but the LRA which issues the decree of confirmation and registration 1 year after issuance of decree, it becomes incontrovertible and amendments of the same will not be allowed except merely in case of clerical errors. Decree of registration may be reviewed on the ground of fraud and must be filed within 1 year from entry of the decree. 1605 This serves as the reckoning date to determine the 1-year period from which one can impugn the validity of the registration.

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C. Remedies 1. New Trial1606 2. Relief from Judgment1607 3. Appeal1608 4. Petition for Review1609 5. Action for Reconveyance1610 6. Recovery of Damages D. Cadastral registration1611 A proceeding in rem, initiated by the filing of a petition for registration by the government, not by the persons claiming ownership of the land subject thereof, and the latter are, on the pain of losing their claim thereto, in effect compelled to go to court to make known their claim or interest therein, and to substantiate such claim or interest. 1606

Sec.1, Rule 37, Rules of Court Grounds: a. fraud, accident, mistake or excusable negligence which ordinary prudence could not have guarded against b. newly discovered evidence c. award of excessive damages, or insufficiency of the evidence to justify the decision 1607 Nature: subsidiary remedy, i.e. may be availed only when the judgment has become final and a new trial is not available Grounds: when a judgment is entered against a party through fraud, accident, mistake, or excusable negligence, such party may file a petition in the court that rendered such judgment praying that the said judgment be set aside. 1608 Under P.D. 1529, judgments and orders in land registration cases are appealable to the Court of Appeals or to the Supreme Court in the same manner as ordinary actions Must be filed within 15 days from receipt of the judgment or final order appealed from. 1609 of a Decree Any person may file a petition for review to set aside the decree of registration on the ground that he was deprived of their opportunity to be heard in the original registration case not later than one (1) year after the entry of the decree. It is a petition for review of judgment when it is filed after rendition of the decision but before the entry of the decree of registration. And it is a petition for review of the decree when it is filed within the one year period after such entry. 1610 An action seeking to transfer or reconvey the land from the registered owner to the rightful owner May be filed even after the lapse of one year from entry of the decree of registration as long as the property has not been transferred or conveyed to an innocent purchaser for value. An action for reconveyance does not aim or purport to reopen the registration proceedings and set aside the decree of registration but only to show that the person who secured the registration of the questioned property is not the real owner thereof. The action, while respecting the decree as incontrovertible, seeks to transfer or reconvey the land from the registered owner to the rightful owner. (Esconde vs Borlongay, 152 SCRA 603) 1611 Here, the government does not seek the registration of land in its name. The objective of the proceeding is the adjudication of title to the lands or lots involved in said proceeding.

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V. Subsequent Registration1612 A. Voluntary dealings.1613 Refer to deeds, instruments or documents which are results of the free and voluntary acts of the parties thereto B. Involuntary dealings1614 1612

Takes place when any deed affecting the land is made of public record after the date of its original registration.; where incidental matters after original registration may be brought before the land registration court by way of motion or petition filed by the registered owner or a party in interest. 1613 In voluntary sale of land, the registration of the instrument is the operative act that transmits or transfers title. Where there is nothing on the certificate of title to indicate any cloud or vice in the ownership of the property, or any encumbrance thereon, the purchaser is not required to explore further than what the Torrens title upon its face indicates in quest for any hidden defect or inchoate right that may subsequently defeat his right thereto. (Fule vs. Legare. GR No. 17951) The exception to the above rule is embodied in the case of Dela Merced vs. GSIS (365 SCRA 1) where the court ruled that “when the purchaser or mortgagee is a financing institution, the general rule that a purchaser or mortgagee of the land is not required to look further than what appears on the face of the title does not apply. Well settled is the rule that all persons dealing with property covered by Torrens certificate of title are not required to go beyond what appears on the face of the title. When there is nothing on the COT indicating any cloud or vice in the ownership of the property, or any encumbrance thereon, the purchaser is not required to explore further than what the Torrens Title upon its face indicates in quest for any hidden defect or inchoate right that may subsequently defeat his right thereto. [Centeno vs CA, 139 SCRA 545, 555 (1985)] Exceptions for applicability: 1) purchaser in bad faith [Egao vs. CA, 174 SCRA 484, 492 (1989)]; 2) sufficiently strong indications to impel closer inquiry into the location, boundaries and condition of the lot. (Francisco vs. CA 153 SCRA 330, 336, 337); 3) where a person buys land not from the registered owner but from one whose right to the land has been merely annotated on the COT. (Quiniano vs. CA 39 SCRA 221); 4) purchaser of land the certificate of title contains a notice of lis pendens; 5) purchaser with full knowledge of flaws and defects in the title.(Bernales vs. IAC 166 SCRA 519, 524; Lu vs. Manipon, 381 SCRA 788) 1614 Involuntary dealings affecting registered land which must be registered: a. attachments b. sale on execution or for taxes or for any assessment c. adverse claim d. notice of lis pendens Claim or interest is adverse when: a. claimant’s right or interest in registered land is adverse to the registered owner; b. such right arose subsequent to date of original registration; c. no other provision is made in the Decree for the registration of such right or claim (Sec. 70, 1st par., P.D. 1529) An adverse claim is a notice to third persons that someone is claiming an interest on the property or has a better right than the registered owner thereof, and that any transaction regarding the disputed land is subject to the outcome of the dispute (Sajonas vs CA, [GR No. 102377, July 5, 1996)

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Refer to such writ order or process issued by a court of record affecting registered land which by law should be registered to be effective, and also to such instruments which are not the willful acts of the registered owner and which may have been executed even without his knowledge or against his consent. VI. Non-Registrable Properties The following lands are not registrable by any private person in his name: 1. Those devoted to public land use such as public roads, plazas, canals, streets, rivers, banks and shores; 2. Those devoted to public service such as towns, walls and fortresses; 3. Public forests; 4. Mineral lands; and 5. Those reserved by the government for public or quasi-public purposes. The Constitution provides that all natural resources, except agricultural, commercial and industrial, residential and resettlement lands are inalienable.1615 Public forests are non-alienable public lands. Possession of public forests on the part of the claimant, however long, cannot convert the same into private property1616 VII. Dealings with Unregistered Lands1617 The system of registration under the Spanish Mortgage Law is hereby discontinued and all lands recorded under said system which are not yet covered by Torrens title shall be considered as unregistered lands. Hereafter, all instruments affecting lands originally registered under the Spanish Mortgage Law may be recorded under Section 113 of this Decree, until the land shall have been brought under the operation of the Torrens system. The books of registration for unregistered lands provided under Section 194 of the Revised Administrative Code, as amended by Act No. 3344, shall continue to remain in

Notice of lis pendens is intended to constructively advise, or warn all people who deal with the property that they so deal with it at their own risk, and whatever rights they may acquire in the property in any voluntary transaction are subject to the results of the action, and may well be inferior and subordinate to those which may be finally determined and laid down therein. (Heirs of Maria Marasigan vs. IAC. 152 SCRA 253). 1615 Art. XIV, Sec. 8, New Constitution 1616 Vano vs. Government of P.I., 41 Phil. 161 (1920) 1617 Sec. 3, P.D. 1529; also Sec. 113

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force; provided, that all instruments dealing with unregistered lands shall henceforth be registered under Section 113 of this Decree.1618 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. (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. (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 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. (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.1619

16181618 1619

Sec. 3, P.D. 1529 Sec. 113, id.

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TORTS AND DAMAGES Book I – Torts1620 I. Principles A. Abuse of Right 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. 1621 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. B. Unjust Enrichment1622 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.1623 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.1624 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.1625 1620

An unlawful violation of private right, not created by contract, and which gives rise to an action for damages. It is an act or omission producing an injury to another, without any previous existing lawful relation of which the said act or omission may be said to be a natural outgrowth or incident. 1621 Art. 19 Contains a mere declaration of principles. The declaration is implemented by Art. 20 (Globe Mackay vs. CA) Sets certain standards which must be observed not only in the exercised of one’s rights but also in the performance of one’s duties. These standards are: 1. To act with justice 2. To give everyone his due; and 3. Observe honesty and good faith There is no hard and fast rule to determine whether or not the principle may be invoked. 1622 Elements of Unjust Enrichment: 1. There must be enrichment on the part of the defendant. 2. There is a concomitant injury to the plaintiff. 3. There is no just cause or legal ground for the enrichment 1623 Art. 22 1624 Art. 2154

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C. Liability without Fault 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.1626 D. Acts Contrary to Law. Every person who, contrary to law, wilfully or negligently causes damage to another, shall indemnify the latter for the same.1627 E. Acts Contrary to Morals 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.1628 II. Classification of Torts A. According to manner of commission: Intentional Include conduct where the actor desires to cause the consequences of his act or believes that the consequences are substantially certain to result from it.1629

Negligent Involve voluntary acts or omissions which result in injury to others without intending to cause the same or because the actor fails to exercise due care in performing such acts or omissions.

1625

Strict Liability When the person is made liable independent of fault or negligence upon submission of proof of certain facts specified by law.1630

Art. 2142 Art.23 1627 Art. 20 Even if the particular provision of law does not expressly provide for indemnification in case of violation, so long as there is a violation of law and damage resulting therefrom, there is liability for damages under this article. 1628 Art. 21 There is an act which may be legal but which may be contrary to morals, good customs, public order or public policy (Albeson vs. CA) 1629 They are found in Chapter 2 of the Preliminary Title of the NCC entitled “Human Relations”. Although this chapter covers negligent acts, the torts mentioned herein are mostly intentional in nature or torts involving malice or bad faith. 1630 Strict liability tort can be committed even if reasonable care was exercised and regardless of the state of mind of the actor at that time. 1626

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B. According to scope: general or specific General

Specific

The catchall provisions on torts provided for in the Civil Code.1631 The effect is that “there is a general duty owe d to every person not to cause harm either willfully or negligently. Articles 19, 20, and 21 are provisions on human relations that “were intended to expand the concept of torts in this jurisdiction by granting adequate legal remedy for the untold number of moral wrongs which is impossible for human foresight to specifically provide for in the statutes.” 1632

It includes trespass, assault and battery, negligence, products liability, and intentional infliction of emotional distress. As defined, torts fall into three different categories: intentional, negligent and liability,1633 product liability tort.

III. The Tortfeasor A. The Direct Tortfeasor 1. Natural Persons Refer to human beings. 2. Juridical Persons (i) The State and its political subdivisions; (ii) Other corporations, institutions and entities for public interest or purpose, created by law; their personality begins as soon as they have been constituted according to law; (iii) Corporations, partnerships and associations for private interest or purpose to which the law grants a juridical personality, separate and distinct from that of each shareholder, partner or member.1634

1631

i.e. Arts. 19, 20 and 21 Aquino, 2005, citing PNB v. CA, et al. 83 SCRA 237 1633 manufacturing and selling defective products 1634 Art. 44 1632

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Juridical persons may acquire and possess property of all kinds, as well as incur obligations and bring civil or criminal actions, in conformity with the laws and regulations of their organization.1635 B. Persons Made Responsible for Others 1. In General a. Quasi-delicts1636 and the Family Code1637 1. Father, or in case of death or incapacity, mother: a. damage caused by minor children1638 b. living in their company 2. Guardians: a. for minors or incapacitated persons b. under their authority c. living in their company 3. Owners and managers1639 of establishments: a. for their employees b. in the service of the branches in which they are employed, or; c. on the occasion of their functions

1635

Art. 46 under Art. 2180 Basis: Pater Familias. The reason for the master’s liability is the negligence in the supervision of his subordinates. 1637 Arts. 218-219, 221 1638 Requisites of vicarious liability of Parents: 1. The child is below twenty‐one (21) years of age 2. The child committed a tortuous act to the damage and prejudice of another person 3. The child lives in the company of the parent concerned whether single or married. 1639 To be liable, the manager must be acting as an employer or with the same authority as the owner. 1636

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4. Employers: a. damages caused by employees and household helpers1640 b. acting within the scope of their assigned tasks c. even if the employer is not engaged in any business or industry 5. State – acting through a special agent and not when the damage has been caused by the official to whom the task done properly pertains. 6. Teachers or heads of establishments: a. of arts and trades b. for damages caused by their pupils and students or apprentices1641 c. so long as they remain in their custody.1642 The responsibility shall cease when the persons mentioned prove that they observed all the diligence of a good father of a family to prevent damage.1643 1640

To make the employer liable, it must be established that the injurious or tortuous act was committed at the time the employee was performing his functions. If there is deviation from the scope of employment, the employer is not liable, no matter how short in time is the deviation. (Pineda, Torts and Damages, 2009, p.97) 1641 Statutory basis: if student is minor – Art. 219, FC if student is no longer a minor – Art. 2180, Civil Code Applies also to teachers of academic institutions. Liability attaches to the teacher-in-charge. The school itself is now solidarily liable with the teacher-in-charge. The liability extends to acts committed even outside the school so long as it is an official activity of the school. Whenever the school or teacher is being made liable, the parents and those exercising substitute parental authority are not free from liability because Art. 219 of the Family Code expressly provides that they are subsidiarily liable. Art. 2180 makes teachers and heads liable for acts of students and apprentices whether the latter are minors or not. General rule: The teacher-in-charge is liable for the acts of his students. The school and administrators are not liable. Exception: It is only the head of the school, not the teacher who is held liable where the injury is caused in a school of arts and trade. The liability of the teacher subsists whether the school is academic or non- academic. Liability is imposed only if the pupil is already in the custody of the teacher or head. The student is in the custody of the school authorities as longs as he is under the control and influence of the school and within its premises whether the semester had not yet begun or has already ended. The victim of negligence is likewise required to exercise due care in avoiding injury to himself. 1642 Art. 2180 1643 The persons liable shall be exempted from liability if they can prove that they have exercised all the diligence of a good father of a family to prevent damage.

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The school, its administrators and teachers, or the individual, entity or institution engaged in child are shall have special parental authority and responsibility over the minor child while under their supervision, instruction or custody. Authority and responsibility shall apply to all authorized activities whether inside or outside the premises of the school, entity or institution.1644 Those given the authority and responsibility mentioned shall be principally and solidarily liable for damages caused by the acts or omissions of the unemancipated minor. The parents, judicial guardians or the persons exercising substitute parental authority over said minor shall be subsidiarily liable. The respective liabilities of those referred to in the preceding paragraph shall not apply if it is proved that they exercised the proper diligence required under the particular circumstances.1645 Parents and other persons exercising parental authority shall be civilly liable for the injuries and damages caused by the acts or omissions of their unemancipated children living in their company and under their parental authority subject to the appropriate defenses provided by law.1646 (1) Elements; definition Quasi-delict

Elements

Whoever by act or omission causes damage (a) fault or negligence of the defendant, or to another, there being fault or negligence is some other person for whose acts he must obliged to pay for the damage done.1647 respond; (b) damages suffered by the plaintiff; and (c) the connection of cause and effect between the fault or negligence of the

1644

Art. 218, FC Art. 219, id. 1646 Art. 221, id. 1647 Article 2176 Difference between Articles 218 & 2180 Art 218 School, admin, teachers engaged in child care are made expressly liable School, admin, teachers is solidary and parents are made subsidiary liable Students involved must be minor Art 2180 Teachers, head of establishment in Arts and trades are made expressly liable No such express solidary nor subsidiary liability is stated Students involved not necessarily minor 1645

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defendant and the damages incurred by the plaintiff.1648 (2) Distinguished from culpa contractual and culpa criminal Culpa Aquiliana 1. Only private concern.

Culpa criminal

Culpa Contractual

1. Crimes affected the public 1. Pre-existing obligation interest. between the parties

2. Repairs the damage by indemnification. 2. Penal law punishes/ corrects the criminal act. 3. Covers all acts that are faulty or negligent. 3. Only acts covered by Penal Law are punished 1650 4. Preponderance of evidence. 4. Guilt proven beyond reasonable doubt. 5. No reservation – it’s independent from crime. 5. Reservation to file separate civil action. No 6. Employer’s liability is reservation, civil action is solidary1649 impliedly instituted in the criminal action.

2. Fault or negligence is incidental to the performance of the obligation 3. Defense of having exercised diligence of a good father of a family is not available, just like in criminal action. Applied doctrine of Respondent Superior, or Master and Servant Rule

6. Employer’s liability is subsidiary Culpa Contractual

Culpa Aquiliana

The foundation of the liability of the It is a separate source of obligation defendant is the contract independent of contract In breach of contract committed through the negligence of employee, the employer cannot erase his primary and direct liability by invoking exercise of diligence of a good father of a family in the selection and supervision of the employee.

In quasi-delict the presumptive responsibility for the negligence of his servants can be rebutted by proof of the exercise of due care in their selection and supervision.

1648

Philippine Bank of Commerce v. CA, 336 Phil. 667, 675 (1997) Fabre Jr. vs. CA, 259 SCRA 426 1650 Barredo vs Garcia, 73 Phil 607; J. Bocobo, 1940 1649

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Culpa Aquiliana

Crime

Only involves private concern

Affect the public interest

The Civil Code by means of indemnification The Revised Penal Code punishes or merely repairs the damage corrects criminal act Includes all acts in which any kind of fault or Punished only if there is a penal law clearly negligence intervenes covering them Liability is direct and primary in quasi-delict

Liability of the employer of the actoremployee is subsidiary in crimes

b. Indirect liability for intentional acts A person who himself is not guilty of negligence is made liable for conduct of another.1651 c. Presumption of negligence on persons indirectly responsible Either in the selection of the servant or employee or in the supervision over him after the selection, or both.1652 d. Nature of liability; joint or solidary? His liability is primary and direct, not subsidiary. He is solidarily liable with the tortfeasor.1653 His responsibility is not conditioned upon the insolvency of or prior recourse against the negligent tortfeasor.1654

1651

Vicarious liability The liability of the vicarious obligor is primary and direct and not subsidiary. He is solidarily liable with the tortfeasor. His responsibility is not conditioned upon the insolvency of or prior recourse against the negligent tortfeasor. 1652 The presumption is juris tantum and not juris et de jure; subsequently, it may be rebutted. Accordingly, if the employer shows to the satisfaction of the court that in the selection and supervision of his employee he has exercised the care and diligence of a good father of a family, the presumption is overcome and he is relieved of the liability 1653 The responsibility of two or more persons who are liable for quasi-delict is solidary (Art. 2194) 1654 De Leon Brokerage v. CA, G.R. 15247, Feb. 28, 1962

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2. In Particular1655 a. Parents1656 This liability is made natural as logical consequences of the duties and responsibilities of parents exercising parental authority which includes controlling, disciplining and instructing their children. In this jurisdiction the parent’s liability is vested by law1657 which assumes that when a minor or un emancipated child living with their parent, commits a tortuous/act, the parents are presumed negligent in t he performance of their duty to supervise the children under their custody. A presumption which juris tantum, not juris et de jure, rebuttable‐ overcome by proof having exercised and observed all the diligence of a good father of a family.1658 b. Guardian De facto guardians are covered.1659

1655

Art. 2180 Father and Mother shall jointly exercise parental authority over common children. In case of disagreement, father's decision shall prevail (Art. 211) Persons liable for the act of minors other than parents. a. Those exercising substitute parental authority b. Surviving grandparents c. Oldest sibling, over 21 years old unless unfit or unqualified d. Child’s actual custodian, over 21 years old unless unfit or disqualified 1657 NCC and FC 1658 Tamagro vs. CA, 209 SCRA 519 The basis of liability for the acts or omissions of their minor children is the parental authority that they exercise over them, except for children 18 to 21. The same foreseability test of negligence should apply to parents when they are sought to be held liable under Art. 2180, NCC The liability is not limited to parents, the same is also imposed on those exercising substitute and special parental authority, i.e., guardian. The liability is present only both under Art 2180 of the NCC and Art 221 of the Family Code if the child is living in his parents’ company. Parental authority is not the sole basis of liability. A teacher in charge is still liable for the acts of their students even if the minor student reaches the age of majority. The parents or guardians can still be held liable even if the minor is already emancipated provided that he is below 21 years of age. Parents and other persons exercising parental authority can escape liability by proving that they observed all the diligence of a good father of a family to prevent damages. (Art. 2180) The burden of proof rests on the parents and persons exercising parental authority 1659 They are relatives and neighbors who take upon themselves the duty to care and support orphaned children without passing through judicial proceedings (Pineda, p. 88, 2009 ed.) 1656

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c. Owners and Managers of Establishments and Enterprises They are liable for damage caused by their employees in the service of the branches in which they are employed, or on the occasion of their functions. d. Employers1660 The employer is liable only if the employee was performing his assigned task at the time the injury was caused. This includes any act done by the employee in the furtherance of the interest of the employer at the time of the infliction of the injury or damage.1661 (1) Meaning of employers 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, subdivisions and instrumentalities, all government-owned or controlled corporations and institutions, as well as non‐profit private institutions, or organizations.1662 (2) Requisites (a) Employee chosen by employer or through another 1. The employee was chosen by the employer personally or through another; 2. The service is to be rendered in/accordance with orders which the employer has the authority to give all times; 3. The elicit act of the employee was on the occasion or by reason of the functions entrusted to him. (b) Services rendered in accordance with orders which employer has authority to give Person for whom the services are to be performed controls not just the result but also the means and manner to achieve such end or result. The vicarious liability of the employer attaches only when the tortious conduct of the employee relates to, or is in the course of his employment.1663 1660

Defenses available to employers: a. exercise of due diligence ins election and supervision of employees b. act/omission was made outside working hours and in violation of company's rules and regulations 1661 Aquino, T., Torts and Damages, 2005, Second Ed., p. 697 1662 Art. 97, P.D. 442 1663 Valenzuela v. CA

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(c) Illicit act of employee was on the occasion or by reason of the functions entrusted to him It is not necessary that the task performed by the employee is his regular job or that which was expressly given to him by the employer. It is enough that the task is indispensable to the business or beneficial to the employer.1664 (d) Presumption of negligence The employer is presumed to be negligent and the presumption flows from the negligence of the employee. Once the employee’s fault is established, the employer can then be made liable on the basis of the presumption that the employer failed to exercise diligentissimi patris families in the selection and supervision of its employees.1665 (3) Employer need not be engaged in business or industry As long as their employees and household helpers acted within the scope of their assigned task.1666 (4) Defense of diligence in selection and supervision It is a defense that the employer exercised proper diligence in the selection and supervision of negligent employee. (5) Nature of employer’s liability If based on culpa aquiliana under Art. 2176 and 2180 of the Civil Code, the liability is primary, while that under Art. 103 of the Revised Penal Code is subsidiary. e. State The State is only liable for the negligent acts of its officers, agents and employees when they are acting as special agents. The State has voluntarily assumed liability for acts done through special agents.1667

1664

Filamer Christian Institute v. IAC, 212 SCRA 637 LRTA v. Navidad, G.R. 145804, Feb. 6, 2003 1666 For, admittedly, employees oftentimes wear different hats. They perform functions beyond their office, title or designation but which, nevertheless, are still within the call of duty (Castilex Industrial Corporation v. Vasquez., et al.) 1667 Two Kinds: 1. Public officials with a particular assigned tasks but is specially commissioned to do such task foreign to his usual assigned governmental function. 1665

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f. Teachers and heads of establishments of arts and trades1668 The basis of the teacher’s vicarious liability is, as such, they acting in loco parentis. However teachers are not expected to have the same measure of responsibility as that imposed on parent for their influence over the child is not equal in degree. The parent can instill more lasting discipline more lasting disciple on the child than the teacher and so should be held to a greater accountability than the teacher or the head for the tort committed by the child. 1669

C. Joint Tortfeasors All the persons who command, instigate, promote, encourage, advice, 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; they are each liable as a principal, to the same extent and in the same manner as if they have performed the wrongful act themselves. 1670 IV. Act of Omission and Its Modalities A. Concept of Act Any bodily movement tending to produce some effect in the external world, it being unnecessary that the same be actually produced, as the possibility of its production is sufficient.1671 It is an act or omission producing an injury to another, without any previous existing lawful relation of which the said act or omission may be said to be a natural outgrowth or incident.1672 V. Proximate Cause 2. Private person – not a public official, commissioned to perform non-governmental function. A government commissioning a special person for a special task is acting thru a special agent within the meaning of Art. 2180. The State assumes the role of an ordinary employer and will be held liable for the special agent’s torts (Fontanilla vs Malianan) 1668 There is really no substantial difference distinction between the academic and nonacademic schools in so far as torts committed by their students are concerned. The same vigilance is expected from the teacher over the student under their control and supervision, whatever the nature of the school where he is teaching. 1669 in place of parents 1670 Art. 2194 1671 People v. Gonzales, 183 SCRA 309, 324 1672 Defendants in tort cases can either be natural or artificial being. Corporations are civilly liable in the same manner as natural persons. Any person who has been injured by reason of a tortious conduct can sue the tortfeasor. The primary purpose of a tort action is to provide compensation to a person who was injured by the tortious conduct of the defendant. Preventive remedy is available in some cases.

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A. Concept 1. Definition That cause which in natural and continuous sequence, unbroken by any efficient intervening cause, produces the injury, without which the result would not have occurred.1673 2. Test Cause-in-fact Test

Policy Test1674

In determining the proximate cause of the injury, it is first necessary to determine if the defendant’s negligence was the cause-in-fact of the damage to the plaintiff.

If the defendant’s negligence was not the cause-in-fact, the inquiry stops. If it is, the inquiry shifts to the question of limit of the defendant’s liability.

It is necessary that there be proof that defendant's conduct is a factor in causing plaintiff's damage. 3. Distinguished from Immediate Cause Proximate Cause

Immediate Cause

A cause that directly produces an event and The last event in a chain of events though without which the event would not have not necessarily the proximate cause of what occurred.1675 follows.1676

4. Distinguished from Intervening Cause Proximate Cause

Intervening Cause

A cause that is legally sufficient to result in One which comes into active operation in liability; an act or omission that is considered producing the result after the actor’s in law to result in a consequence, so that negligent act or omission has occurred. liability can be imposed on the actor.1677

1673

Primary cause remains the proximate cause even if there is an intervening cause which merely cooperated with the primary cause and which did not break the chain of causation. 1674 The directness approach is being applied in this jurisdiction 1675 Black’s Law Dictionary, 9th Ed. 1676 Ibid. 1677 Ibid.

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One which destroys the causal connection between the negligent act and the injury and thereby negatives liability.1678 5. Distinguished from Remote and Concurrent Proximate Cause1679

Remote Cause

Concurrent Cause

A cause that does not One of two or more necessarily or immediately causes that simultaneously produce an event or produce a result.1681 injury.1680

B. Cause in Fact 1. Substantial Factor Test The conduct is the cause-in-fact of the damage if it was a substantial factor in producing the injuries. In order to be a substantial factor in producing the harm, the causes set in motion by the defendant must continue until the moment of the damage or at least down the setting in motion of the final active injurious force which immediately produced or preceded the damage. 2. Concurrent Causes The actor is liable even if the active and substantially simultaneous operation of the effects of a third person’s innocent, tortious or criminal act is also a substantial factor in bringing about the harm so long as the actor’s negligent conduct actively and continuously operate to bring about harm to another.1682 Where several causes producing the injury are concurrent and each is an efficient cause without which the injury would not have happened, the injury may be attributed to all or any of the causes and recovery may be had against any or all of the responsible persons. 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 1678

Example: The medical findings, show that the infection of the wound by tetanus was an efficient intervening cause later or between the time Javier was wounded to the time of his death. (People vs. Rellin, 77 Phil 1038) 1679 supra 1680 Black’s Law Dictionary, 9th Ed. 1681 Ibid. 1682 Africa vs. Caltex

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of a single injury to a third person, and it is impossible to determine what proportion each contributed to the injury, either of them is responsible for the whole injury, even though his act alone might not have caused the entire injury; they become joint tort-feasors and are solidarily liable for the resulting damage under Article 21941683 of the Civil Code. C. Legal Cause 1. Natural and Probable Consequences1684 Where the defendant’s liability is recognized only if the harm or injury suffered is the natural and probable consequence of his act or omission complained of.1685 Involves 2 things: 1. Causality - damage would not have resulted without the fault or negligence of the defendant 2. Adequacy - the fault of the defendant would normally result in the damage suffered by the obligee1686 2. Foreseeability Involves the question of probability, that is, the existence of some real likelihood of some damage and the likelihood is of such appreciable weight reasonably to induce, action to avoid it. Even if a particular injury was not foreseeable, the risk is still foreseeable if possibility of injury is foreseeable. Where the particular harm was reasonably foreseeable at the time of the defendant’s misconduct, his act or omission is the legal cause thereof. 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 unreasonably subjected to a general but definite class of risk which made the actor’s conduct negligent, it is obviously the consequence for the actor must be held legally responsible.

1683

The responsibility of two or more persons who are liable for quasi-delict is solidary. Art. 2202, see Reference 1685 Banzon v. CA, 175 SCRA 297 1686 Reyes & Puno 1684

386

D. Efficient Intervening Cause1687 One which destroys the causal connection between the negligent act and the injury and thereby negatives liability. There is no efficient intervening cause if the force created by the negligent act or omission have either: 1. Remained active itself, or 2. Created another force which remained active until it directly caused the result, or 3. Created a new active risk of being acted upon by the active force that caused the result.1688 E. Cause vs. Condition Cause

Condition

The active force

The passive situation.

The active “cause” of the harm

The existing “conditions” upon which the cause operated.1689

1687

A cause is not an intervening cause if it was already in operation at the time the negligent act is committed. Foreseeable intervening causes cannot be considered sufficient intervening causes. The intervention of unforeseen and unexpected cause is not sufficient to relieve the wrongdoer from consequences of negligence if such negligence directly and proximately cooperates with the independent cause in the resulting injury. 1688 Example: The medical findings, show that the infection of the wound by tetanus was an efficient intervening cause later or between the time Javier was wounded to the time of his death (People vs. Rellin, 77 Phil 1038) 1689 If the defendant has created only a passive static condition which made the damage possible, the defendant is said not to be liable.

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F. Last Clear Chance1690 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 negligence. The contributory negligence of the party injured will not defeat the claim for damages if it is shown that the defendant could, by the exercise of reasonable care and prudence, have avoided the consequences of the negligence of the injured party. VI. Legal Injury A. Concept The violation of a legal right.1691 An act causing damage, which act must be not only hurtful, but wrongful. There must be damnum et injuria. B. Elements of Right 1. A legal wrong inflicted by the defendant, and 2. Damage resulting to the plaintiff therefrom

1690

Doctrine of Last Clear Chance or Discovered Peril Elements: a. plaintiff was in a position of danger by his own negligence b. defendant knew of such position of the plaintiff c. defendant had the least clear chance to avoid the accident by exercise of ordinary care but failed to exercise such last clear chance and d. accident occurred as proximate cause of such failure Who may invoke: plaintiff Inapplicable to: 1. joint tortfeasors 2. defendants concurrently negligent as against 3rd persons Cases when the doctrine was held inapplicable (PICCA) 1. If the plaintiff was not negligent. 2. The party charged is required to act instantaneously, and if the injury cannot be avoided by the application of all the means at hand after the peril is or should have been discovered. 3. If defendant’s negligence is a concurrent cause and which was still in operation up to the time the injury was inflicted. 4. Where the plaintiff, a passenger, filed an action against a carrier based on contract. 5. If the actor, though negligent, was not aware of the danger or risk brought about by the prior fraud or negligent act. 1691 Black’s Law Dictionary, 9th Ed.

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C. Violation of Right or Legal Injury The loss, hurt or harm which results from the injury. D. Classes of Injury Injury to persons 1. assault, 2. battery, 3. false imprisonment,

Injury to property 1. trespass to land, 2. trespass to chattels, and 3. conversion.

4. intentional infliction of emotional distress, and

Injury to relations 1. Family relations a. Alienation of affection b. Loss of consortium c. Criminal conversation 2. Social relations

5. fraud

a.Meddling with or disturbing famiy relations b.Intriguing to cause another to be alienated from his friends 3. Economic relations a. Interference with contractual relations b. Unfair competition 4. Political relations a. Violation of right to suffrage b. Violation of other political rights1692

1692

freedom of speech, press, assembly and petition, etc.

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VII. Intentional Torts A. General 1. Concept A tort committed by someone acting with general or specific intent.1693 Include conduct where the actor desires to cause the consequences of his act or believes that the consequences are substantially certain to result from it. They are found in Chapter 2 of the Preliminary Title of the NCC entitled “Human Relations.” Although this chapter covers negligent acts, the torts mentioned herein are mostly intentional in nature or torts involving malice or bad faith. 2. Classes a. Interference with persons and property Physical harms 1.Violation of persons security, physical injuries a. battery1694 b. assault1695

Non-physical harms 1. Violation of personal dignity 2. Infliction of emotional distress 3. Violation of privacy1697

2. False imprisonment1696

a. Appropriation

1693

Blacks’ Law Dictionary, 9th Ed. physical injury 1695 grave threat . 1696 illegal detention 1697 Zones of privacy under the NCC, RPC, Rules of Court, and special laws: 1.That every person shall respect the dignity, personality, privacy and peace of mind of his neighbors and other persons and any act of a person of meddling and prying into the privacy of another is punishable as an actionable wrong; 2. That a public officer or employee or any private individual shall be liable for damages for any violation of the rights and liberties of another person, and recognizes the privacy of letters and other private communications; 3. The RPC makes a crime the: i. violation of secrets by an officer, ii. revelation of trade and industrial secrets, and iii. trespass to dwelling. 4. Invasion of privacy is likewise an offense in special laws such as the: i. anti‐wiretapping law; and ii. secrecy of bank deposits act; and 5. The Rules of Court provisions on privileged communication. 1694

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3. Trespass to land

b. Intrusion c. public disclosure of private facts

4. Interference with personal property a. trespass to chattels b. conversion

d. false light in the public eye 4. Disturbance of peace of mind 5. Malicious prosecution 7. Defamation

b. Interference with relations The gist of the tort is an interference with one spouse’s mental attitude toward the other and the conjugal kindness of marital relations resulting in some actual conduct which materially affects it. It extends to all cases of wrongful interference in the family affairs of others whereby one spouse is induced to leave the other spouse or conduct himself or herself that the comfort of married life is destroyed. If the interference is by the parents of the spouse, malice must be proven. B. Interference with rights to persons and property 1. Intentional Physical Harms a. General (1) Concept It is an intentional infliction of a harmful or offensive bodily contact which offends a reasonable person’s sense of dignity or places him in apprehension of immediate bodily harm or offensive act. (2) Kinds1698

1698

supra

391

b. Violation of persons security, physical injuries1699 (1) Battery1700 It is the intentional, unprivileged, and either harmful or offensive contact with the person of another. (2) Assault1701 It is the tort of acting intentionally and voluntarily causing the reasonable apprehension of an immediate harmful or offensive contact. c. False Imprisonment1702 It is a restraint of a person in a bounded area without justification or consent. It is unlawful obstruction or deprivation of freedom from restraint of movement. 1703 An actor is liable for false imprisonment if: 1. he acts intending to confine the other within boundaries fixed by the actor, 2. his act directly or indirectly results in such a confinement, and 3. the other is conscious of the confinement or is harmed by it. d. Trespass to Land (1) Concept It is a tort that is committed when a person unlawfully invades the real property of another. (2) Elements 1. Intrude without authorization and without privilege under law 2. Cause something to enter another's land. The Revised Penal Code and the New Civil Code requires intent or bad faith. 1699

Art. 33, see Reference Physical injuries which resulted because of negligence or imprudence is not included in this article; they are already covered by Article 2176. 1700 Physical Injury 1701 Grave Threat Includes bodily injuries causing death. 1702 Illegal detention 1703 It applies to private as well as governmental detention.

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e. Interference with Personal Property 1) Trespass to Chattels It is where a person took possession of the property of another in bad faith. The creditor possesses to himself the mortgaged property with violence and against the will of the debtor. 2) Conversion An intentional exercise of dominion and control over a chattel which so seriously interferes with the right of another to control it that the actor may justly be required to pay the other the full value of the chattel.1704 2. Intentional Non-Physical Harms a. General (1) Concept (2) Kinds1705 b. Violation of Personal Dignity 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.1706

1704

Elements: 1. the plaintiff has clear legal ownership or right to possession of the property at the time of the conversion; 2. the defendant's conversion by a wrongful act or disposition of plaintiff's property rights; 3. there are damages resulting from the conversion 1705 supra 1706 Art. 26

393

c. Infliction of emotional distress1707 An intentional conduct of defendant that results in extreme emotional distress of plaintiff. The plaintiff must show that: 1. The conduct of the defendant was intentional or in reckless disregard of the plaintiff; 2. The conduct was extreme and outrageous;1708 3. There was a causal connection between the defendant’s conduct and the plaintiff’s mental distress; and 4. The plaintiff’s mental distress was extreme and severe.1709 d. Violation of Privacy (1) Appropriation It consists of appropriation, for the defendant’s benefit or advantage, of the plaintiff’s name or likeness. (2) Intrusion It is not limited to cases where the defendant physically trespassed into another’s property. It includes cases when the defendant invades one’s privacy by looking from outside.1710 Consists in the intrusion upon the plaintiff’s solitude or seclusion. It includes: 1. prying into the privacy of one’s home; 2. invading his home; 3. invading one’s privacy by looking from outside; 4. eavesdropping; or 1707

It is any highly unpleasant mental reaction such as extreme grief,shame, humiliation,embarrassment, anger, disappointment, worry, nausea, mental suffering and anguish, shock, fright, horror, and chagrin. 1708 It is conduct that is so outrageous in character, and so extreme in degree, as to go beyond all possible bounds of decency, and to be regarded as atrocious, and utterly intolerable in civilized society. 1709 Even if there was no intentional infliction of emotional distress in one case, the SC recognized the possibility that one may be made liable for the tort of intentional infliction of emotional distress. 1710 Example: “peeping-tom

394

5. persistent and unwanted telephone calls. (3) Public disclosure of private facts Consists of a cause of action in publicity, of a highly objectionable kind, given to private information about the plaintiff, even though it is true and no action would lie for defamation.1711 (4) False light in the public eye It is a tort committed by putting a person in a false light before the public. It is a non‐defamatory falsehood in that a false impression is conveyed. The interest to be protected in this tort is the interest of the individual in not being made to appear before the public in an objectionable false light or false position.1712 e. Disturbance of Peace of Mind1713 f. Malicious Prosecution An action for damages brought by one against another 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 proceeding in favor of the defendant therein. The gist of the action is putting legal process in force regularly, for mere purpose of vexation or injury.1714 1711

Requisites: 1. Publicity is given to any private or purely personal information about a person; 2. Without the latter’s consent; and Regardless of whether or not such publicity constitutes a criminal offense, like libel or defamation, the circumstance that the publication was made with intent of gain or for commercial and business purposes invariably serves to aggravate the violation of the right 1712 Example: Defendant was held liable for damages when he published an unauthorized biography of a famous baseball player exaggerating his feats on the baseball field, portraying him as a war hero. (Spahn vs. Messner) If the publicity given to the plaintiff is defamatory, hence an action for libel is also warranted; the action for invasion of privacy will afford an alternative remedy. May be committed by the media by distorting a news report. 1713 See Emotional Distress 1714 Drilon vs. CA (1997) Elements: 1. The fact of the prosecution and the further fact that the defendant was himself the prosecutor; and that the action was finally terminated with an acquittal; 2. That in bringing the action, the prosecutor acted without probable cause; 3. The prosecutor was actuated or impelled by legal malice. Malice is the inexcusable intent to injure, oppress, vex, annoy or humiliate.

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g. Defamation1715 Defamation is tarnishing the reputation of someone. It is a public and malicious imputation of a crime, or of a vice or defect, real or imaginary, or any act, omission, condition, status, or circumstance tending to cause the dishonor, discredit, or contempt of a natural or juridical person, or to blacken the memory of one who is dead.1716 It has two varieties, slander and libel. (1) Defenses (a) Absence of elements Absence of malice1717 signifies good faith on the part of the defendant; good faith may even be based on mistake of law. In order to escape criminal responsibility, it is not enough for the offender to say that he expresses therein no more than his opinion or belief. The communication must be made in the performance of a “legal, moral, or social duty.”

1715

Requisites for one to be liable for defamatory imputations: a. It must be defamatory b. It must be malicious c. It must be given publicity d. The victim must be identifiable Test in determining the defamatory character of the imputation: A charge is sufficient if the words are calculated to induce the hearers to suppose and understand that the person/s against whom they were uttered were guilty of a certain offense, or are sufficient to impeach their honesty, virtue, or reputation, or to hold the person/s up to public ridicule. Dissemination to a number of persons is not required, communication to a single individual is sufficient publication. General rule: Every defamatory imputation is presumed to be malicious, even if it be true, if no good intention or justifiable motive for making it is shown. Exceptions: 1. A private communication made by any person to another in the performance of any legal, moral or social duty; and 2. A fair and true report, made in good faith, without any comments or remarks, of any judicial, legislative or other official proceedings which are not of confidential nature, or of any statement, report, or speech delivered in said proceedings or of any other act performed by public officers in the exercise of their functions. It is not sufficient that the offended party recognized himself as the person attacked or defamed, it must be shown that at least a third person could identify him as the object of the libelous publication. In order to escape liability, the defendant may claim that the statements made are privileged. 1716 Art. 353, RPC RPC considers the statement defamatory if it is an imputation of circumstance tending to cause the dishonor, discredit or contempt of natural or juridical person or to blacken the memory of one who is dead. 1717 Presence of probable cause signifies absence of malice.

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(b) Privilege Two kinds: Absolutely privilege

Qualifiedly privilege

Not actionable even if the author acted in Not actionable unless found to have been bad faith made without good intention or justifiable motive.

h. Fraud or Misrepresentation1718 Usually a tort, but in some cases1719 it may be a crime.1720 A tort arising from a knowing misrepresentation, concealment of material fact, or reckless misrepresentation made to induce another to act to his or her detriment.1721 Half-truths are likewise included; it is actionable if the withholding of that which is not stated makes that which is stated absolutely false. Misrepresentation upon a mere matter of opinion is not an actionable deceit. i. Seduction Seduction, by itself, is an act contrary to morals, good customs and public policy. The defendant is liable if he employed deceit, enticement, superior power or abuse of confidence in successfully having sexual intercourse with another even if he satisfied his lust without promising to marry the offended party.1722 It may not even matter that the plaintiff and the defendant are of the same gender.

1718

formerly deceit esp. when the conduct is willful 1720 Black’s Law Dictionary, 9th Ed. 1721 Ibid. 1722 There is liability even if there is no breach of promise to marry. 1719

397

j. Unjust Dismissal It is a basic rule that an employer has a right to dismiss an employee in the mann er and on the grounds provided for under the NCC. If the dismissal is for a valid cause, his dismissal is consistent with the employer’s right to protect his interest in seeing to it that his employees are performing their jobs with honesty, integrity and good faith. However, such exercise of the right to terminate must be consistent with the general principles provided for under articles 19 and 21, NCC. If there is non‐ compliance with said provisions, the employer may be held liable for damages. The right to dismiss an employee should not be confused with the manner in which the right is exercised and the effects flowing therefrom. If the dismissal is done anti‐ socially or oppressively then the employer should be deemed to have violated Article 1701,1723 NCC and Article 21. An employer may be held liable for damages if the manner of dismissing the employee is contrary to morals, good customs and public policy. This may be done by false imputation of misdeed to justify dismissal or any similar manner of dismissal which is done abusively. C. Interference with relations 1. General a. Concept1724 b. Kinds1725 2. Family Relations a. Alienation of affection This onsists of depriving one spouse of the affection, society, companionship and comfort of the other.1726 The gist is an interference with one spouse’s mental attitude toward the other and the conjugal kindness of marital relations resulting in some actual conduct which materially affects it.

1723

which prohibits acts of oppression by either capital or labor against the other supra 1725 See no. 2-5, below 1726 Aquino, T., Torts and Damages, 2005, Second Ed., p. 480 The Family Code imposes on the spouses the obligation to live together, observe mutual love, respect and fidelity, and render mutual help and support (Art. 68). Interference with such may result in the tort liability of alienation of affection. 1724

398

b. Loss of consortium The loss of conjugal fellowship and the impairment or destruction of sexual life. A spouse has a legal obligation to live with his or her spouse. If a spouse does not perform his or her duty to the other, he may be held liable for damages for such omission because the same is contrary to law, morals and good customs. c. Criminal conversation1727 Committed by the married woman who shall have sexual intercourse with a man not her husband, and by him who has carnal knowledge of her knowing that she is married, although the marriage be afterwards declared void.1728 3. Social Relations a. Meddling with or disturbing family relations Meddling with or disturbing the private life or family relations of another" and "similar acts", "though they may not constitute a criminal offense, shall produce a cause of action for damages, prevention and other relief. b. 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.1729 4. Economic Relations a. Interference with contractual relations Any third person who induces another to violate his contract shall be liable for damages to the other contracting parties.1730 The existence of a contract is necessary and the breach must occur because of the alleged act of interference; No action can be maintained if the contract is void.1731 1727

Adultery Art. 333, RPC Liability for adultery or concubinage based on the law on torts: not only moral damages but also for other appropriate damages. 1729 Pineda, 2004 1730 Art. 1314 1731 Malice is not essential. Rule under Article 2201 and 2202 Civil Code 1) If in bad faith: defendant is liable for all natural and probable consequences of his act or omission, whether the same is foreseen or unforeseen. 1728

399

b. Unfair competition Unfair Competition in agricultural, commercial, or industrial enterprises, or in labor, through the use of force, intimidation , deceit, machination or any unjust or oppressive or highhanded method shall give rise to a right of action by a person who thereby suffers damage.1732 5. Political Relations a. Violation of right to suffrage1733 b. Violation of other political rights 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 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;

2) If in good faith: defendant is liable only for consequences that can be foreseen Article 27 For a defendant to be liable, the plaintiff must show that the former’s conduct was purely malicious and served no legitimate purpose, or that any trade or competitive motive was absent. Cases included: a. passing off and disparagement of products b. interference c. misappropriation d. monopolies and predatory pricing 1733 see b (5), below 1732

400

(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.1734 6. Defenses a. Absence of element Defendant may not avail of any of the defenses if there is an absence of element. The defendant is free from liability if he can prove that at the time of the commi ssion, the plaintiff knew of the act of interference or omission. b. Privilege 1. Consent Plaintiff gives permission, express or implied, that what would otherwise be tortious is instead privileged. Typically, one cannot hold another liable in tort for actions to which one has con sented. This is frequently summarized by the phrase "volenti non fit injuria."1735 It operates when the claimant either expressly or implicitly consents to the risk of loss or damage.

1734 1735

Art. 32 "to a willing person, no injury is done" or "no injury is done to a person who consents"

401

2. Self-defense and defense of others Reasonable force can be used where one reasonably believes that such force is necessary to protect oneself or a third party from immediate harm.1736 An actor is privileged to use reasonable force, not intended or likely to cause death or serious bodily harm, to defend himself against unprivileged harmful contract which he reasonably believes that another is about to inflict. The self‐defense privilege extends to protecting total strangers as well. 3. Necessity Allows the defendant to interfere with the property interests of an innocent party in order to avoid a greater injury. 4. Defense of property An individual is privileged to use reasonable force to prevent a tort against her real or personal property. 5. Authority of Law Police, military, prison officials, regulatory inspectors, mental health workers, etc. engaging in conduct that otherwise would be tortuous. c. Prescription The following actions must be instituted within four (4) years: (1) Upon an injury to the rights of the plaintiff; (2) Upon a quasi-delict.1737 d. Waiver1738 To be valid and effective, must in the first place be couched in clear and unequivocal terms which leave no doubt as to the intention of a person to give up a right or benefit which legally pertains to him. A waiver may not casually be attributed to a person when the terms thereof do not explicitly and clearly evidence an intent to abandon a right vested in such person.

1736

threatened battery Art. 1146 (As amended by PD No. 1755, Dec. 24, 1980) The four-year prescriptive period is reckoned from the date when the tortious act was committed. But, according to the discovery rule: if the injury is discovered after the four-year period, the reckoning point is the date of discovery and not the date of commission of the act. 1738 See also Persons, Waiver of Rights, supra 1737

402

e. Force majeure General rule: It is a complete defense and a person is not liable if the cause of the damage is a fortuitous event. Exception: It is merely a partial defense and the courts may mitigate the damages if the loss would have resulted in any event.1739 VIII. Negligence A. Concept The omission of that degree of diligence which is required by the nature of t he obligation and corresponding to the circumstances of the persons, of the time and pl ace.1740 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.1741 Involve voluntary acts or omissions which result in injury to others without intending to cause the same or because the actor fails to exercise due care in performing such acts or omissions. B. Good Father of a Family or Reasonably Prudent Man1742 A reasonable man is deemed to have knowledge of the facts that a man should be expected to know based on ordinary human experience.1743 The Supreme Court described a good father of a family by first stating who is not. He is not and is not supposed to be omniscient of the future; rather, he is one who takes precautions against any harm when there is something before him to suggest or warn him of the danger or to foresee it.1744 1739

Art. 2215(4) No person shall be responsible for those events which cannot be foreseen, or which through foreseen were inevitable. Exception: assumption of risk 1740 Art. 1173 1741 Philippine Bank of Commerce v. CA, 336 Phil. 667, 676 (1997) 1742 The only standard of conduct used in the Philippines (Art. 1173) 1743 PNR v. IAC, G.R. No. 7054, Jan. 22, 1993 1744 Picart v. Smith, G.R. No. L‐12406, Mar. 15, 1918

403

C. Standard of Care 1. NCC, Art. 1173 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. 2. Emergency Rule1745 One who suddenly finds himself in a place of danger, and is required to act without time to consider the best means that may be adopted to avoid the impending danger, is not guilty of negligence, if he fails to adopt what subsequently and upon reflection may appear to have been a better method, unless the emergency in which he finds himself is brought about by his own negligence.1746 D. Unreasonable risk of Harm If the risk is of such magnitude as to outweigh what the law regards as the utility of the act. The following are circumstances to be considered: 1. Time 2. Place 3. Emergency 4. Gravity of harm to be avoided 5. Alternative course of action 6. Social value or utility of activity 7. Person exposed to the risk E. Evidence The quantum of proof required is preponderance of evidence.1747

1745

Applicable only to situations that are sudden and unexpected such as to deprive actor of all opportunity for deliberation But action must still be judged by the standard of the ordinary prudent man Absence of foreseeability An individual will nevertheless be subject to liability if the emergency was brought about by his own negligence (Valenzuela v. CA, 253 SCRA 303) 1746 Emergency rule exempts common carriers 1747 Rule 133, RoC Exception: When the rules or the law provides for cases when negligence is presumed.

404

F. Presumption of Negligence 1. Legal Provisions In motor vehicle mishaps, the owner is presumed negligent if he was in the vehicle and he could have used due diligence to prevent 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 for the next preceding two months.1748 The driver of a motor vehicle is presumed negligent if at the time of the mishap, he was violating any traffic regulation.1749 Prima facie presumption of negligence of the defendant arises if death or injury results from his possession of dangerous weapons or substance except when such possession or use is indispensable to his occupation or business.1750 Presumption of negligence of the common carrier arises in case of loss, destruction or deterioration of the goods, or in case of death or injury of passengers except upon proof of exercise of extraordinary diligence. 2. Res ipsa loquitur1751 “The thing or transaction speaks for itself.” It is a rule of evidence peculiar to the law of negligence which recognizes that prima facie negligence may be established in the absence of direct proof, and furnishes a substitute for specific proof of negligence.

1748

Art. 2184 Art. 2185 1750 Art. 2188 Proof of possession of dangerous weapons or substances required. 1751 Requisites: 1. The accident was of a kind which ordinarily does not occur in the absence of someone’s negligence; 2. The instrumentality which caused the injury was under the exclusive control and management of the person charged with negligence; and 3. The injury suffered must not have been due to any voluntary action or contribution on the part of the person injured; absence of explanation by the defendant. The doctrine is not applicable if there is direct proof of absence or presence of negligence. (S.D. Martinez, et al vs. William Van Buskirk) 1749

405

G. Defenses 1. Complete1752 a. Absence of element (1) Due diligence1753 Diligence required by law/contract/depends on circumstances of persons, places, things. (2) Acts of public officers In the lawful exercise of their functions. b. Accident or fortuitous event1754 c. Damnum absque injuria1755 A principle that involves damage without injury, therefore no liability is incurred; there is no legal injury. There is no liability even if there is damage because there was no injury. d. Authority of law By specific provision of law. e. Assumption of risk1756 Volenti non fit injuria: One is not legally injured if he has consented to the act complained of or was willing that it should occur. 1752

They are called “complete” defenses because they completely bar recovery as opposed to partial defenses which only serve to mitigate liability. 1753 supra 1754 ibid. 1755 Literal translation: Damage without injury Consequences must be borne by the injured alone 1756 Doctrine of Assumption of Risk Intentional exposure to a known danger. One who voluntarily assumed the risk of an injury from a known danger cannot recover in an action for negligence or an injury is incurred. Plaintiff’s acceptance of risk (by law/contract/nature of obligation) has erased defendant’s duty so that his negligence is not a legal wrong. Applies to all known danger.

406

There is assumption of risk if the plaintiff in advance has expressly waived his right to recover damages for the negligent act of the defendant.1757 f. Last clear chance1758 g. Prescription The following actions must be brought within ten (10) years from the time the right of action accrues: (1) Upon a written contract; (2) Upon an obligation created by law; (3) Upon a judgment1759 The following actions must be instituted within four (4) years: (1) Upon an injury to the rights of the plaintiff; (2) Upon a quasi-delict.1760 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.1761 h. Waiver A person cannot contract away his right to recover damages resulting from negligence. Such waiver is contrary to public policy and cannot be allowed. However, the waiver contemplated by this prohibition is the waiver of the right to recover before the negligent act was committed. If waiver was made after the cause of action accrued, the waiver is valid and may be construed as a condonation of the obligation. i. Double recovery The plaintiff cannot recover damages twice for the same act or omission of the defendant.1762

1757

A person cannot contract away his right to recover damages resulting from negligence; the same is contrary to public policy (Pleasantville Dev't. Corp vs. CA ,253 SCRA 10) 1758 supra 1759 Art. 1144 1760 Art. 1146 1761 Art. 1150 1762 Art. 2177

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IX. Special Liability in Particular Activities A. General 1. Concept B. Products Liability1763 1. Manufacturers or Processors a. Elements 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 The plaintiff should allege and prove that: 1) The product was defective; 2) The product was manufactured by the defendant; 3) The defective product was the cause of his injury. b. Consumer Act1764 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. 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.

1763

Law which governs the liability of manufacturers and sellers for damages resulting from defective products. It is meant to protect the consumers by providing safeguards when they purchase or use consumer products (Aquino, T., Torts and Damages, 2005, Second Ed.) Based on fraud, warranty, negligence or strict liability 1764 R.A. 7394

408

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.1765 The tradesman/seller is likewise liable 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 against the other responsible parties, in accordance with their part or responsibility in the cause of the damage effected.1766 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. 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. 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.1767 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 1765

Art. 97 Art. 98 1767 Art. 99 1766

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messages/advertisement, with due regard to the variations resulting from their nature, the consumer being able to demand replacement to the imperfect parts. 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. 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. The consumer may make immediate use of the foregoing alternatives 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. If the consumer opts for the alternative under sub-paragraph (a) and replacement of the product is not possible, it may be replaced by another of a different kind, mark or model. Any difference in price that 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.1768 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. 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.1769 1768 1769

Art. 100 Art. 101

410

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. 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.1770 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.1771 The supplier's ignorance of the quality imperfections due to inadequacy of the products and services does not exempt him from any liability.1772 The legal guarantee of product or service adequacy does not require an express instrument or contractual exoneration of the supplier being forbidden.1773 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.1774 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

1770

Art. 102 Art. 103 1772 Art. 104 1773 Art. 105 1774 Art. 106 1771

411

thousand pesos (P5,000.00) and by imprisonment of not more than one (1) year or both upon the discretion of the court. 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.1775 C. Nuisance1776 1. Nuisance Per Se and Nuisance Per Accidence Per se

Per accidens

Nuisance at all times and under all Nuisance by reason of circumstances, circumstances regardless of location and location, or surroundings. surrounding.

2. Public Nuisance and Private Nuisance Public

Private

Affects the community or a considerable Affects only a person or a small number of number of persons. persons.

3. 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.1777 D. Violation of Constitutional Rights1778 1. Violation of Civil Liberties1779 E. Violation of Rights Committed by Public Officers1780

1775

Art. 107 For definition, see Art. 694, supra 1777 Doctrine of Attractive Nuisance 1778 It is not necessary that the defendant should have acted with malice/bad faith to be liable. 1779 supra, under Political Relations 1780 Ibid. 1776

412

F. Provinces, Cities and Municipalities 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 and supervision.1781 G. Owner of Motor Vehicle In motor vehicle mishap, 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 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. If the owner was not in the motor vehicle, the provisions of Article 2180 are applicable.1782 H. Proprietor of Building or Structure or Thing 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.1783 Proprietors shall also be responsible for damages caused: (1) By the 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; (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.1784 If damages referred to in Articles 2190 and 2191 1785 should be the result of any defect in the construction mentioned in Article 1723,1786 the third person suffering damages 1781

Art. 2189 Art. 2184 1783 Art. 2190 Third persons who suffered damages may proceed only against the engineer or architect or contractor if the damage referred to in Articles 2190 and 2191should be a result of any defect in construction. Nevertheless, actions for damages can still be maintained under Article 2176 for damages resulting from proprietor’s failure to exercise due care in the maintenance of his building and that he used his property in such a way that he injured the property of another. 1784 Art. 2191 1782

413

may proceed only against the engineer or architect or contractor in accordance with said article, within the period therein fixed.1787 I. Head of Family 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.1788 X. Strict Liability1789 A. Animals 1. Possessor and User of an Animal General rule: The possessor of an animal or whoever may make use of the same is responsible for the damages which it may cause although it may escape or be lost. Exception: When the damage was caused by force majeure or by the person who suffered the damage.1790 B. Nuisance 1. Classes a) Per se or per accidents; b) Public or Private1791 2. Easement Against Nuisance 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.1792

1785

supra See Reference 1787 Art. 2192 1788 Art. 2193 1789 When the person is made liable independent of fault or negligence upon submission of proof of certain facts specified by law. Strict liability tort can be committed even if reasonable care was exercised and regardless of the state of mind of the actor at that time. 1790 Art. 2183 1791 supra 1792 Art. 682 1786

414

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.1793 C. Products Liability 1. Consumer Act1794

1793 1794

Art. 683 supra

415

BOOK II – DAMAGES1795 I. General Considerations A. Classification 1. Under Art. 2197 of the Civil Code Damages may be: (1) Actual or compensatory; (2) Moral; (3) Nominal; (4) Temperate or moderate; (5) Liquidated; or (6) Exemplary or corrective. 2. According to purpose Damages may be recovered: (1) For loss or impairment of earning capacity in cases of temporary or permanent personal injury; (2) For injury to the plaintiff's business standing or commercial credit.1796 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.1797 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.1798 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 1795

General Principles of Damages: 1. The amount should be fair and just and commensurate to the damage. 2. Damage and the amount must be proven by competent evidence. “Competent” means that it is admissible. 3. Only proximate damages, not remote or speculative, can be recovered. 1796 Art. 2205 1797 Art. 2220 1798 Art. 2221

416

been suffered but its amount cannot, from the nature of the case, be provided with certainty.1799 Liquidated damages are those agreed upon by the parties to a contract, to be paid in case of breach thereof.1800 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.1801 3. According to manner of determination No proof of pecuniary loss is necessary in order that moral, nominal, temperate, liquidated or exemplary damages, may be adjudicated. The assessment of such damages, except liquidated ones, is left to the discretion of the court, according to the circumstances of each case.1802 4. Special and ordinary Special

Ordinary

Those which arise directly but not necessarily Those which necessarily and by implication or by implication of law, from the act or of law result from the act or default default complained of. These are super complained of. added to ordinary damages, arising from an act injurious in itself, as when some particular loss arises from the uttering of slanderous words, actionable in themselves, or such as arise from an act indifferent and not actionable in itself, but injurious only in its consequences as when the words become actionable only by reason of special damages insuing.1803

1799

Art. 2224 Art. 2226 1801 Art. 2229 1802 Art. 2216 1803 Bouvier’s Dictionary, p. 750 1800

417

II. Actual and Compensatory Damages A. Concept Comprehends not only the value of the loss suffered but also that of the profits which the obligee failed to obtain.1804 B. Requisites 1. Alleged and proved with certainty Actual or compensatory damages cannot be presumed but must be duly proved.1805 Actual damages must be proved and a court cannot rely on speculation, conjecture or guesswork as to the fact and amount of damages, but must depend on actual proof that damages had been suffered and on evidence of the actual amount.1806 2. Not speculative Remote and speculative damages are not recoverable. C. Component Elements 1. Value of loss; unrealized profit Loss of earning capacity

Loss of profits

Variables considered are:

May be determined by considering the average profit for the preceding years multiplied by the number of years during which the business was affected by the wrongful act or breach.

1. life expectancy 2. net income/earnings

2. Attorney’s fees and expenses of litigation They are actual damages. It is due to the plaintiff and not to the counsel. Plaintiff must allege the basis of his claim for attorney’s fees in the complaint; the basis should be one of the 11 cases specified in Article 22081807 of the Civil Code.

1804

Art. 2200 Malonzo vs. Galang, 109 Phil. 16 1806 Rangas vs. Raya, 22 SCRA 839 1807 See Reference 1805

418

3. Interest 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: 1. When the obligation is breached and it consist of payment of sum of money:1808 a. 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. b. In the absence of stipulation, the rate of interest shall be 12% per annum to be computed from default.1809 2. When the obligation, not constituting a loan or forbearance or money, is breached: An interest on the amount of damages to be awarded may be imposed at the discretion of the court at the rate of 6% per annum. No interest shall be adjudged on unliquidated claims or damages, except when or until demand can be established with reasonable certainty. Where the demand is established with reasonable certainty, the interest shall begin to run from the time the claim is made judicially or extrajudicially. 3. When the judgment of the court awarding the sum of money becomes final and executory, the rate of legal interest shall be 12% per annum from such finality until its satisfaction. D. Extent or scope of actual damages 1. 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 non-performance of the obligation.1810 1808

i.e., a loan or forbearance of money i.e., from judicial or extra-judicial demand under and subject to the provisions of Article 1169 of the Civil Code. 1810 Art. 2201 1809

419

2. In crimes and quasi-delicts The defendant shall be liable for all damages which are the natural and probable consequences of the act and omission complained of. It is not necessary that such damages have been foreseen or could have reasonably foreseen by the defendant.1811 The amount should be that which would put plaintiff in the same position as he would have been if he had not sustained the wrong for which he is now getting his compensation or reparation. To recover damages, the amount of loss must not only be capable of proof but must actually be proven. Uncertainty as to the precise amount is not necessarily fatal. III. Moral Damages A. Concept 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.1812 In the adjudication of moral damages, the sentimental value of property, real or personal, may be considered.1813 B. When recoverable In the following and analogous cases: (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; In construing and applying this Article, the provisions of Article 2200 must be considered and taken into account. 1811 Art. 2202 1812 Art. 2217 1813 Art. 2218

420

(8) Malicious prosecution; (9) Acts mentioned in Article 309;1814 (10) Acts and actions referred to in Articles 21, 26, 27, 28, 29, 30, 32, 34, and 35.1815 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.1816 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.1817 1. In seduction, abduction, rape and other lascivious acts Victim and parents are included. 2. In acts referred to in Arts. 21, 26, 27, 28, 29, 32, 34 & 35, NCC1818 3. In cases of malicious prosecution1819 IV. Nominal Damages A. Concept Small sums fixed by the court without regard to the extent of the harm done to the injured party. Law presumes damage although actual or compensatory damages are not proven. They are damages in name only and are allowed simply in recognition of a technical injury based on a violation of a legal right. Nominal damages cannot co-exist with actual or compensatory damages.

1814

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. 1815 See reference 1816 Art. 2219 1817 Art. 2220 1818 See Reference 1819 supra

421

B. When awarded 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.1820 V. Temperate or Moderate Damages A. Concept These are damages, which are more than nominal but less than compensatory, and may be recovered when the court finds that some pecuniary loss has been suffered but its amount cannot be proved with certainty.1821 B. When awarded 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. VI. Liquidated Damages A. Concept Those agreed upon by the parties to a contract, to be paid in case of breach thereof.1822 B. Rules governing in case of breach of contract Interest may, in the discretion of the court, be allowed upon damages awarded for breach of contract.1823

1820

Art. 2221 Article 2224 Civil Code 1822 Art. 2226 1823 Art. 2210 1821

422

VII. Exemplary or Corrective Damages A. Concept Imposed, by way of example or correction for the public good, in addition to the moral, temperate, liquidated or compensatory damages.1824 B. When recovered 1. In criminal offenses 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.1825 2. In quasi-delicts If the defendant acted with gross negligence.1826 3. In contracts and quasi-contracts If the defendant acted in a wanton, fraudulent, reckless, oppressive, or malevolent manner.1827 C. Requisites Exemplary damages cannot be recovered as a matter of right; the court will decide whether or not they should be adjudicated.1828 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 plaintiff must show that he would be entitled to moral, temperate or compensatory damages were it not for the stipulation for liquidated damages.1829

1824

Art. 2229 Art. 2230 1826 Art. 2231 1827 Art. 2232 1828 Art. 2233 1829 Art. 2234 1825

423

VIII. Damages in Case of Death A. In crimes and quasi-delicts causing death 1. In death caused by breach of conduct by a common crime The amount of damages for death caused by a crime or quasi-delict shall be at least three thousand pesos,1830 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.1831

1830

As of 2008, it is P75,000 (People vs. Robert Brodett y Pajaro, Jan. 18, 2008) Art. 2206 Damages recoverable in case of death: 1. Medical & Hospital Bills 2. Damages for death a. Minimum amount: P50,000 b. Loss of earning capacity unless deceased had permanent physical disability not caused by defendant so that deceased had no earning capacity at time of death c. Support, if deceased was obliged to give support (for period not more than 5 years) d. Moral damages 1831

424

IX. Graduation of Damages A. Duty of Injured Party 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.1832 B. Rules 1. In crimes The damages to be adjudicated may be respectively increased or lessened according to the aggravating or mitigating circumstances.1833 2. In quasi-delict The contributory negligence of the plaintiff shall reduce the damages that he may recover.1834 3. In contracts, quasi-contracts and quasi-delicts; The court may equitably mitigate the damages, as in the following instances: (1) Plaintiff himself has contravened the terms of the contract; (2) 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) The loss would have resulted in any event; (5) Since the filing of the action, the defendant has done his best to lessen the plaintiff's loss or injury.1835 4. Liquidated damages Shall be equitably reduced if they are iniquitous or unconscionable.1836

1832

Art. 2203 Art. 2204 1834 Art. 2214 1835 Art. 2215 1836 Art. 2227 1833

425

5. Compromise The courts may mitigate the damages to be paid by the losing party who has shown a sincere desire for a compromise.1837 X. Miscellaneous Rules A. Damages that cannot co-exists 1. Nominal with other damages 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.1838 2. Actual and Liquidated Liquidated damages are those agreed upon by the parties to a contract, to be paid in case of breach thereof.1839 B. Damages that must co-exist 1. Exemplary with moral, temperate, liquidated or compensatory1840 C. Damages that must stand alone 1. Nominal Damages1841

Include: Pertinent Supreme Court decisions promulgated up to January 31, 2012.

1837

Art. 2031 Art. 2223 1839 Art. 2226 1840 supra 1841 Ibid. 1838

426

REFERENCE Civil Code Article 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. Article 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. Article 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. Article 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. Article 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. Art. 30. When a separate civil action is brought to demand civil liability arising from a criminal offense, and no criminal proceedings are instituted during the pendency of the civil case, a preponderance of evidence shall likewise be sufficient to prove the act complained of. 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; 427

(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 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. 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.

428

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. Article 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. Article 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. Article 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. 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. Article 294. The claim for support, when proper and two or more persons are obliged to give it, shall be made in the following order: (1) From the spouse; (2) From the descendants of the nearest degree; (3) From the ascendants, also of the nearest degree; (4) From the brothers and sisters. Among descendants and ascendants the order in which they are called to the intestate succession of the person who has a right to claim support shall be observed Art. 391. The following shall be presumed dead for all purposes, including the division of the estate among the heirs: (1) A person on board a vessel lost during a sea voyage, or an aeroplane which is missing, who has not been heard of for four years since the loss of the vessel or aeroplane; years;

(2) A person in the armed forces who has taken part in war, and has been missing for four

429

(3) A person who has been in danger of death under other circumstances and his existence has not been known for four years. Article 443. He who receives the fruits has the obligation to pay the expenses made by a third person in their production, gathering, and preservation Article 537. Acts merely tolerated, and those executed clandestinely and without the knowledge of the possessor of a thing, or by violence, do not affect possession Article 546. Necessary expenses shall be refunded to every possessor; but only the possessor in good faith may retain the thing until he has been reimbursed therefor. 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 by reason thereof Article 559. The possession of movable property acquired in good faith is equivalent to a title. Nevertheless, one who has lost any movable or has been unlawfully deprived thereof, may recover it from the person in possession of the same. If the possessor of a movable lost or which the owner has been unlawfully deprived, has acquired it in good faith at a public sale, the owner cannot obtain its return without reimbursing the price paid therefor. Article 649. The owner, or any person who by virtue of a real right may cultivate or use any immovable, which is surrounded by other immovables pertaining to other persons and without adequate outlet to a public highway, is entitled to demand a right of way through the neighboring estates, after payment of the proper indemnity. Should this easement be established in such a manner that its use may be continuous for all the needs of the dominant estate, establishing a permanent passage, the indemnity shall consist of the value of the land occupied and the amount of the damage caused to the servient estate. In case the right of way is limited to the necessary passage for the cultivation of the estate surrounded by others and for the gathering of its crops through the servient estate without a permanent way, the indemnity shall consist in the payment of the damage caused by such encumbrance. This easement is not compulsory if the isolation of the immovable is due to the proprietor's own acts. Article 670. No windows, apertures, balconies, or other similar projections which afford a direct view upon or towards an adjoining land or tenement can be made, without leaving a distance of two meters between the wall in which they are made and such contiguous property. Neither can side or oblique views upon or towards such conterminous property be had, unless there be a distance of sixty centimeters. The nonobservance of these distances does not give rise to prescription 430

Art. 688. 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, provided he does not contravene the laws, public policy or public order. Article 750. The donation may comprehend all the present property of the donor, or part thereof, 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. Without such reservation, the donation shall be reduced in petition of any person affected Article 760. Every 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 as provided in the next article, 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. Article 911. After the legitime has been determined in accordance with the three preceding articles, the reduction shall be made as follows: (1) Donations shall be respected as long as the legitime can be covered, reducing or annulling, if necessary, the devises or legacies made in the will; (2) The reduction of the devises or legacies shall be pro rata, without any distinction whatever. If the testator has directed that a certain devise or legacy be paid in preference to others, it shall not suffer any reduction until the latter have been applied in full to the payment of the legitime. (3) If the devise or legacy consists of a usufruct or life annuity, whose value may be considered greater than that of the disposable portion, the compulsory heirs may choose between complying with the testamentary provision and delivering to the devisee or legatee the part of the inheritance of which the testator could freely dispose. (820a) Article 912. If the devise subject to reduction should consist of real property, which cannot be conveniently divided, it shall go to the devisee if the reduction does not absorb one-half of its value; and in a contrary case, to the compulsory heirs; but the former and the latter shall reimburse each other in cash for what respectively belongs to them. The devisee who is entitled to a legitime may retain the entire property, provided its value does not exceed that of the disposable portion and of the share pertaining to him as legitime. Article 919. The following shall be sufficient causes for the disinheritance of children and descendants, legitimate as well as illegitimate:

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(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 accused the testator of a crime for which the law prescribes imprisonment for six years or more, if the accusation has been found groundless; (3) When a child or descendant has been convicted of adultery or concubinage with the spouse of the testator; (4) When a child or descendant by fraud, violence, intimidation, or undue influence causes the testator to make a will or to change one already made; (5) A refusal without justifiable cause to support the parent or ascendant who disinherits such child or descendant; (6) Maltreatment of the testator by word or deed, by the child or descendant; (7) When a child or descendant leads a dishonorable or disgraceful life; (8) Conviction of a crime which carries with it the penalty of civil interdiction. Art. 1030. Testamentary provisions in favor of the poor in general, without designation of particular persons or of any community, shall be deemed limited to the poor living in the domicile of the testator at the time of his death, unless it should clearly appear that his intention was otherwise. The designation of the persons who are to be considered as poor and the distribution of the property shall be made by the person appointed by the testator for the purpose; in default of such person, by the executor, and should there be no executor, by the justice of the peace, the mayor, and the municipal treasurer, who shall decide by a majority of votes all questions that may arise. In all these cases, the approval of the Court of First Instance shall be necessary. The preceding paragraph shall apply when the testator has disposed of his property in favor of the poor of a definite locality Article 1132. The ownership of movables prescribes through uninterrupted possession for four years in good faith. The ownership of personal property also prescribes through uninterrupted possession for eight years, without need of any other condition. With regard to the right of the owner to recover personal property lost or of which he has been illegally deprived, as well as with respect to movables acquired in a public sale, fair, or market, or from a merchant's store the provisions of articles 559 and 1505 of this Code shall be observed. Article 1133. Movables possessed through a crime can never be acquired through prescription by the offender.

Article 1140. Actions to recover movables shall prescribe eight years from the time the possession thereof is lost, unless the possessor has acquired the ownership by prescription for a less period, according to articles 1132, and without prejudice to the provisions of articles 559, 1505, and 1133.

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Article 1141. Real actions over immovables prescribe after thirty years. This provision is without prejudice to what is established for the acquisition of ownership and other real rights by prescription. Article 1142. A mortgage action prescribes after ten years Article 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. Article 1145. The following actions must be commenced within six years: (1) Upon an oral contract; (2) Upon a quasi-contract. Article 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; 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 Martial Law including the arrest, detention and/or trial of the plaintiff, the same must be brought within one (1) year. (As amended by PD No. 1755, Dec. 24, 1980.) Article 1147. The following actions must be filed within one year: (1) For forcible entry and detainer; (2) For defamation. Art. 1163. Every person obliged to give something is also obliged to take care of it with the proper diligence of a good father of a family, unless the law or the stipulation of the parties requires another standard of care. (1094a) Art. 1164. The creditor has a right to the fruits of the thing from the time the obligation to deliver it arises. However, he shall acquire no real right over it until the same has been delivered to him. (1095) 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. If the thing is indeterminate or generic, he may ask that the obligation be complied with at the expense of the debtor. 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 433

Article 1170. Those who in the performance of their obligations are guilty of fraud, negligence, or delay, and those who in any manner contravene the tenor thereof, are liable for damages 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. 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. 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 1233. A debt shall not be understood to have been paid unless the thing or service in which the obligation consists has been completely delivered or rendered, as the case may be. (1 Article 1248. Unless there is an express stipulation to that effect, the creditor cannot be compelled partially to receive the prestations in which the obligation consists. Neither may the debtor be required to make partial payments. However, when the debt is in part liquidated and in part unliquidated, the creditor may demand and the debtor may effect the payment of the former without waiting for the liquidation of the latter. Art. 1262. An obligation which consists in the delivery of a determinate thing shall be extinguished if it should be lost or destroyed without the fault of the debtor, and before he has incurred in delay. When by law or stipulation, the obligor is liable even for fortuitous events, the loss of the thing does not extinguish the obligation, and he shall be responsible for damages. The same rule applies when the nature of the obligation requires the assumption of risk. Art. 1327. The following cannot give consent to a contract: (1) Unemancipated minors; (2) Insane or demented persons, and deaf-mutes who do not know how to write Article 1385. Rescission creates the obligation to return the things which were the object of the contract, together with their fruits, and the price with its interest; consequently, it can be carried out only when he who demands rescission can return whatever he may be obliged to restore. Neither shall rescission take place when the things which are the object of the contract are legally in the possession of third persons who did not act in bad faith. In this case, indemnity for damages may be demanded from the person causing the loss. Article 1388. Whoever acquires in bad faith the things alienated in fraud of creditors, shall indemnify the latter for damages suffered by them on account of the alienation, whenever, due to any cause, it should be impossible for him to return them.

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Art. 1490. The husband and the wife cannot sell property to each other, except: (1) When a separation of property was agreed upon in the marriage settlements; or (2) When there has been a judicial separation or property under Article 191. (1458a) Art. 1491. The following persons cannot acquire by purchase, even at a public or judicial auction, either in person or through the mediation of another: (1) The guardian, the property of the person or persons who may be under his guardianship; (2) Agents, the property whose administration or sale may have been entrusted to them, unless the consent of the principal has been given; (3) Executors and administrators, the property of the estate under administration; (4) Public officers and employees, the property of the State or of any subdivision thereof, or of any government-owned or controlled corporation, or institution, the administration of which has been intrusted to them; this provision shall apply to judges and government experts who, in any manner whatsoever, take part in the sale; (5) Justices, judges, prosecuting attorneys, clerks of superior and inferior courts, and other officers and employees connected with the administration of justice, the property and rights in litigation or levied upon an execution before the court within whose jurisdiction or territory they exercise their respective functions; this prohibition includes the act of acquiring by assignment and shall apply to lawyers, with respect to the property and rights which may be the object of any litigation in which they may take part by virtue of their profession. (6) Any others specially disqualified by law. Art. 1497. The thing sold shall be understood as delivered, when it is placed in the control and possession of the vendee. (1462a) Art. 1498. When the sale is made through a public instrument, the execution thereof shall be equivalent to the delivery of the thing which is the object of the contract, if from the deed the contrary does not appear or cannot clearly be inferred. With regard to movable property, its delivery may also be made by the delivery of the keys of the place or depository where it is stored or kept. Art. 1499. The delivery of movable property may likewise be made by the mere consent or agreement of the contracting parties, if the thing sold cannot be transferred to the possession of the vendee at the time of the sale, or if the latter already had it in his possession for any other reason. Art. 1500. There may also be tradition constitutum possessorium. Art. 1501. With respect to incorporeal property, the provisions of the first paragraph of article 1498 shall govern. In any other case wherein said provisions are not applicable, the placing of the titles of ownership in the possession of the vendee or the use by the vendee of his rights, with the vendor's consent, shall be understood as a delivery. (1464)

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Article 1505. Subject to the provisions of this Title, where goods are sold by a person who is not the owner thereof, and who does not sell them under authority or with the consent of the owner, the buyer acquires no better title to the goods than the seller had, unless the owner of the goods is by his conduct precluded from denying the seller's authority to sell. Nothing in this Title, however, shall affect: (1) The provisions of any factors' act, recording laws, or any other provision of law enabling the apparent owner of goods to dispose of them as if he were the true owner thereof; (2) The validity of any contract of sale under statutory power of sale or under the order of a court of competent jurisdiction; (3) Purchases made in a merchant's store, or in fairs, or markets, in accordance with the Code of Commerce and special laws Art. 1526. Subject to the provisions of this Title, notwithstanding that the ownership in the goods may have passed to the buyer, the unpaid seller of goods, as such, has: them;

(1) A lien on the goods or right to retain them for the price while he is in possession of

(2) In case of the insolvency of the buyer, a right of stopping the goods in transitu after he has parted with the possession of them; (3) A right of resale as limited by this Title; (4) A right to rescind the sale as likewise limited by this Title. Where the ownership in the goods has not passed to the buyer, the unpaid seller has, in addition to his other remedies a right of withholding delivery similar to and coextensive with his rights of lien and stoppage in transitu where the ownership has passed to the buyer. Art. 1539. The obligation to deliver the thing sold includes that of placing in the control of the vendee all that is mentioned in the contract, in conformity with the following rules: If the sale of real estate should be made with a statement of its area, at the rate of a certain price for a unit of measure or number, the vendor shall be obliged to deliver to the vendee, if the latter should demand it, all that may have been stated in the contract; but, should this be not possible, the vendee may choose between a proportional reduction of the price and the rescission of the contract, provided that, in the latter case, the lack in the area be not less than one-tenth of that stated. The same shall be done, even when the area is the same, if any part of the immovable is not of the quality specified in the contract. The rescission, in this case, shall only take place at the will of the vendee, when the inferior value of the thing sold exceeds one-tenth of the price agreed upon. Nevertheless, if the vendee would not have bought the immovable had he known of its smaller area of inferior quality, he may rescind the sale.

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Art. 1542. In the sale of real estate, made for a lump sum and not at the rate of a certain sum for a unit of measure or number, there shall be no increase or decrease of the price, although there be a greater or less area or number than that stated in the contract. The same rule shall be applied when two or more immovables as sold for a single price; but if, besides mentioning the boundaries, which is indispensable in every conveyance of real estate, its area or number should be designated in the contract, the vendor shall be bound to deliver all that is included within said boundaries, even when it exceeds the area or number specified in the contract; and, should he not be able to do so, he shall suffer a reduction in the price, in proportion to what is lacking in the area or number, unless the contract is rescinded because the vendee does not accede to the failure to deliver what has been stipulated. Art. 1584. Where goods are delivered to the buyer, which he has not previously examined, he is not deemed to have accepted them unless and until he has had a reasonable opportunity of examining them for the purpose of ascertaining whether they are in conformity with the contract if there is no stipulation to the contrary. Unless otherwise agreed, when the seller tenders delivery of goods to the buyer, he is bound, on request, to afford the buyer a reasonable opportunity of examining the goods for the purpose of ascertaining whether they are in conformity with the contract. Where goods are delivered to a carrier by the seller, in accordance with an order from or agreement with the buyer, upon the terms that the goods shall not be delivered by the carrier to the buyer until he has paid the price, whether such terms are indicated by marking the goods with the words "collect on delivery," or otherwise, the buyer is not entitled to examine the goods before the payment of the price, in the absence of agreement or usage of trade permitting such examination. Art. 1596. Where the buyer wrongfully neglects or refuses to accept and pay for the goods, the seller may maintain an action against him for damages for non-acceptance. The measure of damages is the estimated loss directly and naturally resulting in the ordinary course of events from the buyer's breach of contract. Where there is an available market for the goods in question, the measure of damages is, in the absence of special circumstances showing proximate damage of a different amount, the difference between the contract price and the market or current price at the time or times when the goods ought to have been accepted, or, if no time was fixed for acceptance, then at the time of the refusal to accept. If, while labor or expense of material amount is necessary on the part of the seller to enable him to fulfill his obligations under the contract of sale, the buyer repudiates the contract or notifies the seller to proceed no further therewith, the buyer shall be liable to the seller for labor performed or expenses made before receiving notice of the buyer's repudiation or countermand. The profit the seller would have made if the contract or the sale had been fully performed shall be considered in awarding the damages. Article 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

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Article 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 extra-judicial demand by the lessor. 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 payments were effected in virtue of the custom of the place. Article 1723. The engineer or architect who drew up the plans and specifications for a building is liable for damages if within fifteen years from the completion of the structure, the same should collapse by reason of a defect in those plans and specifications, or due to the defects in the ground. The contractor is likewise responsible for the damages if the edifice falls, within the same period, on account of defects in the construction or the use of materials of inferior quality furnished by him, or due to any violation of the terms of the contract. If the engineer or architect supervises the construction, he shall be solidarily liable with the contractor. Acceptance of the building, after completion, does not imply waiver of any of the cause of action by reason of any defect mentioned in the preceding paragraph. The action must be brought within ten years following the collapse of the building Article 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 Article 1731. He who has executed work upon a movable has a right to retain it by way of pledge until he is paid. Article 1892. The agent may appoint a substitute if the principal has not prohibited him from doing so; but he shall be 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 without designating the person, and the person appointed was notoriously incompetent or insolvent. (1721)

All acts of the substitute appointed against the prohibition of the principal shall be void.

Article 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.

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Article 1994. The depositary may retain the thing in pledge until the full payment of what may be due him by reason of the deposit 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. 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. In all cases, the attorney's fees and expenses of litigation must be reasonable.

Family Code Art. 15. Any contracting party between the age of twenty-one and twenty-five shall be obliged to ask their parents or guardian for advice upon the intended marriage. If they do not obtain such advice, or if it be unfavorable, the marriage license shall not be issued till after three months following the completion of the publication of the application therefor. A sworn statement by the contracting parties to the effect that such advice has been sought, together with the written advice given, if any, shall be attached to the application for marriage license. Should the parents or guardian refuse to give any advice, this fact shall be stated in the sworn statement. (62a) Art. 16. In the cases where parental consent or parental advice is needed, the party or parties concerned shall, in addition to the requirements of the preceding articles, attach a certificate issued by a priest, imam or minister authorized to solemnize marriage under Article 7 of this Code or a marriage counselor duly accredited by the proper government agency to the effect that the 439

contracting parties have undergone marriage counseling. Failure to attach said certificates of marriage counseling shall suspend the issuance of the marriage license for a period of three months from the completion of the publication of the application. Issuance of the marriage license within the prohibited period shall subject the issuing officer to administrative sanctions but shall not affect the validity of the marriage. Should only one of the contracting parties need parental consent or parental advice, the other party must be present at the counseling referred to in the preceding paragraph. (n) Chapter 2. Marriages Exempted from License Requirement Art. 27. In case either or both of the contracting parties are at the point of death, the marriage may be solemnized without necessity of a marriage license and shall remain valid even if the ailing party subsequently survives. Art. 28. If the residence of either party is so located that there is no means of transportation to enable such party to appear personally before the local civil registrar, the marriage may be solemnized without necessity of a marriage license. Art. 29. In the cases provided for in the two preceding articles, the solemnizing officer shall state in an affidavit executed before the local civil registrar or any other person legally authorized to administer oaths that the marriage was performed in articulo mortis or that the residence of either party, specifying the barrio or barangay, is so located that there is no means of transportation to enable such party to appear personally before the local civil registrar and that the officer took the necessary steps to ascertain the ages and relationship of the contracting parties and the absence of legal impediment to the marriage. Art. 30. The original of the affidavit required in the last preceding article, together with the legible copy of the marriage contract, shall be sent by the person solemnizing the marriage to the local civil registrar of the municipality where it was performed within the period of thirty days after the performance of the marriage. Art. 31. A marriage in articulo mortis between passengers or crew members may also be solemnized by a ship captain or by an airplane pilot not only while the ship is at sea or the plane is in flight, but also during stopovers at ports of call. Art. 32. A military commander of a unit, who is a commissioned officer, shall likewise have authority to solemnize marriages in articulo mortis between persons within the zone of military operation, whether members of the armed forces or civilians. Art. 33. Marriages among Muslims or among members of the ethnic cultural communities may be performed validly without the necessity of marriage license, provided they are solemnized in accordance with their customs, rites or practices. Art. 34. No license shall be necessary for the marriage of a man and a woman who have lived together as husband and wife for at least five years and without any legal impediment to marry each other. The contracting parties shall state the foregoing facts in an affidavit before any person authorized by law to administer oaths. The solemnizing officer shall also state under oath that he ascertained the qualifications of the contracting parties are found no legal impediment to the marriage. 440

Art. 51. In said partition, the value of the presumptive legitimes of all common children, computed as of the date of the final judgment of the trial court, shall be delivered in cash, property or sound securities, unless the parties, by mutual agreement judicially approved, had already provided for such matters. The children or their guardian or the trustee of their property may ask for the enforcement of the judgment. The delivery of the presumptive legitimes herein prescribed shall in no way prejudice the ultimate successional rights of the children accruing upon the death of either of both of the parents; but the value of the properties already received under the decree of annulment or absolute nullity shall be considered as advances on their legitime.

Art. 77. The marriage settlements and any modification thereof shall be in writing, signed by the parties and executed before the celebration of the marriage. They shall not prejudice third persons unless they are registered in the local civil registry where the marriage contract is recorded as well as in the proper registries of properties.

apply:

Art. 102. Upon dissolution of the absolute community regime, the following procedure shall

(1) An inventory shall be prepared, listing separately all the properties of the absolute community and the exclusive properties of each spouse. (2) The debts and obligations of the absolute community shall be paid out of its assets. In case of insufficiency of said assets, the spouses shall be solidarily liable for the unpaid balance with their separate properties in accordance with the provisions of the second paragraph of Article 94. (3) Whatever remains of the exclusive properties of the spouses shall thereafter be delivered to each of them. (4) The net remainder of the properties of the absolute community shall constitute its net assets, which shall be divided equally between husband and wife, unless a different proportion or division was agreed upon in the marriage settlements, or unless there has been a voluntary waiver of such share provided in this Code. For purpose of computing the net profits subject to forfeiture in accordance with Articles 43, No. (2) and 63, No. (2), the said profits shall be the increase in value between the market value of the community property at the time of the celebration of the marriage and the market value at the time of its dissolution. (5) The presumptive legitimes of the common children shall be delivered upon partition, in accordance with Article 51. (6) Unless otherwise agreed upon by the parties, in the partition of the properties, the conjugal dwelling and the lot on which it is situated shall be adjudicated to the spouse with whom the majority of the common children choose to remain. Children below the age of seven years are deemed to have chosen the mother, unless the court has decided otherwise. In case there in no such majority, the court shall decide, taking into consideration the best interests of said children. 441

Art. 128. If a spouse without just cause abandons the other or fails to comply with his or her obligation to the family, the aggrieved spouse may petition the court for receivership, for judicial separation of property, or for authority to be the sole administrator of the conjugal partnership property, subject to such precautionary conditions as the court may impose. The obligations to the family mentioned in the preceding paragraph refer to marital, parental or property relations. A spouse is deemed to have abandoned the other when he or she has left the conjugal dwelling without intention of returning. The spouse who has left the conjugal dwelling for a period of three months or has failed within the same period to give any information as to his or her whereabouts shall be prima facie presumed to have no intention of returning to the conjugal dwelling Art. 129. Upon the dissolution of the conjugal partnership regime, the following procedure shall apply: (1) An inventory shall be prepared, listing separately all the properties of the conjugal partnership and the exclusive properties of each spouse. (2) Amounts advanced by the conjugal partnership in payment of personal debts and obligations of either spouse shall be credited to the conjugal partnership as an asset thereof. (3) Each spouse shall be reimbursed for the use of his or her exclusive funds in the acquisition of property or for the value of his or her exclusive property, the ownership of which has been vested by law in the conjugal partnership. (4) The debts and obligations of the conjugal partnership shall be paid out of the conjugal assets. In case of insufficiency of said assets, the spouses shall be solidarily liable for the unpaid balance with their separate properties, in accordance with the provisions of paragraph (2) of Article 121. (5) Whatever remains of the exclusive properties of the spouses shall thereafter be delivered to each of them. (6) Unless the owner had been indemnified from whatever source, the loss or deterioration of movables used for the benefit of the family, belonging to either spouse, even due to fortuitous event, shall be paid to said spouse from the conjugal funds, if any. (7) The net remainder of the conjugal partnership properties shall constitute the profits, which shall be divided equally between husband and wife, unless a different proportion or division was agreed upon in the marriage settlements or unless there has been a voluntary waiver or forfeiture of such share as provided in this Code. (8) The presumptive legitimes of the common children shall be delivered upon the partition in accordance with Article 51. (9) In the partition of the properties, the conjugal dwelling and the lot on which it is situated shall, unless otherwise agreed upon by the parties, be adjudicated to the spouse with whom the majority of the common children choose to remain. Children below the age of seven years are

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deemed to have chosen the mother, unless the court has decided otherwise. In case there is no such majority, the court shall decide, taking into consideration the best interests of said children. 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. Art. 135. Any of the following shall be considered sufficient cause for judicial separation of property: (1) That the spouse of the petitioner has been sentenced to a penalty which carries with it civil interdiction; (2) That the spouse of the petitioner has been judicially declared an absentee; (3) That loss of parental authority of the spouse of petitioner has been decreed by the court; (4) That the spouse of the petitioner has abandoned the latter or failed to comply with his or her obligations to the family as provided for in Article 101; (5) That the spouse granted the power of administration in the marriage settlements has abused that power; and (6) That at the time of the petition, the spouses have been separated in fact for at least one year and reconciliation is highly improbable. In the cases provided for in Numbers (1), (2) and (3), the presentation of the final judgment against the guilty or absent spouse shall be enough basis for the grant of the decree of judicial separation of property. Art. 136. The spouses may jointly file a verified petition with the court for the voluntary dissolution of the absolute community or the conjugal partnership of gains, and for the separation of their common properties. All creditors of the absolute community or of the conjugal partnership of gains, as well as the personal creditors of the spouse, shall be listed in the petition and notified of the filing thereof. The court shall take measures to protect the creditors and other persons with pecuniary interest. Art. 137. Once the separation of property has been decreed, the absolute community or the conjugal partnership of gains shall be liquidated in conformity with this Code. During the pendency of the proceedings for separation of property, the absolute community or the conjugal partnership shall pay for the support of the spouses and their children. (192a) Art. 138. After dissolution of the absolute community or of the conjugal partnership, the provisions on complete separation of property shall apply.

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Art. 155. The family home shall be exempt from execution, forced sale or attachment except: (1) For nonpayment of taxes; (2) For debts incurred prior to the constitution of the family home; (3) For debts secured by mortgages on the premises before or after such constitution; and (4) For debts due to laborers, mechanics, architects, builders, materialmen and others who have rendered service or furnished material for the construction of the building. Art. 205. The right to receive support under this Title as well as any money or property obtained as such support shall not be levied upon on attachment or execution Article 213. Separation of property may refer to present or future property or both. It may be total or partial. In the latter case, the property not agreed upon as separate shall pertain to the conjugal partnership of gains.

Rules of Court RULE 39 Section 13. Property exempt from execution. — Except as otherwise expressly provided by law, the following property, and no other, shall be exempt from execution: (a) The judgment obligor's family home as provided by law, or the homestead in which he resides, and land necessarily used in connection therewith; (b) Ordinary tools and implements personally used by him in his trade, employment, or livelihood; (c) Three horses, or three cows, or three carabaos, or other beasts of burden, such as the judgment obligor may select necessarily used by him in his ordinary occupation; (d) His necessary clothing and articles for ordinary personal use, excluding jewelry; (e) Household furniture and utensils necessary for housekeeping, and used for that purpose by the judgment obligor and his family, such as the judgment obligor may select, of a value not exceeding one hundred thousand pesos; (f) Provisions for individual or family use sufficient for four months; (g) The professional libraries and equipment of judges, lawyers, physicians, pharmacists, dentists, engineers, surveyors, clergymen, teachers, and other professionals, not exceeding three hundred thousand pesos in value; (h) One fishing boat and accessories not exceeding the total value of one hundred thousand pesos owned by a fisherman and by the lawful use of which he earns his livelihood; (i) So much of the salaries, wages, or earnings of the judgment obligor for his personal services within the four months preceding the levy as are necessary for the support of his family; (j) Lettered gravestones; 444

(k) Monies, benefits, privileges, or annuities accruing or in any manner growing out of any life insurance; (l) The right to receive legal support, or money or property obtained as such support, or any pension or gratuity from the Government; (m) Properties specially exempted by law. But no article or species of property mentioned in this section shall be exempt from execution issued upon a judgment recovered for its price or upon a judgment of foreclosure of a mortgage thereon. RULE 108 CANCELLATION OR CORRECTION OF ENTRIES IN THE CIVIL REGISTRY 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 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. 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.chanrobles virtua law library 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.

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REPUBLIC ACT NO. 9048 [March 22, 2001] Section 1. Authority to Correct Clerical or Typographical Error and Change of First Name or Nickname. No entry in a civil register shall be changed or corrected without a judicial order; except for clerical or typographical errors and change of first name or nickname which can be corrected or changed by concerned city or municipal civil registrar or consul general in accordance with the provisions of this Act and its implementing rules and regulations. Sec. 2. Definitions of Terms. — As used in this Act, the following terms shall mean: (1) "City or municipal civil registrar" refers to the head of the local civil registry office of the city or municipality, as the case may be, who is appointed as such by the city or municipal mayor in accordance with the provisions of existing laws. (2) "Petitioner" refers to a natural person filing the petition and who has direct and personal interest in the correction of a clerical or typographical error in an entry or change of first name or nickname in the civil register. (3) "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, such as misspelled name or misspelled place of birth 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: Provided, however, That no correction must involve the change of nationality, age, status or sex of the petitioner. (4) "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 Register General. (5) "Civil registrar general" refers to the administrator of the National Statistics Office which is the agency mandated to carry out and administer the provision of laws on civil registration. (6) "First name" refers to a name or nickname given to a person which may consist of one or more names in addition to the middle and last names. 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. 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.

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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 correction of 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 the first name or nickname in the community; or (3) The change will avoid confusion. Sec. 5. Form and Contents of the Petition. — The petition shall be in the form of an affidavit, subscribed and sworn to before any person authorized by law to administer oaths. The affidavit shall set forth facts necessary to establish the merits of the 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. The petition shall be supported with the following documents: (1) A certified true machine copy of the certificate or of the page or 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. In case of change of first name or nickname, the petition shall likewise be supported with the documents mentioned in the immediately preceding paragraph. In addition, the petition shall be published at least once a week for two (2) consecutive weeks in a newspaper of general circulation. Furthermore, the petitioner shall submit a certification from the appropriate law enforcement 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 the third copy to the petitioner.

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Sec. 6. Duties of the City of Municipal Civil Registrar or the Consul General. — The city or municipal civil registrar or the consul general to whom the petition is presented shall examine the petition and its supporting documents. He shall post the petition in a conspicuous place provided for the purpose for ten (10) consecutive days after he finds the petition and its supporting documents sufficient in form and substance. The city or municipal civil registrar or the consul general shall act on the petition and shall render a decision not later than five (5) working days after the completion of the posting and/or publication requirement. He shall transmit a copy of his decision together with the records of the proceedings to the Office of the Civil Registrar General within five (5) working days from the date of the decision. Sec. 7. Duties and Powers of the Civil Registrar General. — The civil registrar general shall, within ten (10) working days from receipt of the decision granting a petition, exercise the power to impugn such decision by way of an objection based on the following grounds: (1) The error is not clerical or typographical; (2) The correction of an entry or entries in the civil register is substantial or controversial as it effects the civil status of a person; or (3) The basis used in changing the first name or nickname of a person does not fall under Section 4. The civil registrar general shall immediately notify the city or municipal civil registrar or the consul general of the action taken on the decision. Upon receipt of the notice thereof, the city or municipal civil registrar or the consul general shall notify the petitioner of such action. The petitioner may seek reconsideration with the civil registrar general or file the appropriate petition with the proper court. If the civil registrar general fails to exercise his power to impugn the decision of the city or municipal registrar or of the consul general within the period prescribed herein, such decision shall become final and executory. Where the petition is denied by the city or municipal civil registrar or the consul general, the petitioner may either appeal the decision to the civil registrar general or file the appropriate petition with the proper court. Sec. 8. Payment of Fees. — The city or municipal civil registrar or the consul general shall be authorized to collect reasonable fees as a condition for accepting the petition. An indigent petitioner shall be exempt from the payment of the said fee. Sec. 9. Penalty Clause. — A person who violates any of the provisions of this Act shall, upon conviction, be penalized by imprisonment of not less than six (6) years but not more than twelve (12) years, or a fine of not less than Ten thousand pesos (P10,000.00) but not more than One hundred thousand pesos (P100,000.00), or both, at the discretion of the court. In addition, if the offender is a government official or employee, he shall suffer the penalties provided under civil service laws, rules and regulations. 448

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Public Land Act Section 118. Conveyance and encumbrance made by persons belonging to the so-called "non-Christian tribes," when proper, shall not be valid unless duly approved by the Director of the Bureau of non-Christian tribes.

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