civil law reviewer

I.

Effect and Application of Laws (Civil Code)

Laws shall take effect after fifteen days following the completion of their publication in the Official Gazette, unless it is otherwise provided.1 This Code shall take effect one year after such publication.2 Ignorance of the law excuses no one from compliance therewith.3 Laws shall have no retroactive effect, unless the contrary is provided.4 Acts which are contrary to mandatory or prohibitory laws are void, except when the law itself authorizes its validity.5 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public policy, morals, or good customs, or prejudicial to a third person with a right recognized by law.6 Laws are repealed only by subsequent ones, either expressly or impliedly.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.

1

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. 2 3 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." 4 Art. 4 5 Art. 5 6 Art. 6

1

Administrative or executive acts, orders and regulations shall be valid only when they are not contrary to the laws or the Constitution.7 Judicial decisions applying or interpreting the laws or the Constitution shall form a part of the legal system of the Philippines.8 No judge or court shall decline to render judgment by reason of the silence, obscurity or insufficiency of laws.9 In case of doubt in the interpretation or application of laws, it is presumed that the lawmaking body intended right and justice to prevail.10 Customs which are contrary to law, public order or public policy shall not be countenanced.11 A custom must be proved as a fact, according to the rules of evidence.12 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.

7

Art. 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. 9 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. 10 Art. 10 11 Art. 11 12 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 8

2

In computing a period, the first day shall be excluded, and the last day included13 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.14 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.15 Real property as well as personal property is subject to the law of the country where it is situated.16 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.17 13

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). 14 Art. 14 15 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. 16 st Art. 16, 1 par. The lex situs or lex rei sitae governs real or personal property. 17 nd id., 2 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

3

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.18 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.19 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.20 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.21 II.

Human Relations

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.22 Every person who, contrary to law, wilfully or negligently causes damage to another, shall indemnify the latter for the same.23 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.24 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.25

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. 18 st Art. 17, 1 par., known as the lex loci celebrationis 19 nd id, 2 par. 20 rd Id., 3 par. 21 Art. 18 22 Art. 19 Principle of abuse of rights 23 Art. 20 24 Art. 21 25 Art. 22

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PERSONS I. Persons and 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 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 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 the conditions specified in the following article.30

26

Civil Code 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." 28 Art. 38 29 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. 27

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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 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 II.

Marriage33

Marriage is a special contract of permanent union between a man and a woman entered into in accordance with law for the establishment of conjugal and family life. It is the foundation of the family and an inviolable social institution whose nature, consequences, and incidents are governed by law and not subject to stipulation, except that marriage settlements may fix the property relations during the marriage.34 No marriage shall be valid, unless these essential requisites are present: (1) Legal capacity of the contracting parties who must be a male and a female; and (2) Consent freely given35 in the presence of the solemnizing officer.36 The formal requisites of marriage are: (1) Authority of the solemnizing officer; (2) A valid marriage license;37 (3) A marriage ceremony which takes place with the appearance of the contracting parties before the solemnizing officer and their personal declaration that they take each other as husband and wife in the presence of not less than two witnesses of legal age.38 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) 33 Family Code 34 Art. 1 35 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). 36 Art. 2 37 except Marriages Exempted from License Requirement, infra 38 Art. 3

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The absence of any of the essential or formal requisites shall render the marriage void ab initio, except as stated in Article 35 (2).39 A defect in any of the essential requisites shall not affect the validity of the marriage but the party or parties responsible for the irregularity shall be civilly, criminally and administratively liable.40 Any male or female of the age of eighteen years or upwards not under any of the impediments mentioned in Articles 37 and 38,41 may contract marriage.42 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 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. 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 officer. 43 Marriage may be solemnized by:44 (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;45 (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;46 39

infra Art. 4 41 infra 42 Art. 5 43 Art. 6 44 Art. 7 45 infra 46 Id. 40

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(5) Any consul-general, consul or vice-consul in the case provided in Article 10.47 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 2948 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.49 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.50 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.51 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.52

47

Id. See reference 49 Art. 8; for Art. 7, supra 50 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; (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) 51 Art. 20 52 Art. 10 48

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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.53 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.54 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.55 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.56 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 marriage57 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 law;58 53

Art. 21 Art. 27 55 Art. 31 56 Art. 32 57 Art. 34 58 except Marriages Exempted from License Requirement, supra 54

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(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 thereof.59 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 38.60 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. 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.61 Either of the former spouses may marry again after compliance with the foregoing requirements; otherwise, the subsequent marriage shall be null and void.62 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;63 (4) Bigamous or polygamous marriages not failing under Article 41;64 59

Art. 22 Art. 26 61 Art. 52 62 Art. 53 63 except Marriages Exempted from License Requirement, supra 64 infra 60

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(5) Contracted through mistake of one contracting party as to the identity of the other; and (6) Subsequent marriages that are void under Article 53.65 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.66 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.67 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. The action or defense for the declaration of absolute nullity shall not prescribe.

65

Art. 35; Art. 53, infra Art. 36 67 Art. 37 66

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In case of marriage celebrated before the effectivity of this Code and falling under Article 36,68 such action or defense shall prescribe in ten (10) years after this Code shall take effect.69 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.70 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 71 of the Civil Code, an absence of only two (2) years shall be sufficient.72 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.73

68

supra Art. 39 70 Art. 40 71 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. 72 Art. 41 73 Art. 42 69

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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 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 succession74 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.75 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;

74 75

Art. 43 Art. 44

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(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; (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.76 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 marriage77 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;78

76

Art. 45 Art. 46 78 No. 1 of Art. 45, supra 77

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(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;79 (3) By the injured party, within five (5) years after the discovery of the fraud;80 (4) By the injured party, within five (5) years from the time the force, intimidation or undue influence disappeared or ceased;81 (5) By the injured party, within five (5) years after the marriage.82 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.83 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.84 The effects provided for by paragraphs (2), (3), (4) and (5) of Article 43 and by Article 4485 shall also apply in the proper cases to marriages which are declared ab initio or annulled by final judgment under Articles 40 and 45.86 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.

79

No. 2, id. No. 3, id. 81 No. 4, id. 82 Nos. 5 & 6, id. (Art. 47) 83 Art. 48 84 Art. 49 85 supra 86 Ibid. 80

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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 129.87 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 legitime88 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.89 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.90 Children conceived or born before the judgment of annulment or absolute nullity of the marriage under Article 3691 has become final and executory shall be considered legitimate. Children conceived or born of the subsequent marriage under Article 53 shall likewise be legitimate.92

87

Art. 50; for Arts. 102 & 109, see Reference Art. 51 89 Art. 52 90 Art. 53 91 supra 92 Art. 54 88

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III.

Legal Separation A petition for legal separation may be filed on any of the following 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.93 The petition for legal separation shall be denied on any of the following grounds: (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;

93

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

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(4) Both parties have given ground for legal separation; (5) There is collusion between the parties to obtain decree of legal separation; or (6) The action is barred by prescription94 An action for legal separation shall be filed within five (5) years from the time of the occurrence of the cause.95 An action for legal separation shall in no case be tried before six (6) months shall have elapsed since the filing of the petition.96 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.97 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.98 After the filing of the petition for legal separation, 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.99 During the pendency of the action for legal separation, the provisions of Article 49100 shall apply to the support of the spouses and the custody and support of the common children.101

94

Art. 56 Art. 57 96 Art. 58 97 Art. 59 98 Art. 60 99 Art. 61 100 supra 101 Art. 62 95

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The decree of legal separation shall have the following effects: (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);102 (3) The custody of the minor children shall be awarded to the innocent spouse, subject to the provisions of Article 213103 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.104 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.105 The reconciliation referred to in the preceding Articles shall have the following consequences: (1) The legal separation proceedings, if still pending, shall thereby be terminated at whatever stage; and

102

supra See Reference 104 Art. 64 105 Art. 65 103

19

(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.106 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.107

106 107

Art. 66 Art. 67

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IV.

Rights and Obligations Between Husband and Wife

The husband and wife are obliged to live together, observe mutual love, respect and fidelity, and render mutual help and support.108 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.109 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.110 The management of the household shall be the right and the duty of both spouses. The expenses for such management shall be paid in accordance with the provisions of Article 70.111 When one of the spouses neglects his or her duties to the conjugal union or commits acts which tend to bring danger, dishonor or injury to the other or to the family, the aggrieved party may apply to the court for relief.112 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.

108

Art. 68 Art. 69 110 Art. 70 111 Art. 71 112 Art. 72 109

21

V.

Property Relations of the Spouses

The property relationship between husband and wife shall be governed in the following order: (1) By marriage settlements executed before the marriage; (2) By the provisions of this Code; and (3) By the local custom.113 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 govern.114 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, 67,115 128, 135 and 136.116 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.117 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 14118 to give consent to the marriage are made parties to the agreement.119 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, it shall be indispensable for the guardian appointed by a competent court to be made a party thereto120

113

Art. 74 Art. 75 115 supra 116 Art. 76; see Reference for Arts. 128, 135-6 117 Art. 77 118 The father, mother, surviving parent or guardian, or persons having legal charge of them, in the order mentioned. 119 Art. 78 120 Art. 79 114

22

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.121 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.122 Donations by reason of marriage are those which are made before its celebration, in consideration of the same, and in favor of one or both of the future spouses.123 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;124 (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 general125 121

Art. 80 Art. 81 123 Art. 82 124 supra 125 Art. 86 122

23

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;126 The effects provided for by paragraphs (2), (3), (4) and (5) of Article 43 and by Article 44127 shall also apply in the proper cases to marriages which are declared ab initio or annulled by final judgment under Articles 40 and 45. 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 129.128 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.129 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 govern130 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.131 Donations of future property shall be governed by the provisions on testamentary succession and the formalities of wills.

126

Art. 43 (3) supra 128 Art. 50; see Reference for Arts. 102 & 129 129 Art. 87 130 Art. 75 131 Art. 84 127

24

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.132 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.133 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.134 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 77.135 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. The provisions on co-ownership shall apply to the absolute community of property between the spouses in all matters not provided for.136 Community Property consists of all the property owned by the spouses at the time of the celebration of the marriage or acquired thereafter.137 Excluded are the following: (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.138 132

Art. 85 Art. 88 134 Art. 89 135 See Reference 136 Art. 90 137 Art. 91 138 Art. 92 133

25

Property acquired during the marriage is presumed to belong to the community, unless it is proved that it is one of those excluded therefrom.139 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; (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.

139

Art. 93

26

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.140 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.141 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. 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.142 Either spouse may dispose by will of his or her interest in the community property.143 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.144 Dissolution of Community Regime: (1) (2) (3) (4)

Upon the death of either spouse; There is a decree of legal separation; The marriage is annulled or declared void; or Judicial separation of property during the marriage under Article 134 to 138.145

140

Art. 94 Art. 95 142 Art. 96 143 Art. 97 144 Art. 98 145 Art. 99; see Reference for Arts. 134-138 141

27

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.146 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. 147 Procedure in the liquidation of the Absolute Community Assets and Liabilities: (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 94.148 (3) Whatever remains of the exclusive properties of the spouses shall thereafter be delivered to each of them. 146

Art. 100 Art. 101 148 supra 147

28

(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),149 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 51.150 (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.151 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.152 Whenever the liquidation of the community properties of two or more marriages contracted by the same person 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.153

149

ibid ibid 151 Art. 102 152 Art. 103 153 Art. 104 150

29

Conjugal partnership of gains: 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 256.154 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.155 The rules provided in Articles 88 and 89156 shall also apply to conjugal partnership of gains.157 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.158 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 husband159 The spouses retain the ownership, possession, administration and enjoyment of their exclusive properties. 154

Art. 105; see Reference for Art. 256 Art. 106 156 supra 157 Art. 107 158 Art. 108 159 Art. 109 155

30

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.160 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.161 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.162 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.163 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.164 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.165 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.166 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;

160

Art. 110 Art. 111 162 Art. 112 163 Art. 113 164 Art. 114 165 Art. 115 166 Art. 116 161

31

(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.167 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.168 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.169 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. 167

Art. 117 Art. 118 169 Art. 119 168

32

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. 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 (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.170 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.

170

Art. 121

33

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.171 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.172 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, 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.173 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.174

171

Art. 122 Art. 123 173 Art. 124 174 Art. 125 172

34

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.

175

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.176 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.177

175

Art. 126 Art. 127 177 Art. 128 176

35

Procedure in the Liquidation of the Conjugal Partnership Assets and Liabilities: (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 121.178 (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 51.179 (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.180

178

supra ibid 180 Art. 129 179

36

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.181 Whenever the liquidation of the conjugal partnership properties of two or more marriages contracted by the same person 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.182 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.183 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.184 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.185

181

Art. 130. Art. 131 183 Art. 132 184 Art. 133 185 Art. 134 182

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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;186 (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.187 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.188 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.189 186

supra Art. 135 188 Art. 136 189 Art. 137 187

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After dissolution of the absolute community or of the conjugal partnership, the provisions on complete separation of property shall apply.190 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.191 The separation of property shall not prejudice the rights previously acquired by creditors.192 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. The revival of the former property regime shall be governed by Article 67.193

190

Art. 138 Art. 139 192 Art. 140 193 Art. 141 191

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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.194 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.195 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.196 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.197 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. The liabilities of the spouses to creditors for family expenses shall, however, be solidary.198

194

Art. 142. Art. 143 196 Art. 144 197 Art. 145 198 Art. 146 195

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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.199 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. The foregoing rules on forfeiture shall likewise apply even if both parties are in both faith.200

199 200

Art. 147 Art. 148

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VI.

The Family

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.201 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.202 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.203 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.204 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 from execution, forced sale or attachment except as hereinafter provided and to the extent of the value allowed by law.205

201

Art. 149. Art. 150 203 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) 204 Art. 152 205 Art. 153 202

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Beneficiaries of a family home: (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.206 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.207 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.208 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.

206

Art. 154 Art. 155 208 Art. 156 207

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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.209 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.210 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.211 When a creditor whose claims is not among those mentioned in Article 155 212 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 157213, 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.214 For purposes of availing of the benefits of a family home, a person may constitute, or be the beneficiary of, only one family home.215 The provisions in this Chapter shall also govern existing family residences insofar as said provisions are applicable.216 209

Art. 157 Art. 158 211 Art. 159 212 supra 213 ibid 214 Art. 160 215 Art. 161 216 Art. 162 210

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VII.

Paternity and Filiation Legitimate Children:

The filiation of children may be by nature or by adoption. Natural filiation may be legitimate or illegitimate.217 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.218 Children conceived and born outside a valid marriage are illegitimate, unless otherwise provided in this Code.219 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;220 or

217

Art. 163 Art. 164 219 Art. 165 220 supra 218

45

(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.221 The child shall be considered legitimate although the mother may have declared against its legitimacy or may have been sentenced as an adulteress.222 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.223 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.224 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.225

221

Art. 166 Art. 167 223 Art. 168 224 Art. 169 225 Art. 170 222

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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.226 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.227 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.228 Rights of legitimate children: (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.229 226

Art. 171 Art. 172 228 Art. 173 229 Art. 174 227

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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 173,230 except when the action is based on the second paragraph of Article 172,231 in which case the action may be brought during the lifetime of the alleged parent.232 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.233 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.234 Legitimation shall take place by a subsequent valid marriage between parents. The annulment of a voidable marriage shall not affect the legitimation.235 Legitimated children shall enjoy the same rights as legitimate children.236 The effects of legitimation shall retroact to the time of the child's birth.237 The legitimation of children who died before the celebration of the marriage shall benefit their descendants.238 Legitimation may be impugned only by those who are prejudiced in their rights, within five years from the time their cause of action accrues.239

230

supra Ibid. 232 Art. 175 233 Art. 176, as amended by R.A. 9255 234 Art. 177 235 Art. 178 236 Art. 179 237 Art. 180 238 Art. 181 239 Art. 182 231

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VIII. Adoption A. Domestic Adoption Act of 1998 (R.A. No. 8552)240 B. Inter- Country Adoption Act of 1995241 IX.

Support

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.242 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-blood243 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 194244, 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.245 In case of legitimate ascendants; descendants, whether legitimate or illegitimate; and brothers and sisters, whether legitimately or illegitimately related, only the separate property 240

see Reference Ibid. 242 Art. 194 243 Art. 195 244 supra 245 Art. 196 241

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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.246 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.247 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.248 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.249 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.250 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.

246

Art. 197 Art. 199 248 Art. 200 249 Art. 206 250 Art. 207 247

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Furthermore, contractual support shall be subject to adjustment whenever modification is necessary due to changes of circumstances manifestly beyond the contemplation of the parties.251 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.252 The amount shall be in proportion to the resources or means of the giver and to the necessities of the recipient.253 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.254 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. 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.255 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.256

251

Art. 208 Art. 198 253 Art. 201. 254 Art. 202 255 Art. 203 256 Art. 204 252

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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.257 X.

Parental Authority

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.258 Parental authority and responsibility may not be renounced or transferred except in the cases authorized by law.259 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.260 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 parental authority over the children, unless the court appoints another person to be the guardian of the person or property of the children.261 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.262 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.263

257

Art. 205 Art. 209 259 Art. 210 260 Art. 211 261 Art. 212 262 Art. 213 263 Art. 214 258

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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.264 The following persons shall exercise substitute parental authority over the child in the order indicated: (1) The surviving grandparent, as provided in Art. 214;265 (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.266 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.267 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.268 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.

264

Art. 215 supra 266 Art. 216 267 Art. 217 268 Art. 218 265

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All other cases not covered by this and the preceding articles shall be governed by the provisions of the Civil Code on quasi-delicts.269 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; (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.270 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.271 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.272 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 269

Art. 219 Art. 220 271 Art. 221 272 Art. 222 270

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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.273 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.274 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.275 273

Art. 223 Art. 224 275 Art. 225 274

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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.276 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.277 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.278 Parental authority also terminates:279 (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.280

276

Art. 226 Art. 227 278 Art. 228 279 unless subsequently revived by a final judgment 280 Art. 229 277

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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.281 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. 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.282 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.283 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.284 Include: Child Abuse Law (R.A. No. 7610)

281

Art. 230 Art. 231 283 Art. 232 284 Art. 233 282

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XI.

Emancipation285 Emancipation takes place by the attainment of majority.286 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.287 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.288 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.289 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.290 Claims for damages by either spouse, except costs of the proceedings, may be litigated only in a separate action.291 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

285

Arts. 234 and 236, Family Code as amended by R.A. No. 6809 which lowered the age of majority Unless otherwise provided, majority commences at the age of twenty-one years. 287 Art. 234, as amended by R.A. 6809 288 Art. 236 289 Art. 238 290 Art. 239 291 Art. 240 286

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regional trial court or its equivalent sitting in the place where either of the spouses resides.292 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.293 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.294 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.295 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.296 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.297 The judgment of the court shall be immediately final and executory.298 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.299

292

Art. 241 Art. 242 294 Art. 243. 295 Art. 244 296 Art. 245 297 Art. 246 298 Art. 247 299 Art. 248 293

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Petitions filed under Articles 223, 225 and 235300 of this Code involving parental authority shall be verified.301 Such petitions shall be verified and filed in the proper court of the place where the child resides.302 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.303 The rules in Chapter 2304 hereof shall also govern summary proceedings under this Chapter insofar as they are applicable.305 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.306 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 294.307 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.308 Every funeral shall be in keeping with the social position of the deceased.309 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.310

300

supra Art. 249 302 Art. 250 303 Art. 251 304 Separation in Fact 305 Art. 252 306 Art. 256 307 See Reference 308 Art. 305 309 Art. 306 310 Art. 307 301

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No human remains shall be retained, interred, disposed of or exhumed without the consent of the persons mentioned in articles 294 and 305.311 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.312 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.313 XV.

Use of Surnames

Legitimate and legitimated children shall principally use the surname of the father.314 An adopted child shall bear the surname of the adopter.315 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.316 Natural children by legal fiction shall principally employ the surname of the

317

father.

Illegitimate children referred to in article 287 shall bear the surname of the mother.318 Children conceived before the decree annulling a voidable marriage shall principally use the surname of the father.319 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

311

Art. 308; Art. 305, supra Art. 309 313 Art. 310 314 Art. 364 315 Art. 365 316 Art. 366 317 Art. 367 318 Art. 368 319 Art. 369 312

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(3) Her husband's full name, but prefixing a word indicating that she is his wife, such as "Mrs."320 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.321 When legal separation has been granted, the wife shall continue using her name and surname employed before the legal separation.322 A widow may use the deceased husband's surname as though he were still living, in accordance with article 370.323 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.324 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.325 No person can change his name or surname without judicial authority.326 Usurpation of a name and surname may be the subject of an action for damages and other relief.327 The unauthorized or unlawful use of another person's surname gives a right of action to the latter.328

320

Art. 370 Art. 371 322 Art. 372 323 Art. 373 324 Art. 374 325 Art. 375 326 Art. 376, amended by R.A. 9048, infra 327 Art. 377 328 Art. 378 321

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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.329 Except as provided in the preceding article, no person shall use different names and surnames.330 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.331 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.332 XVII. Civil Registrar Acts, events and judicial decrees concerning the civil status of persons shall be recorded in the civil register.333 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; 329

Art. 379 Art. 380 331 Art. 43, CC 332 Art. 41, FC 333 Art. 407 330

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(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.334 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.335 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.336 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.337 No entry in a civil register shall be changed or corrected, without a judicial order.338 All other matters pertaining to the registration of civil status shall be governed by special laws.339

334

Art. 408 Art. 409 336 Art. 410 337 Art. 411 338 Art. 412 339 Art. 413 335

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PROPERTY I.

Characteristics 1. Utility for the satisfaction of moral and economic wants 2. Susceptibility of appropriation 3. Individuality or substantivity340

II.

Classification341 Immovables or real342

Movables343

a) By nature – those which cannot be General Rule: All things which can be carried from place to place.344 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).345 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.346 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 an integral part of an immovable. c. Obligations and actions which have 340

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 341 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). 342 Art. 415 343 Art. 416 to 417 344 Pars. 1 & 8 345 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. 346 Pars. 2, 3 & 7

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for their object movables351 or demandable 2. Everything attached to an immovable sums.352 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.347 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.348 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.349 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.

347

Rex vinta Indirect utility 349 Direct utility 348

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d) By analogy - classified by express provision of law because it is regarded as united to the immovable property.350 1. Contracts for public works. 2. Servitudes. 3. Real rights over immovable property. III.

Ownership Ownership may be exercised over things or rights.353

The owner has the right to enjoy and dispose of a thing, without other limitations than those established by law.354 The owner has also a right of action against the holder and possessor of the thing in order to recover it. The owner or lawful possessor of a thing has the right to exclude any person from the enjoyment and disposal thereof. For this purpose, he may use such force as may be reasonably necessary to repel or prevent an actual or threatened unlawful physical invasion or usurpation of his property.355 Every owner may enclose or fence his land or tenements by means of walls, ditches, live or dead hedges, or by any other means without detriment to servitudes constituted thereon.356 The owner of a thing cannot make use thereof in such manner as to injure the rights of a third person.357 The owner of a thing has no right to prohibit the interference of another with the same, if the interference is necessary to avert an imminent danger and the threatened 351

corporeal or intangible These are really personal rights because they have a definite passive subject (e.g. intellectual property). 350 Par. 10 353 Art. 427 354 Art. 428 355 Art. 429 356 Art. 430 357 Art. 431 352

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damage, compared to the damage arising to the owner from the interference, is much greater. The owner may demand from the person benefited indemnity for the damage to him.358 Actual possession under claim of ownership raises disputable presumption of ownership. The true owner must resort to judicial process for the recovery of the property.359 In an action to recover, the property must be identified, and the plaintiff must rely on the strength of his title and not on the weakness of the defendant's claim.360 No person shall be deprived of his property except by competent authority and for public use and always upon payment of just compensation. Should this requirement be not first complied with, the courts shall protect and, in a proper case, restore the owner in his possession.361 When any property is condemned or seized by competent authority in the interest of health, safety or security, the owner thereof shall not be entitled to compensation, unless he can show that such condemnation or seizure is unjustified.362 The owner of a parcel of land is the owner of its surface and of everything under it, and he can construct thereon any works or make any plantations and excavations which he may deem proper, without detriment to servitudes and subject to special laws and ordinances. He cannot complain of the reasonable requirements of aerial navigation.363 Hidden treasure belongs to the owner of the land, building, or other property on which it is found.364 Nevertheless, when the discovery is made on the property of another, or of the State or any of its subdivisions, and by chance, one-half thereof shall be allowed to the finder. 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 of the arts, the State may acquire them at their just price, which shall be divided in conformity with the rule stated.

358

Art. 432 Art. 433 360 Art. 434 361 Art. 435 362 Art. 436 363 Art. 437 364 Art. 438 359

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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.365 IV.

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.366 To the owner belongs: (1) The natural fruits; (2) The industrial fruits; (3) The civil fruits.367 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.368 He who receives the fruits has the obligation to pay the expenses made by a third person in their production, gathering, and preservation.369 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.370 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, subject to the provisions of the following articles.371

365

Art. 439 Art. 440 367 Art. 441 368 Art. 442 369 Art. 443 370 Art. 444 371 Art. 445 366

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All works, sowing, and planting are presumed made by the owner and at his expense, unless the contrary is proved.372 The owner of the land who makes thereon, personally or through another, plantings, constructions or works with the materials of another, shall pay their value; and, if he acted in bad faith, he shall also be obliged to the reparation of damages. The owner of the materials shall have the right to remove them only in case he can do so without injury to the work constructed, or without the plantings, constructions or works being destroyed. However, if the landowner acted in bad faith, the owner of the materials may remove them in any event, with a right to be indemnified for damages.373 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 548, 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.374 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.375 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.376 In the cases of the two preceding articles, the landowner is entitled to damages from the builder, planter or sower.377 The builder, planter or sower in bad faith is entitled to reimbursement for the necessary expenses of preservation of the land.378

372

Art. 446 Art. 447. 374 Art. 448 375 Art. 449 376 Art. 450 377 Art. 451 378 Art. 452. 373

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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.379 When the landowner acted in bad faith and the builder, planter or sower proceeded in good faith, the provisions of article 447 shall apply.380 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.381 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. In the cases regulated in the preceding articles, good faith does not necessarily exclude negligence, which gives right to damages under article 2176.382 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.383 The owners of estates adjoining ponds or lagoons do not acquire the land left dry by the natural decrease of the waters, or lose that inundated by them in extraordinary floods.384 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 years.385 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

379

Art. 453 Art. 454 381 Art. 455 382 Art. 456 383 Art. 457 384 Art. 458 385 Art. 459 380

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months. If such owners claim them, they shall pay the expenses incurred in gathering them or putting them in a safe place.386 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.387 Whenever a river, changing its course by natural causes, opens a new bed through a private estate, this bed shall become of public dominion.388 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.389 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.390 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.391 Whenever two movable things belonging to different owners are, without bad faith, united in such a way that they form a single object, the owner of the principal thing acquires the accessory, indemnifying the former owner thereof for its value.392 The principal thing, as between two things incorporated, is deemed to be that to which the other has been united as an ornament, or for its use or perfection.393 If it cannot be determined by the rule given in the preceding article which of the two things incorporated is the principal one, the thing of the greater value shall be so considered, and as between two things of equal value, that of the greater volume. 386

Art. 460 Art. 461 388 Art. 462 389 Art. 463 390 Art. 464 391 Art. 465 392 Art. 466 393 Art. 467 387

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In painting and sculpture, writings, printed matter, engraving and lithographs, the board, metal, stone, canvas, paper or parchment shall be deemed the accessory thing.394 Whenever the things united can be separated without injury, their respective owners may demand their separation. Nevertheless, in case the thing united for the use, embellishment or perfection of the other, is much more precious than the principal thing, the owner of the former may demand its separation, even though the thing to which it has been incorporated may suffer some injury.395 Whenever the owner of the accessory thing has made the incorporation in bad faith, he shall lose the thing incorporated and shall have the obligation to indemnify the owner of the principal thing for the damages he may have suffered. If the one who has acted in bad faith is the owner of the principal thing, the owner of the accessory thing shall have a right to choose between the former paying him its value or that the thing belonging to him be separated, even though for this purpose it be necessary to destroy the principal thing; and in both cases, furthermore, there shall be indemnity for damages. If either one of the owners has made the incorporation with the knowledge and without the objection of the other, their respective rights shall be determined as though both acted in good faith.396 Whenever the owner of the material employed without his consent has a right to an indemnity, he may demand that this consist in the delivery of a thing equal in kind and value, and in all other respects, to that employed, or else in the price thereof, according to expert appraisal.397 If by the will of their owners two things of the same or different kinds are mixed, or if the mixture occurs by chance, and in the latter case the things are not separable without injury, each owner shall acquire a right proportional to the part belonging to him, bearing in mind the value of the things mixed or confused.398 If by the will of only one owner, but in good faith, two things of the same or different kinds are mixed or confused, the rights of the owners shall be determined by the provisions of the preceding article.

394

Art. 468 Art. 469 396 Art. 470 397 Art. 471 398 Art. 472 395

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If the one who caused the mixture or confusion acted in bad faith, he shall lose the thing belonging to him thus mixed or confused, besides being obliged to pay indemnity for the damages caused to the owner of the other thing with which his own was mixed.399 One who in good faith employs the material of another in whole or in part in order to make a thing of a different kind, shall appropriate the thing thus transformed as his own, indemnifying the owner of the material for its value. If the material is more precious than the transformed thing or is of more value, its owner may, at his option, appropriate the new thing to himself, after first paying indemnity for the value of the work, or demand indemnity for the material. If in the making of the thing bad faith intervened, the owner of the material shall have the right to appropriate the work to himself without paying anything to the maker, or to demand of the latter that he indemnify him for the value of the material and the damages he may have suffered. However, the owner of the material cannot appropriate the work in case the value of the latter, for artistic or scientific reasons, is considerably more than that of the material.400 In the preceding articles, sentimental value shall be duly appreciated.401 V. Quieting of Title to or Interest in and Removal or Prevention of Cloud over Title to or Interest in Real Property Whenever there is a cloud on title to real property or any interest therein, by reason of any instrument, record, claim, encumbrance or proceeding which is apparently valid or effective but is in truth and in fact invalid, ineffective, voidable, or unenforceable, and may be prejudicial to said title, an action may be brought to remove such cloud or to quiet the title. An action may also be brought to prevent a cloud from being cast upon title to real property or any interest therein.402 The plaintiff must have legal or equitable title to, or interest in the real property which is the subject matter of the action. He need not be in possession of said property.403 There may also be an action to quiet title or remove a cloud therefrom when the contract, instrument or other obligation has been extinguished or has terminated, or has been barred by extinctive prescription.404 399

Art. 473. Art. 474 401 Art. 475 402 Art. 476 403 Art. 477 400

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The 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 the plaintiff's benefit.405 VI.

Co-ownership

There is co-ownership whenever the ownership of an undivided thing or right belongs to different persons. In default of contracts, or of special provisions, co-ownership shall be governed by the provisions of this Title.406 The share of the co-owners, in the benefits as well as in the charges, shall be proportional to their respective interests. Any stipulation in a contract to the contrary shall be void. The portions belonging to the co-owners in the co-ownership shall be presumed equal, unless the contrary is proved.407 Each co-owner may use the thing owned in common, provided he does so in accordance with the purpose for which it is intended and in such a way as not to injure the interest of the co-ownership or prevent the other co-owners from using it according to their rights. The purpose of the co-ownership may be changed by agreement, express or implied.408 Any one of the co-owners may bring an action in ejectment.409 Each co-owner shall have a right to compel the other co-owners to contribute to the expenses of preservation of the thing or right owned in common and to the taxes. Any one of the latter may exempt himself from this obligation by renouncing so much of his undivided interest as may be equivalent to his share of the expenses and taxes. No such waiver shall be made if it is prejudicial to the co-ownership.410 Repairs for preservation may be made at the will of one of the co-owners, but he must, if practicable, first notify his co-owners of the necessity for such repairs. Expenses to

404

Art. 478 Art. 479 406 Art. 484 407 Art. 485 408 Art. 486 409 Art. 487 410 Art. 488 405

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improve or embellish the thing shall be decided upon by a majority as determined in Article 492.411 Whenever the different stories of a house belong to different owners, if the titles of ownership do not specify the terms under which they should contribute to the necessary expenses and there exists no agreement on the subject, the following rules shall be observed: (1) The main and party walls, the roof and the other things used in common, shall be preserved at the expense of all the owners in proportion to the value of the story belonging to each; (2) Each owner shall bear the cost of maintaining the floor of his story; the floor of the entrance, front door, common yard and sanitary works common to all, shall be maintained at the expense of all the owners pro rata; (3) The stairs from the entrance to the first story shall be maintained at the expense of all the owners pro rata, with the exception of the owner of the ground floor; the stairs from the first to the second story shall be preserved at the expense of all, except the owner of the ground floor and the owner of the first story; and so on successively.412 None of the co-owners shall, without the consent of the others, make alterations in the thing owned in common, even though benefits for all would result therefrom. However, if the withholding of the consent by one or more of the co-owners is clearly prejudicial to the common interest, the courts may afford adequate relief.413 For the administration and better enjoyment of the thing owned in common, the resolutions of the majority of the co-owners shall be binding. There shall be no majority unless the resolution is approved by the co-owners who represent the controlling interest in the object of the co-ownership. Should there be no majority, or should the resolution of the majority be seriously prejudicial to those interested in the property owned in common, the court, at the instance of an interested party, shall order such measures as it may deem proper, including the appointment of an administrator.

411

Art. 489 Art. 490 413 Art. 491 412

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Whenever a part of the thing belongs exclusively to one of the co-owners, and the remainder is owned in common, the preceding provision shall apply only to the part owned in common.414 Each co-owner shall have the full ownership of his part and of the fruits and benefits pertaining thereto, and he may therefore alienate, assign or mortgage it, and even substitute another person in its enjoyment, except when personal rights are involved. But the effect of the alienation or the mortgage, with respect to the co-owners, shall be limited to the portion which may be allotted to him in the division upon the termination of the coownership.415 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.416 Notwithstanding the provisions of the preceding article, the co-owners cannot demand a physical division of the thing owned in common, when to do so would render it unserviceable for the use for which it is intended. But the co-ownership may be terminated in accordance with Article 498.417 Partition may be made by agreement between the parties or by judicial proceedings. Partition shall be governed by the Rules of Court insofar as they are consistent with this Code.418 The creditors or assignees of the co-owners may take part in the division of the thing owned in common and object to its being effected without their concurrence. But they cannot impugn any partition already executed, unless there has been fraud, or in case 414

Art. 492 Art. 493 416 Art. 494 417 Art. 495 418 Art. 496 415

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it was made notwithstanding a formal opposition presented to prevent it, without prejudice to the right of the debtor or assignor to maintain its validity.419 Whenever the thing is essentially indivisible and the co-owners cannot agree that it be allotted to one of them who shall indemnify the others, it shall be sold and its proceeds distributed.420 The partition of a thing owned in common shall not prejudice third persons, who shall retain the rights of mortgage, servitude or any other real rights belonging to them before the division was made. Personal rights pertaining to third persons against the coownership shall also remain in force, notwithstanding the partition.421 Upon partition, there shall be a mutual accounting for benefits received and reimbursements for expenses made. Likewise, each co-owner shall pay for damages caused by reason of his negligence or fraud.422 Every co-owner shall, after partition, be liable for defects of title and quality of the portion assigned to each of the other co-owners.423 VII.

Possession Possession is the holding of a thing or the enjoyment of a right.424 Possession may be exercised in one's own name or in that of another.425

The possession of things or rights may be had in one of two concepts: either in the concept of owner, or in that of the holder of the thing or right to keep or enjoy it, the ownership pertaining to another person.426 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. He is deemed a possessor in bad faith who possesses in any case contrary to the foregoing.

419

Art. 497 Art. 498 421 Art. 499 422 Art. 500 423 Art. 501 424 Art. 523 425 Art. 524 426 Art. 525 420

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faith.

427

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.428 Possession acquired in good faith does not lose this character except in the case and from the moment facts exist which show that the possessor is not unaware that he possesses the thing improperly or wrongfully.429 It is presumed that possession continues to be enjoyed in the same character in which it was acquired, until the contrary is proved.430 Only things and rights which are susceptible of being appropriated may be the object of possession.431 Possession is acquired by the material occupation of a thing or the exercise of a right, or by the fact that it is subject to the action of our will, or by the proper acts and legal formalities established for acquiring such right.432 Possession may be acquired by the same person who is to enjoy it, by his legal representative, by his agent, or by any person without any power whatever: but in the last case, the possession shall not be considered as acquired until the person in whose name the act of possession was executed has ratified the same, without prejudice to the juridical consequences of negotiorum gestio in a proper case.433 The possession of hereditary property is deemed transmitted to the heir without interruption and from the moment of the death of the decedent, in case the inheritance is accepted. same.434

One who validly renounces an inheritance is deemed never to have possessed the

On who succeeds by hereditary title shall not suffer the consequences of the wrongful possession of the decedent, if it is not shown that he was aware of the flaws

427

Art. 526 Art. 527 429 Art. 528 430 Art. 529 431 Art. 530 432 Art. 531 433 Art. 532 434 Art. 533 428

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affecting it; but the effects of possession in good faith shall not benefit him except from the date of the death of the decedent.435 Minors and incapacitated persons may acquire the possession of things; but they need the assistance of their legal representatives in order to exercise the rights which from the possession arise in their favor.436 In no case may possession be acquired through force or intimidation as long as there is a possessor who objects thereto. He who believes that he has an action or a right to deprive another of the holding of a thing, must invoke the aid of the competent court, if the holder should refuse to deliver the thing.437 Acts merely tolerated, and those executed clandestinely and without the knowledge of the possessor of a thing, or by violence, do not affect possession.438 Possession as a fact cannot be recognized at the same time in two different personalities except in the cases of co-possession. Should a question arise regarding the fact of possession, the present possessor shall be preferred; if there are two possessors, the one longer in possession; if the dates of the possession are the same, the one who presents a title; and if all these conditions are equal, the thing shall be placed in judicial deposit pending determination of its possession or ownership through proper proceedings.439 Every possessor has a right to be respected in his possession; and should he be disturbed therein he shall be protected in or restored to said possession by the means established by the laws and the Rules of Court. A possessor deprived of his possession through forcible entry may within ten days from the filing of the complaint present a motion to secure from the competent court, in the action for forcible entry, a writ of preliminary mandatory injunction to restore him in his possession. The court shall decide the motion within thirty (30) days from the filing thereof.440 Only the possession acquired and enjoyed in the concept of owner can serve as a title for acquiring dominion.441 A possessor in the concept of owner has in his favor the legal presumption that he possesses with a just title and he cannot be obliged to show or prove it.442 435

Art. 534 Art. 535 437 Art. 536 438 Art. 537 439 Art. 538 440 Art. 539 441 Art. 540 436

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The possession of real property presumes that of the movables therein, so long as it is not shown or proved that they should be excluded.443 Each one of the participants of a thing possessed in common shall be deemed to have exclusively possessed the part which may be allotted to him upon the division thereof, for the entire period during which the co-possession lasted. Interruption in the possession of the whole or a part of a thing possessed in common shall be to the prejudice of all the possessors. However, in case of civil interruption, the Rules of Court shall apply.444 A possessor in good faith 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.445 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.446 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.447

442

Art. 541 Art. 542 444 Art. 543 445 Art. 544 446 Art. 545 447 Art. 546 443

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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.448 Expenses for pure luxury or mere pleasure shall not be refunded to the possessor in good faith; but he may remove the ornaments with which he has embellished the principal thing if it suffers no injury thereby, and if his successor in the possession does not prefer to refund the amount expended.449 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 546 and in Article 443. 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.450 The costs of litigation over the property shall be borne by every possessor.451 Improvements caused by nature or time shall always insure to the benefit of the person who has succeeded in recovering possession.452 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. A possessor in bad faith shall be liable for deterioration or loss in every case, even if caused by a fortuitous event.453 One who recovers possession shall not be obliged to pay for improvements which have ceased to exist at the time he takes possession of the thing.454 A present possessor who shows his possession at some previous time, is presumed to have held possession also during the intermediate period, in the absence of proof to the contrary.455 448

Art. 547 Art. 548 450 Art. 549 451 Art. 550 452 Art. 551 453 Art. 552 454 Art. 553 455 Art. 554 449

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A possessor may lose his possession: (1) By the abandonment of the thing; (2) By an assignment made to another either by onerous or gratuitous title; (3) By the destruction or total loss of the thing, or because it goes out of commerce; (4) By the possession of another, subject to the provisions of Article 537, if the new possession has lasted longer than one year. But the real right of possession is not lost till after the lapse of ten years.456 The possession of movables is not deemed lost so long as they remain under the control of the possessor, even though for the time being he may not know their whereabouts.457 The possession of immovables and of real rights is not deemed lost, or transferred for purposes of prescription to the prejudice of third persons, except in accordance with the provisions of the Mortgage Law and the Land Registration laws.458 Acts relating to possession, executed or agreed to by one who possesses a thing belonging to another as a mere holder to enjoy or keep it, in any character, do not bind or prejudice the owner, unless he gave said holder express authority to do such acts, or ratifies them subsequently.459 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.460 Wild animals are possessed only while they are under one's control; domesticated or tamed animals are considered domestic or tame if they retain the habit of returning to the premises of the possessor.461 456

Art. 555 Art. 556 458 Art. 557 459 Art. 558 460 Art. 559 461 Art. 560 457

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One who recovers, according to law, possession unjustly lost, shall be deemed for all purposes which may redound to his benefit, to have enjoyed it without interruption.462 VIII. Usufruct Usufruct gives a right to enjoy the property of another with the obligation of preserving its form and substance, unless the title constituting it or the law otherwise provides.463 Usufruct is constituted by law, by the will of private persons expressed in acts inter vivos or in a last will and testament, and by prescription.464 Usufruct may be constituted on the whole or a part of the fruits of the thing, in favor of one more persons, simultaneously or successively, and in every case from or to a certain day, purely or conditionally. It may also be constituted on a right, provided it is not strictly personal or intransmissible.465 The rights and obligations of the usufructuary shall be those provided in the title constituting the usufruct; in default of such title, or in case it is deficient, the provisions contained in the two following Chapters shall be observed.466 The usufructuary shall be entitled to all the natural, industrial and civil fruits of the property in usufruct. With respect to hidden treasure which may be found on the land or tenement, he shall be considered a stranger.467 Natural or industrial fruits growing at the time the usufruct begins, belong to the usufructuary. Those growing at the time the usufruct terminates, belong to the owner. In the preceding cases, the usufructuary, at the beginning of the usufruct, has no obligation to refund to the owner any expenses incurred; but the owner shall be obliged to reimburse at the termination of the usufruct, from the proceeds of the growing fruits, the ordinary expenses of cultivation, for seed, and other similar expenses incurred by the usufructuary. The provisions of this article shall not prejudice the rights of third persons, acquired either at the beginning or at the termination of the usufruct.468 462

Art. 561 Art. 562 464 Art. 563 465 Art. 564 466 Art. 565 467 Art. 566 463

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If the usufructuary has leased the lands or tenements given in usufruct, and the usufruct should expire before the termination of the lease, he or his heirs and successors shall receive only the proportionate share of the rent that must be paid by the lessee.469 Civil fruits are deemed to accrue daily, and belong to the usufructuary in proportion to the time the usufruct may last.470 Whenever a usufruct is constituted on the right to receive a rent or periodical pension, whether in money or in fruits, or in the interest on bonds or securities payable to bearer, each payment due shall be considered as the proceeds or fruits of such right. Whenever it consists in the enjoyment of benefits accruing from a participation in any industrial or commercial enterprise, the date of the distribution of which is not fixed, such benefits shall have the same character. In either case they shall be distributed as civil fruits, and shall be applied in the manner prescribed in the preceding article.471 The usufructuary shall have the right to enjoy any increase which the thing in usufruct may acquire through accession, the servitudes established in its favor, and, in general, all the benefits inherent therein.472 The usufructuary may personally enjoy the thing in usufruct, lease it to another, or alienate his right of usufruct, even by a gratuitous title; but all the contracts he may enter into as such usufructuary shall terminate upon the expiration of the usufruct, saving leases of rural lands, which shall be considered as subsisting during the agricultural year.473 Whenever the usufruct includes things which, without being consumed, gradually deteriorate through wear and tear, the usufructuary shall have the right to make use thereof in accordance with the purpose for which they are intended, and shall not be obliged to return them at the termination of the usufruct except in their condition at that time; but he shall be obliged to indemnify the owner for any deterioration they may have suffered by reason of his fraud or negligence.474 Whenever the usufruct includes things which cannot be used without being consumed, the usufructuary shall have the right to make use of them under the obligation of paying their appraised value at the termination of the usufruct, if they were appraised 468

Art. 567 Art. 568 470 Art. 569 471 Art. 570 472 Art. 571 473 Art. 572 474 Art. 573 469

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when delivered. In case they were not appraised, he shall have the right to return at the same quantity and quality, or pay their current price at the time the usufruct ceases.475 The usufructuary of fruit-bearing trees and shrubs may make use of the dead trunks, and even of those cut off or uprooted by accident, under the obligation to replace them with new plants.476 If in consequence of a calamity or extraordinary event, the trees or shrubs shall have disappeared in such considerable number that it would not be possible or it would be too burdensome to replace them, the usufructuary may leave the dead, fallen or uprooted trunks at the disposal of the owner, and demand that the latter remove them and clear the land.477 The usufructuary of woodland may enjoy all the benefits which it may produce according to its nature. If the woodland is a copse or consists of timber for building, the usufructuary may do such ordinary cutting or felling as the owner was in the habit of doing, and in default of this, he may do so in accordance with the custom of the place, as to the manner, amount and season. In any case the felling or cutting of trees shall be made in such manner as not to prejudice the preservation of the land. In nurseries, the usufructuary may make the necessary thinnings in order that the remaining trees may properly grow. With the exception of the provisions of the preceding paragraphs, the usufructuary cannot cut down trees unless it be to restore or improve some of the things in usufruct, and in such case shall first inform the owner of the necessity for the work.478 The usufructuary of an action to recover real property or a real right, or any movable property, has the right to bring the action and to oblige the owner thereof to give him the authority for this purpose and to furnish him whatever proof he may have. If in consequence of the enforcement of the action he acquires the thing claimed, the usufruct shall be limited to the fruits, the dominion remaining with the owner.479 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, 475

Art. 574 Art. 575 477 Art. 576 478 Art. 577 479 Art. 578 476

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however, remove such improvements, should it be possible to do so without damage to the property.480 The usufructuary may set off the improvements he may have made on the property against any damage to the same. 481 The owner of property the usufruct of which is held by another, may alienate it, but he cannot alter its form or substance, or do anything thereon which may be prejudicial to the usufructuary.482 The usufructuary of a part of a thing held in common shall exercise all the rights pertaining to the owner thereof with respect to the administration and the collection of fruits or interest. Should the co-ownership cease by reason of the division of the thing held in common, the usufruct of the part allotted to the co-owner shall belong to the usufructuary.483 The usufructuary, before entering upon the enjoyment of the property, is obliged: (1) To make, after notice to the owner or his legitimate representative, an inventory of all the property, which shall contain an appraisal of the movables and a description of the condition of the immovables; (2) To give security, binding himself to fulfill the obligations imposed upon him in accordance with this Chapter.484 The provisions of No. 2 of the preceding article shall not apply to the donor who has reserved the usufruct of the property donated, or to the parents who are usufructuaries of their children's property, except when the parents contract a second marriage.485 The usufructuary, whatever may be the title of the usufruct, may be excused from the obligation of making an inventory or of giving security, when no one will be injured thereby.486 Should the usufructuary fail to give security in the cases in which he is bound to give it, the owner may demand that the immovables be placed under administration, that the movables be sold, that the public bonds, instruments of credit payable to order or to bearer be converted into registered certificates or deposited in a bank or public institution, 480

Art. 579 Art. 580 482 Art. 581 483 Art. 582 484 Art. 583 485 Art. 584 486 Art. 585 481

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and that the capital or sums in cash and the proceeds of the sale of the movable property be invested in safe securities. The interest on the proceeds of the sale of the movables and that on public securities and bonds, and the proceeds of the property placed under administration, shall belong to the usufructuary. Furthermore, the owner may, if he so prefers, until the usufructuary gives security or is excused from so doing, retain in his possession the property in usufruct as administrator, subject to the obligation to deliver to the usufructuary the net proceeds thereof, after deducting the sums which may be agreed upon or judicially allowed him for such administration.487 If the usufructuary who has not given security claims, by virtue of a promise under oath, the delivery of the furniture necessary for his use, and that he and his family be allowed to live in a house included in the usufruct, the court may grant this petition, after due consideration of the facts of the case. The same rule shall be observed with respect to implements, tools and other movable property necessary for an industry or vocation in which he is engaged. If the owner does not wish that certain articles be sold because of their artistic worth or because they have a sentimental value, he may demand their delivery to him upon his giving security for the payment of the legal interest on their appraised value.488 After the security has been given by the usufructuary, he shall have a right to all the proceeds and benefits from the day on which, in accordance with the title constituting the usufruct, he should have commenced to receive them.489 The usufructuary shall take care of the things given in usufruct as a good father of a family.490 A usufructuary who alienates or leases his right of usufruct shall answer for any damage which the things in usufruct may suffer through the fault or negligence of the person who substitutes him.491 If the usufruct be constituted on a flock or herd of livestock, the usufructuary shall be obliged to replace with the young thereof the animals that die each year from natural causes, or are lost due to the rapacity of beasts of prey. 487

Art. 586 Art. 587 489 Art. 588 490 Art. 589 491 Art. 590 488

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If the animals on which the usufruct is constituted should all perish, without the fault of the usufructuary, on account of some contagious disease or any other uncommon event, the usufructuary shall fulfill his obligation by delivering to the owner the remains which may have been saved from the misfortune. Should the herd or flock perish in part, also by accident and without the fault of the usufructuary, the usufruct shall continue on the part saved. Should the usufruct be on sterile animals, it shall be considered, with respect to its effects, as though constituted on fungible things.492 The usufructuary is obliged to make the ordinary repairs needed by the thing given in usufruct. By ordinary repairs are understood such as are required by the wear and tear due to the natural use of the thing and are indispensable for its preservation. Should the usufructuary fail to make them after demand by the owner, the latter may make them at the expense of the usufructuary.493 Extraordinary repairs shall be at the expense of the owner. The usufructuary is obliged to notify the owner when the need for such repairs is urgent.494 If the owner should make the extraordinary repairs, he shall have a right to demand of the usufructuary the legal interest on the amount expended for the time that the usufruct lasts. Should he not make them when they are indispensable for the preservation of the thing, the usufructuary may make them; but he shall have a right to demand of the owner, at the termination of the usufruct, the increase in value which the immovable may have acquired by reason of the repairs.495 The owner may construct any works and make any improvements of which the immovable in usufruct is susceptible, or make new plantings thereon if it be rural, provided that such acts do not cause a diminution in the value of the usufruct or prejudice the right of the usufructuary.496 The payment of annual charges and taxes and of those considered as a lien on the fruits, shall be at the expense of the usufructuary for all the time that the usufruct lasts.497

492

Art. 591 Art. 592 494 Art. 593 495 Art. 594 496 Art. 595 497 Art. 596 493

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The taxes which, during the usufruct, may be imposed directly on the capital, shall be at the expense of the owner. If the latter has paid them, the usufructuary shall pay him the proper interest on the sums which may have been paid in that character; and, if the said sums have been advanced by the usufructuary, he shall recover the amount thereof at the termination of the usufruct.498 If the usufruct be constituted on the whole of a patrimony, and if at the time of its constitution the owner has debts, the provisions of Articles 758 and 759 relating to donations shall be applied, both with respect to the maintenance of the usufruct and to the obligation of the usufructuary to pay such debts. The same rule shall be applied in case the owner is obliged, at the time the usufruct is constituted, to make periodical payments, even if there should be no known capital.499 The usufructuary may claim any matured credits which form a part of the usufruct if he has given or gives the proper security. If he has been excused from giving security or has been able to give it, or if that given is not sufficient, he shall need the authorization of the owner, or of the court in default thereof, to collect such credits. The usufructuary who has given security may use the capital he has collected in any manner he may deem proper. The usufructuary who has not given security shall invest the said capital at interest upon agreement with the owner; in default of such agreement, with judicial authorization; and, in every case, with security sufficient to preserve the integrity of the capital in usufruct.500 The usufructuary of a mortgaged immovable shall not be obliged to pay the debt for the security of which the mortgage was constituted. Should the immovable be attached or sold judicially for the payment of the debt, the owner shall be liable to the usufructuary for whatever the latter may lose by reason thereof.501 The usufructuary shall be obliged to notify the owner of any act of a third person, of which he may have knowledge, that may be prejudicial to the rights of ownership, and he shall be liable should he not do so, for damages, as if they had been caused through his own fault.502

498

Art. 597 Art. 598 500 Art. 599 501 Art. 600 502 Art. 601 499

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be

The expenses, costs and liabilities in suits brought with regard to the usufruct shall borne by the usufructuary.503 Usufruct is extinguished: (1) By the death of the usufructuary, unless a contrary intention clearly appears;

(2) By the expiration of the period for which it was constituted, or by the fulfillment of any resolutory condition provided in the title creating the usufruct; (3) By merger of the usufruct and ownership in the same person; (4) By renunciation of the usufructuary; (5) By the total loss of the thing in usufruct; (6) By the termination of the right of the person constituting the usufruct; (7) By prescription.504 If the thing given in usufruct should be lost only in part, the right shall continue on the remaining part.505 Usufruct cannot be constituted in favor of a town, corporation, or association for more than fifty years. If it has been constituted, and before the expiration of such period the town is abandoned, or the corporation or association is dissolved, the usufruct shall be extinguished by reason thereof.506 A usufruct granted for the time that may elapse before a third person attains a certain age, shall subsist for the number of years specified, even if the third person should die before the period expires, unless such usufruct has been expressly granted only in consideration of the existence of such person.507 If the usufruct is constituted on immovable property of which a building forms part, and the latter should be destroyed in any manner whatsoever, the usufructuary shall have a right to make use of the land and the materials. The same rule shall be applied if the usufruct is constituted on a building only and the same should be destroyed. But in such a case, if the owner should wish to construct 503

Art. 602 Art. 603 505 Art. 604 506 Art. 605 507 Art. 606 504

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another building, he shall have a right to occupy the land and to make use of the materials, being obliged to pay to the usufructuary, during the continuance of the usufruct, the interest upon the sum equivalent to the value of the land and of the materials.508 If the usufructuary shares with the owner the insurance of the tenement given in usufruct, the former shall, in case of loss, continue in the enjoyment of the new building, should one be constructed, or shall receive the interest on the insurance indemnity if the owner does not wish to rebuild. Should the usufructuary have refused to contribute to the insurance, the owner insuring the tenement alone, the latter shall receive the full amount of the insurance indemnity in case of loss, saving always the right granted to the usufructuary in the preceding article.509 Should the thing in usufruct be expropriated for public use, the owner shall be obliged either to replace it with another thing of the same value and of similar conditions, or to pay the usufructuary the legal interest on the amount of the indemnity for the whole period of the usufruct. If the owner chooses the latter alternative, he shall give security for the payment of the interest.510 A usufruct is not extinguished by bad use of the thing in usufruct; but if the abuse should cause considerable injury to the owner, the latter may demand that the thing be delivered to him, binding himself to pay annually to the usufructuary the net proceeds of the same, after deducting the expenses and the compensation which may be allowed him for its administration.511 A usufruct constituted in favor of several persons living at the time of its constitution shall not be extinguished until death of the last survivor.512 Upon the termination of the usufruct, the thing in usufruct shall be delivered to the owner, without prejudice to the right of retention pertaining to the usufructuary or his heirs for taxes and extraordinary expenses which should be reimbursed. After the delivery has been made, the security or mortgage shall be cancelled.513

508

Art. 607 Art. 608 510 Art. 609 511 Art. 610 512 Art. 611 513 Art. 612. 509

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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.514 Servitudes may also be established for the benefit of a community, or of one or more persons to whom the encumbered estate does not belong.515 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. 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.516 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.517 Easements are inseparable from the estate to which they actively or passively

518

belong.

Easements are indivisible. If the servient estate is divided between two or more persons, the easement is not modified, and each of them must bear it on the part which corresponds to him.

514

Art. 613 Art. 614 516 Art. 615 517 Art. 616 518 Art. 617 515

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If it is the dominant estate that is divided between two or more persons, each of them may use the easement in its entirety, without changing the place of its use, or making it more burdensome in any other way.519 are

Easements are established either by law or by the will of the owners. The former called legal and the latter voluntary easements.520

Continuous and apparent easements are acquired either by virtue of a title or by prescription of ten years.521 In order to acquire by prescription the easements referred to in the preceding article, 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.522 Continuous nonapparent easements, and discontinuous ones, whether apparent or not, may be acquired only by virtue of a title.523 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.524 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.525 Upon the establishment of an easement, all the rights necessary for its use are considered granted.526

519

Art. 618 Art. 619 521 Art. 620 522 Art. 621 523 Art. 622 524 Art. 623 525 Art. 624 526 Art. 625 520

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The owner of the dominant estate cannot use the easement except for the benefit of the immovable originally contemplated. Neither can he exercise the easement in any other manner than that previously established.527 Easements are extinguished: (1) By merger in the same person of the ownership of the dominant and servient estates; (2) By nonuser for ten years; with respect to discontinuous easements, this period shall be computed from the day on which they ceased to be used; and, with respect to continuous easements, from the day on which an act contrary to the same took place; (3) When either or both of the estates fall into such condition that the easement cannot be used; but it shall revive if the subsequent condition of the estates or either of them should again permit its use, unless when the use becomes possible, sufficient time for prescription has elapsed, in accordance with the provisions of the preceding number; (4) By the expiration of the term or the fulfillment of the condition, if the easement is temporary or conditional; (5) By the renunciation of the owner of the dominant estate; (6) By the redemption agreed upon between the owners of the dominant and servient estates.528 The form or manner of using the easement may prescribe as the easement itself, and in the same way.529 If the dominant estate belongs to several persons in common, the use of the easement by any one of them prevents prescription with respect to the others.530 Easements imposed by law have for their object either public use or the interest of private persons.531 All matters concerning easements established for public or communal use shall be governed by the special laws and regulations relating thereto, and, in the absence thereof, by the provisions of this Title.532 527

Art. 626 Art. 631 529 Art. 632 530 Art. 633 531 Art. 634 532 Art. 635 528

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Easements established by law in the interest of private persons or for private use shall be governed by the provisions of this Title, without prejudice to the provisions of general or local laws and ordinances for the general welfare. These easements may be modified by agreement of the interested parties, whenever the law does not prohibit it or no injury is suffered by a third person.533 Lower estates are obliged to receive the waters which naturally and without the intervention of man descend from the higher estates, as well as the stones or earth which they carry with them. The owner of the lower estate cannot construct works which will impede this easement; neither can the owner of the higher estate make works which will increase the burden.534 The banks of rivers and streams, even in case they are of private ownership, are subject throughout their entire length and within a zone of three meters along their margins, to the easement of public use in the general interest of navigation, floatage, fishing and salvage. Estates adjoining the banks of navigable or floatable rivers are, furthermore, subject to the easement of towpath for the exclusive service of river navigation and floatage. If it be necessary for such purpose to occupy lands of private ownership, the proper indemnity shall first be paid.535 Whenever for the diversion or taking of water from a river or brook, or for the use of any other continuous or discontinuous stream, it should be necessary to build a dam, and the person who is to construct it is not the owner of the banks, or lands which must support it, he may establish the easement of abutment of a dam, after payment of the proper indemnity.536 Compulsory easements for drawing water or for watering animals can be imposed only for reasons of public use in favor of a town or village, after payment of the proper indemnity.537 Easements for drawing water and for watering animals carry with them the obligation of the owners of the servient estates to allow passage to persons and animals to 533

Art. 636 Art. 637 535 Art. 638 536 Art. 639 537 Art. 640 534

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the place where such easements are to be used, and the indemnity shall include this service.538 Any person who may wish to use upon his own estate any water of which he can dispose shall have the right to make it flow through the intervening estates, with the obligation to indemnify their owners, as well as the owners of the lower estates upon which the waters may filter or descend.539 One desiring to make use of the right granted in the preceding article is obliged: (1) To prove that he can dispose of the water and that it is sufficient for the use for which it is intended; (2) To show that the proposed right of way is the most convenient and the least onerous to third persons; (3) To indemnify the owner of the servient estate in the manner determined by the laws and regulations.540 The easement of aqueduct for private interest cannot be imposed on buildings, courtyards, annexes, or outhouses, or on orchards or gardens already existing.541 The easement of aqueduct does not prevent the owner of the servient estate from closing or fencing it, or from building over the aqueduct in such manner as not to cause the latter any damage, or render necessary repairs and cleanings impossible.542 For legal purposes, the easement of aqueduct shall be considered as continuous and apparent, even though the flow of the water may not be continuous, or its use depends upon the needs of the dominant estate, or upon a schedule of alternate days or hours.543 One who for the purpose of irrigating or improving his estate, has to construct a stop lock or sluice gate in the bed of the stream from which the water is to be taken, may demand that the owners of the banks permit its construction, after payment of damages, including those caused by the new easement to such owners and to the other irrigators.544 The establishment, extent, form and conditions of the servitudes of waters, to which this section refers, shall be governed by the special laws relating thereto insofar as no 538

Art. 641 Art. 642 540 Art. 643 541 Art. 644 542 Art. 645 543 Art. 646. 544 Art. 647 539

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provision

therefor

is

made

in

this

Code.545

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.546 The easement of right of way shall be established at the point least prejudicial to the servient estate, and, insofar as consistent with this rule, where the distance from the dominant estate to a public highway may be the shortest.547 The width of the easement of right of way shall be that which is sufficient for the needs of the dominant estate, and may accordingly be changed from time to time.548 Whenever a piece of land acquired by sale, exchange or partition, is surrounded by other estates of the vendor, exchanger, or co-owner, he shall be obliged to grant a right of way without indemnity. In case of a simple donation, the donor shall be indemnified by the donee for the establishment of the right of way.549 In the case of the preceding article, if it is the land of the grantor that becomes isolated, he may demand a right of way after paying a indemnity. However, the donor shall not be liable for indemnity.550

545

Art. 648 Art. 649 547 Art. 650 548 Art. 651 549 Art. 652 550 Art. 653 546

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If the right of way is permanent, the necessary repairs shall be made by the owner of the dominant estate. A proportionate share of the taxes shall be reimbursed by said owner to the proprietor of the servient estate.551 If the right of way granted to a surrounded estate ceases to be necessary because its owner has joined it to another abutting on a public road, the owner of the servient estate may demand that the easement be extinguished, returning what he may have received by way of indemnity. The interest on the indemnity shall be deemed to be in payment of rent for the use of the easement. The same rule shall be applied in case a new road is opened giving access to the isolated estate. In both cases, the public highway must substantially meet the needs of the dominant estate in order that the easement may be extinguished.552 If it be indispensable for the construction, repair, improvement, alteration or beautification of a building, to carry materials through the estate of another, or to raise therein scaffolding or other objects necessary for the work, the owner of such estate shall be obliged to permit the act, after receiving payment of the proper indemnity for the damage caused him.553 Easements of the right of way for the passage of livestock known as animal path, animal trail or any other, and those for watering places, resting places and animal folds, shall be governed by the ordinances and regulations relating thereto, and, in the absence thereof, by the usages and customs of the place. Without prejudice to rights legally acquired, the animal path shall not exceed in any case the width of 75 meters, and the animal trail that of 37 meters and 50 centimeters. Whenever it is necessary to establish a compulsory easement of the right of way or for a watering place for animals, the provisions of this Section and those of Articles 640 and 641 shall be observed. In this case the width shall not exceed 10 meters.554 The easement of party wall shall be governed by the provisions of this Title, by the local ordinances and customs insofar as they do not conflict with the same, and by the rules of co-ownership.555

551

Art. 654 Art. 655 553 Art. 656 554 Art. 657 555 Art. 658 552

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The existence of an easement of party wall is presumed, unless there is a title, or exterior sign, or proof to the contrary: (1) In dividing walls of adjoining buildings up to the point of common elevation; (2) In dividing walls of gardens or yards situated in cities, towns, or in rural communities; (3) In fences, walls and live hedges dividing rural lands.556 It is understood that there is an exterior sign, contrary to the easement of party wall: (1) Whenever in the dividing wall of buildings there is a window or opening; (2) Whenever the dividing wall is, on one side, straight and plumb on all its facement, and on the other, it has similar conditions on the upper part, but the lower part slants or projects outward; (3) Whenever the entire wall is built within the boundaries of one of the estates; (4) Whenever the dividing wall bears the burden of the binding beams, floors and roof frame of one of the buildings, but not those of the others; (5) Whenever the dividing wall between courtyards, gardens, and tenements is constructed in such a way that the coping sheds the water upon only one of the estates; (6) Whenever the dividing wall, being built of masonry, has stepping stones, which at certain intervals project from the surface on one side only, but not on the other; (7) Whenever lands inclosed by fences or live hedges adjoin others which are not inclosed. In all these cases, the ownership of the walls, fences or hedges shall be deemed to belong exclusively to the owner of the property or tenement which has in its favor the presumption based on any one of these signs.557 Ditches or drains opened between two estates are also presumed as common to both, if there is no title or sign showing the contrary.

556 557

Art. 659 Art. 660

100

There is a sign contrary to the part-ownership whenever the earth or dirt removed to open the ditch or to clean it is only on one side thereof, in which case the ownership of the ditch shall belong exclusively to the owner of the land having this exterior sign in its favor.558 The cost of repairs and construction of party walls and the maintenance of fences, live hedges, ditches, and drains owned in common, shall be borne by all the owners of the lands or tenements having the party wall in their favor, in proportion to the right of each. Nevertheless, any owner may exempt himself from contributing to this charge by renouncing his part-ownership, except when the party wall supports a building belonging to him.559 If the owner of a building, supported by a party wall desires to demolish the building, he may also renounce his part-ownership of the wall, but the cost of all repairs and work necessary to prevent any damage which the demolition may cause to the party wall, on this occasion only, shall be borne by him.560 Every owner may increase the height of the party wall, doing at his own expense and paying for any damage which may be caused by the work, even though such damage be temporary. The expenses of maintaining the wall in the part newly raised or deepened at its foundation shall also be paid for by him; and, in addition, the indemnity for the increased expenses which may be necessary for the preservation of the party wall by reason of the greater height or depth which has been given it. If the party wall cannot bear the increased height, the owner desiring to raise it shall be obliged to reconstruct it at his own expense and, if for this purpose it be necessary to make it thicker, he shall give the space required from his own land.561 The other owners who have not contributed in giving increased height, depth or thickness to the wall may, nevertheless, acquire the right of part-ownership therein, by paying proportionally the value of the work at the time of the acquisition and of the land used for its increased thickness.562 Every part-owner of a party wall may use it in proportion to the right he may have in the co-ownership, without interfering with the common and respective uses by the other

558

Art. 661 Art. 662 560 Art. 663 561 Art. 664 562 Art. 665 559

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co-owners.563 No part-owner may, without the consent of the others, open through the party wall any window or aperture of any kind.564 The period of prescription for the acquisition of an easement of light and view shall be counted: (1) From the time of the opening of the window, if it is through a party wall; or (2) From the time of the formal prohibition upon the proprietor of the adjoining land or tenement, if the window is through a wall on the dominant estate.565 When the distances in Article 670566 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. 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.567 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.568

563

Art. 666 Art. 667 565 Art. 668 566 infra 567 Art. 669. 568 Art. 670 564

102

The distance referred to in the preceding article 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.569 The provisions of Article 670 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. Any stipulation permitting distances less than those prescribed in Article 670 is void.571 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.572 The owner of a tenement or piece of land, the usufruct of which belongs to another, may impose thereon, without the consent of the usufructuary, any servitudes which will not injure the right of usufruct.573 Whenever the naked ownership of a tenement or piece of land belongs to one person and the beneficial ownership to another, no perpetual voluntary easement may be established thereon without the consent of both owners.574 In order to impose an easement on an undivided tenement, or piece of land, the consent of all the co-owners shall be required. The consent given by some only, must be held in abeyance until the last one of all the co-owners shall have expressed his conformity. But the consent given by one of the co-owners separately from the others shall bind the grantor and his successors not to prevent the exercise of the right granted.575

569

Art. 671 Art. 672 571 Art. 673 572 Art. 688 573 Art. 689 574 Art. 690 575 Art. 691 570

103

The title and, in a proper case, the possession of an easement acquired by prescription shall determine the rights of the dominant estate and the obligations of the servient estate. In default thereof, the easement shall be governed by such provisions of this Title as are applicable thereto.576 If the owner of the servient estate should have bound himself, upon the establishment of the easement, to bear the cost of the work required for the use and preservation thereof, he may free himself from this obligation by renouncing his property to the owner of the dominant estate.577 X.

Nuisance

A nuisance is any act, omission, establishment, business, condition of property, or anything else which: (1) Injures or endangers the health or safety of others; or (2) Annoys or offends the senses; or (3) Shocks, defies or disregards decency or morality; or (4) Obstructs or interferes with the free passage of any public highway or street, or any body of water; or (5) Hinders or impairs the use of property.578 Nuisance is either public or private. A public nuisance affects a community or neighborhood or any considerable number of persons, although the extent of the annoyance, danger or damage upon individuals may be unequal. A private nuisance is one that is not included in the foregoing definition.579 Every successive owner or possessor of property who fails or refuses to abate a nuisance in that property started by a former owner or possessor is liable therefor in the same manner as the one who created it.580 The abatement of a nuisance does not preclude the right of any person injured to recover damages for its past existence.581

576

Art. 692 Art. 693 578 Art. 694 579 Art. 695. 580 Art. 696 581 Art. 697 577

104

Lapse of time cannot legalize any nuisance, whether public or private.582 The remedies against a public nuisance are: (1) A prosecution under the Penal Code or any local ordinance: or (2) A civil action; or (3) Abatement, without judicial proceedings.583 The district health officer shall take care that one or all of the remedies against a public nuisance are availed of.584 If a civil action is brought by reason of the maintenance of a public nuisance, such action shall be commenced by the city or municipal mayor.585 The district health officer shall determine whether or not abatement, without judicial proceedings, is the best remedy against a public nuisance.586 A private person may file an action on account of a public nuisance, if it is specially injurious to himself.587 Any private person may abate a public nuisance which is specially injurious to him by removing, or if necessary, by destroying the thing which constitutes the same, without committing a breach of the peace, or doing unnecessary injury. But it is necessary: (1) That demand be first made upon the owner or possessor of the property to abate the nuisance; (2) That such demand has been rejected; (3) That the abatement be approved by the district health officer and executed with the assistance of the local police; and (4) That the value of the destruction does not exceed three thousand pesos.588

582

Art. 698 Art. 699 584 Art. 700 585 Art. 701 586 Art. 702 587 Art. 703 588 Art. 704 583

105

The remedies against a private nuisance are: (1) A civil action; or (2) Abatement, without judicial proceedings.589 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.590 A private person or a public official extrajudicially abating a nuisance shall be liable for damages: (1) If he causes unnecessary injury; or (2) If an alleged nuisance is later declared by the courts to be not a real nuisance. 591 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.592 The ownership of a piece of land cannot be acquired by occupation.593 Things appropriable by nature which are without an owner594 are acquired by occupation.595

589

Art. 705 Art. 706 591 Art. 707 592 Art. 712 593 Art. 714 594 such as animals that are the object of hunting and fishing, hidden treasure and abandoned movables 595 Art. 713 590

106

PRESCRIPTION I. Definition By prescription, one acquires ownership and other real rights through the lapse of time in the manner and under the conditions laid down by law. In the same way, rights and conditions are lost by prescription.596 II. No prescription applicable Movables possessed through a crime can never be acquired through prescription by the offender.597 III. Prescription or limitation of actions Actions prescribe by the mere lapse of time fixed by law.598 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 1133.599 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.600 A mortgage action prescribes after ten years.601 The following rights, among others specified elsewhere in this Code, are not extinguished by prescription: (1) To demand a right of way, regulated in Article 649; (2) To bring an action to abate a public or private nuisance.602

596

Art. 1106 Art. 1133 598 Art. 1139 599 Art. 1140 600 Art. 1141 601 Art. 1142 602 Art. 1143 597

107

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.603 The following actions must be commenced within six years: (1) Upon an oral contract; (2) Upon a quasi-contract.604 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.605 The following actions must be filed within one year: (1) For forcible entry and detainer; (2) For defamation.606 The limitations of action mentioned in Articles 1140 to 1142, and 1144 to 1147 607 are without prejudice to those specified in other parts of this Code, in the Code of Commerce, and in special laws.608 All other actions whose periods are not fixed in this Code or in other laws must be brought within five years from the time the right of action accrues.609 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.610 603

Art. 1144 Art. 1145 605 Art. 1146, as amended by PD No. 1755, Dec. 24, 1980 606 Art. 1147 607 supra 608 Art. 1148 609 Art. 1149. 610 Art. 1150 604

108

The time for the prescription of actions which have for their object the enforcement of obligations to pay principal with interest or annuity runs from the last payment of the annuity or of the interest.611 The period for prescription of actions to demand the fulfillment of obligation declared by a judgment commences from the time the judgment became final.612 The period for prescription of actions to demand accounting runs from the day the persons who should render the same cease in their functions. The period for the action arising from the result of the accounting runs from the date when said result was recognized by agreement of the interested parties.613 The period during which the obligee was prevented by a fortuitous event from enforcing his right is not reckoned against him.614 The prescription of actions is interrupted when they 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.615 OBLIGATIONS I.

Definition

A juridical necessity to give, to do or not to do,616 one impressed with the character of enforceability. II.

Elements of an Obligation 1. Active subject617

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

2. Passive subject618

He who has the duty of giving,

611

Art. 1151 Art. 1152 613 Art. 1153 614 Art. 1154 615 Art. 1155 616 Art. 1156 617 obligee or creditor 618 obligor or debtor 612

109

doing or not doing;

III.

3. Object or prestation619

May consist of giving a thing, or doing or not doing a certain act620and

4. Efficient cause621

The reason why the obligation exists

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

619

the subject matter of the obligation 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 621 vinculum or juridical tie 620

110

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.622 c. W/ a term623 -

2. Plurality of objects

a. Single

3. Plurality of subjects

b. Alternative - where the debtor must perform any of the prestations624 c. Facultative - where only one thing is due but the debtor has reserved the right to substitute it w/ another625 d. Joint - one in w/c each of the debtors is liable only for a proportionate part of the debt or

622

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. 623 see Reference 624 The characteristic of alternative obligations is that, several objects being due, the fulfillment of one is sufficient (Tolentino) 625 Art. 1206

111

each creditor is entitled only to a proportionate part of the credit.626 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. b. Indivisible - one that must be performed in one act.627

5. Sanctions for Breach

a. Simple

626

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.) 627 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.

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b. W/ a penal clause - an accessory undertaking to assume greater liability in case of breach.628

V.

Sources of Obligations Obligations arise from: (1) Law; (2) Contracts; (3) Quasi-contracts; (4) Acts or omissions punished by law; and (5) Quasi-delicts.629 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.”630 Natural Obligations:631 They are real obligations to which the law denies an action, but which the debtor may perform voluntarily.632

628

The purpose is to strengthen the coercive force of the obligation. When a penal clause is present, damages do not have to be proved. 629 Art. 1157. 630 Nolledo, Jose N., The Philippine Law on Obligations and Contracts Explained, 1980 Ed., p. 2 631 a. Based not on positive law but on equity and natural law b. Do not grant such right of action to enforce their performance 632 Examples of natural obligations enumerated under the Civil Code: 1. Performance after the civil obligation has prescribed; 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.

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Extra-contractual Obligations:633 1. Quasi-contract634 - 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 management635 b. Solutio indebiti - undue payment 636 2. Quasi-delict/torts637 - 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.638 VI.

Nature and Effect of Obligations

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.639 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.640

633

Arts. 2142 to 2194 obligation ex quasi-contractu 635 This takes place when a person voluntarily takes charge of another’s abandoned business or property without the owner’s authority 636 This takes place when something is received when there is no right to demand it, and it was unduly delivered thru mistake 637 obligation ex quasi-delicto or ex quasi maleficio 638 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 ) 639 Art. 1163 640 Art. 1164 634

114

When what is to be delivered is a determinate thing, the creditor, in addition to the right granted him by Article 1170,641 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.642 The obligation to give a determinate thing includes that of delivering all its accessions and accessories, even though they may not have been mentioned.643 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 poorly done be undone.644 When the obligation consists in not doing, and the obligor does what has been forbidden him, it shall also be undone at his expense.645 Those obliged to deliver or to do something incur in delay from the time the obligee judicially or extrajudicially demands from them the fulfillment of their obligation. However, the demand by the creditor shall not be necessary in order that delay may exist: (1) When the obligation or the law expressly so declare; or (2) When from the nature and the circumstances of the obligation it appears that the designation of the time when the thing is to be delivered or the service is to be rendered was a controlling motive for the establishment of the contract; or

641

infra Art. 1165 643 Art. 1166 644 Art. 1167 645 Art. 1168 642

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(3) When demand would be useless, as when the obligor has rendered it beyond his power to perform. In reciprocal obligations, neither party incurs in delay if the other does not comply or is not ready to comply in a proper manner with what is incumbent upon him. From the moment one of the parties fulfills his obligation, delay by the other begins.646 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.647 Responsibility arising from fraud is demandable in all obligations. Any waiver of an action for future fraud is void.648 Responsibility arising from negligence in the performance of every kind of obligation is also demandable, but such liability may be regulated by the courts, according to the circumstances.649 The fault or negligence of the obligor consists in the omission of that diligence which is required by the nature of the obligation and corresponds with the circumstances of the persons, of the time and of the place. When negligence shows bad faith, the provisions of Articles 1171 and 2201, paragraph 2, shall apply. If the law or contract does not state the diligence which is to be observed in the performance, that which is expected of a good father of a family shall be required.650 Except in cases expressly specified by the law, or when it is otherwise declared by stipulation, or when the nature of the obligation requires the assumption of risk, no person shall be responsible for those events which could not be foreseen, or which, though foreseen, were inevitable.651 The receipt of the principal by the creditor without reservation with respect to the interest, shall give rise to the presumption that said interest has been paid. 646

Art. 1169 Art. 1170. 648 Art. 1171 649 Art. 1172 650 Art. 1173 651 Art. 1174 647

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The receipt of a later installment of a debt without reservation as to prior installments, shall likewise raise the presumption that such installments have been paid.652 The creditors, after having pursued the property in possession of the debtor to satisfy their claims, may exercise all the rights and bring all the actions of the latter for the same purpose, save those which are inherent in his person; they may also impugn the acts which the debtor may have done to defraud them.653

there

Subject to the laws, all rights acquired in virtue of an obligation are transmissible, if has been no stipulation to the contrary.654

VII.

Kinds of Civil Obligations 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.655 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.656 1. Suspensive condition657 The happening of the event gives birth to an obligation 2. Resolutory condition658

652

Art. 1176 Art. 1177 654 Art. 1178. 655 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) 656 Art. 1181 657 condition precedent 658 condition subsequent 653

117

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.659 third person or upon chance.660

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.

VIII. Joint and Solidary 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.661 If from the law, or the nature or the wording of the obligations to which the preceding article refers the contrary does not appear, the credit or debt shall be presumed to be divided into as many shares as there are creditors or debtors, the credits or debts being considered distinct from one another, subject to the Rules of Court governing the multiplicity of suits.662 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.663

659

e.g., "I will give you my plantation in Davao provided you reside in Davao permanently." e.g., "I will give you my land in Pampanga if you will pass the bar exams this year." 661 Art. 1207 662 Art. 1208 663 Art. 1209 660

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The indivisibility of an obligation does not necessarily give rise to solidarity. Nor does solidarity of itself imply indivisibility.664 Solidarity may exist although the creditors and the debtors may not be bound in the same manner and by the same periods and conditions.665 Each one of the solidary creditors may do whatever may be useful to the others, but not anything which may be prejudicial to the latter.666 A solidary creditor cannot assign his rights without the consent of the others.667 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.668 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 1219.669 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.670 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.671 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.

664

Art. 1210 Art. 1211 666 Art. 1212 667 Art. 1213 668 Art. 1214 669 infra 670 Art. 1215 671 Art. 1216 665

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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.672 Payment by a solidary debtor shall not entitle him to reimbursement from his codebtors if such payment is made after the obligation has prescribed or become illegal.673 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.674 The remission of the whole obligation, obtained by one of the solidary debtors, does not entitle him to reimbursement from his co-debtors.675 If the thing has been lost or if the prestation has become impossible without the fault of the solidary debtors, the obligation shall be extinguished. If there was fault on the part of any one of them, all shall be responsible to the creditor, for the price and the payment of damages and interest, without prejudice to their action against the guilty or negligent debtor. If through a fortuitous event, the thing is lost or the performance has become impossible after one of the solidary debtors has incurred in delay through the judicial or extrajudicial demand upon him by the creditor, the provisions of the preceding paragraph shall apply.676 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

672

Art. 1217. Art. 1218 674 Art. 1219 675 Art. 1220 676 Art. 1221 673

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others, he may avail himself thereof only as regards that part of the debt for which the latter are responsible.677 IX.

Extinguishment of Obligations Obligations are extinguished: (1) By payment or performance: (2) By the loss of the thing due: (3) By the condonation or remission of the debt; (4) By the confusion or merger of the rights of creditor and debtor; (5) By compensation; (6) By novation.

Other causes of extinguishment of obligations, such as annulment, rescission, fulfillment of a resolutory condition, and prescription, are governed elsewhere in this Code.678 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.679

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.680 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 677

Art. 1222 Art. 1231 679 Art. 1381 680 like deposit, pledge and commodatum 678

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but also to all consequences which, according to their nature may be in keeping with good faith, usage and law.

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.681 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.682 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;683 (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.

681

Art. 1356 Art. 1357 683 infra 682

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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 1405.684 IV.

Defective Contracts Rescissible Contracts:685

(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.686 (6) Payments made in a state of insolvency on account of obligations not yet enforceable

684

Art. 1358 Contracts validly agreed upon but, by reason of lesion or economic prejudice may be rescinded in cases established by law. 686 Art. 1381 685

123

Voidable Contracts:687 Contracts entered into during a lucid interval are valid. Contracts agreed to in a state of drunkenness or during a hypnotic spell are voidable.688 The incapacity declared in Article 1327689 is subject to the modifications determined by law, and is understood to be without prejudice to special disqualifications established in the laws.690 A contract where consent is given through mistake, violence, intimidation, undue influence, or fraud is voidable.691 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.692 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.693

687

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. 688 Art. 1328 689 See Reference 690 Art. 1329 691 Art. 1330 692 Art. 1331 693 Art. 1332

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There is no mistake if the party alleging it knew the doubt, contingency or risk affecting the object of the contract.694 Mutual error as to the legal effect of an agreement when the real purpose of the parties is frustrated, may vitiate consent.695 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.696 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.697 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. 698 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.699 Failure to disclose facts, when there is a duty to reveal them, as when the parties are bound by confidential relations, constitutes fraud.700

694

Art. 1333 Art. 1334 696 Art. 1335 697 Art. 1336 698 Art. 1337 699 Art. 1338 700 Art. 1339 695

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The usual exaggerations in trade, when the other party had an opportunity to know the facts, are not in themselves fraudulent.701 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.702 Misrepresentation by a third person does not vitiate consent, unless such misrepresentation has created substantial mistake and the same is mutual.703 Misrepresentation made in good faith is not fraudulent but may constitute error.704 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.705 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.706 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. 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.707 701

Art. 1340 Art. 1341 703 Art. 1342 704 Art. 1343 705 Art. 1344 706 Art. 1390 702

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Ratification extinguishes the action to annul a voidable contract.708 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.709 Ratification may be effected by the guardian of the incapacitated person.710 Ratification does not require the conformity of the contracting party who has no right to bring the action for annulment.711 Ratification cleanses the contract from all its defects from the moment it was constituted.712 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.713 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.714 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.715 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.716 707

Art. 1391 Art. 1392 709 Art. 1393 710 Art. 1394 711 Art. 1395 712 Art. 1396 713 Art. 1397 714 Art. 1398 715 Art. 1399 716 Art. 1400 708

127

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.717 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.718 Unenforceable Contracts:719 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. 717

Art. 1401 Art. 1402 719 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 718

128

In the following cases an agreement hereafter made shall be unenforceable by action, unless the same, or some note or memorandum thereof, be in writing, and subscribed by the party charged, or by his agent; evidence, therefore, of the agreement cannot be received without the writing, or a secondary evidence of its contents: (a) An agreement that by its terms is not to be performed within a year from the making thereof; (b) A special promise to answer for the debt, default, or miscarriage of another; (c) An agreement made in consideration of marriage, other than a mutual promise to marry; (d) An agreement for the sale of goods, chattels or things in action, at a price not less than five hundred pesos (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.720 Unauthorized contracts are governed by Article 1317721 and the principles of

agency.722

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.723 720

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 722 Art. 1404 723 Art. 1405 721

129

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 1357.724 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. 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.725 Void Contracts:726 (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;

724

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) 725 Art. 1407 726 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.

130

(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.727 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.728 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 3729 of Article 1403 may prescribe

727

Art. 1409 Art. 1346 729 supra 728

131

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 but even by a person who is third person prejudiced or whose interest is damaged by the directly affected contract 7. Assailed directly Assailed directly or Assailed directly only Assailed directly or or collaterally collaterally collaterally 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.730

730

Art. 1311

132

SALES I.

Definition and Essential Requisites of a Contract of Sale

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.731 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.732 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: (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.733 II.

Parties to a Contract of Sale

All persons who are authorized by law to obligate themselves, may enter into a contract of sale, with modifications. Where necessaries734 are those sold and delivered to a minor or other person without capacity to act, he must pay a reasonable price therefor. 735 731

Art. 1458 Art. 1470 733 Art. 1505 734 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. 732

133

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.736 III.

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.737 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.738 Things having a potential existence may be the object of the contract of sale. 735

Art. 1489 Art. 1491 737 Art. 1459 738 Art. 1460 736

134

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.739 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.740 The sole owner of a thing may sell an undivided interest therein.741 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.742 Things subject to a resolutory condition may be the object of the contract of sale.743 IV.

Obligations of the Seller to Transfer Ownership

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.744 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.745

739

Art. 1461 Art. 1462 741 Art. 1463 742 Art. 1464 743 Art. 1465 744 Art. 1462 745 Art. 1505 740

135

The thing must be licit and the vendor must have a right to transfer the ownership thereof at the time it is delivered.746 V.

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. 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.747 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.748 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.749 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.750 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.751 Where the price cannot be determined, or in any other manner, the contract is 746

Art. 1459 Art. 1469 748 Art. 1470 749 Art. 1471 750 Art. 1472 751 Art. 1473 747

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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.752 VI.

Formation of Contract of Sale

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.753 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.754 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.755 VII.

Transfer of Ownership

The ownership of the thing sold shall be transferred to the vendee upon the actual or constructive delivery thereof.756 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, 757 or in any other manner signifying an agreement that the possession is transferred from the vendor to the vendee.758 The thing sold shall be understood as delivered, when it is placed in the control and possession of the vendee.759

752

Art. 1474 Art. 1475 754 Art. 1479 755 Art. 1324 756 Art. 1477 757 See Reference 758 Art. 1496 759 Art. 1497 753

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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.760 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.761 There may also be tradition constitutum possessorium.762 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.763 VIII. Risk of Loss 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; (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.764 760

Art. 1498 Art. 1499 762 Art. 1500 763 Art. 1501 764 Art. 1189 761

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In an obligation to deliver a generic thing, the loss or destruction of anything of the same kind does not extinguish the obligation.765 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.766 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.767 IX.

Documents of Title

"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.768 X.

Remedies of an 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

765

Art. 1263 Art. 1493 767 Art. 1494 768 Art. 1636 766

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XI.

Performance of Contract

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. 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.769 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.770 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 1262.771 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.772 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:

769

Art. 1522 Art. 1537 771 See Reference 772 Art. 1480 770

140

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.773 The actions arising from Articles 1539 and 1542774 shall prescribe in six months, counted from the day of delivery.775 XII.

Warranties 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. 776 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.777 773

Art. 1539 See reference 775 Art. 1543 776 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 777 Art. 1546 774

141

Implied warranties:778 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.779 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. 778

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) 779 Art. 1547

142

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 1191.780 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 1526.781 (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.782 XIII. Breach of Contract Violation of a contractual obligation by failing to perform one's own promise, by repudiating it, or by interfering with another party's performance.783 A breach may be one by non-performance, or by repudiation, or by both. Every breach gives rise to a claim for damages, and may give rise to other remedies. Even if the injured party sustains no pecuniary loss or is unable to show such loss with sufficient certainty, he has at least a claim for nominal damages. If a court chooses to ignore a trifling departure, there is no breach and no claim arises.784

780

See Reference Ibid. 782 Art. 1599 783 th Black’s Law Dictionary, 9 Ed. 784 Ibid. 781

143

XIV. Extinguishment of the Sale Obligations are extinguished by: (1) (2) (3) (4) (5) (6)

Payment or performance; Loss of the thing due; Condonation or remission of the debt; Confusion or merger of the rights of creditor and debtor; Compensation; Novation.

Other causes: 1. Annulment, 2. Rescission, 3. Fulfillment of a resolutory condition, and 4. Prescription.785 Sales are extinguished by the same causes as all other obligations and by conventional or legal redemption.786 XV.

The Subdivision and Condominium Buyers' Protective Decree (P.D. 957)787

XVI. The Condominium Act (R.A. No. 4726)788

785

Art. 1231 Art. 1600 787 see Reference 788 Ibid. 786

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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.789 Succession may be: (1) Testamentary; (2) Legal or intestate; or (3) Mixed.790 Testamentary succession is that which results from the designation of an heir, made in a will executed in the form prescribed by law.791 Mixed succession is that effected partly by will and partly by operation of law.792 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.793 "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.794 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.795 The rights to the succession are transmitted from the moment of the death of the decedent.796 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.797 789

Art. 776 Art. 778 791 Art. 779 792 Art. 780 793 Art. 774 794 Art. 775 795 Art. 781 796 Art. 777 790

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II.

Testamentary Succession

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.798 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.799 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.800 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.801 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.802 The validity of a will as to its form depends upon the observance of the law in force at the time it is made.803 All persons who are not expressly prohibited by law may make a will.804 A married woman may make a will without the consent of her husband, and without the authority of the court.805 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.806

797

Art. 782 Art. 783 799 Art. 787 800 Art. 784 801 Art. 785 802 Art. 786 803 Art. 795 804 Art. 796 805 Art. 802 806 Art. 803 798

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III.

Legal or Intestate Succession Legal or intestate succession807 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;808 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

809

Code.

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.810 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 1006811 with respect to relatives of the full and half blood, and of Article 987, par. 2,812 concerning division between the paternal and maternal lines.813 807

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 808 Legal succession shall take place only with respect to the property of which the testator has not disposed 809 Art. 960 810 Art. 961 811 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. 812 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. 813 Art. 962

147

Proximity of relationship is determined by the number of generations. Each generation forms a degree.814 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.815 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.816 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.817 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.818 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.819 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 814

Art. 963 Art. 964 816 Art. 965 817 Art. 966 818 Art. 967 819 Art. 968 815

148

the following degree shall inherit in their own right and cannot represent the person or persons repudiating the inheritance.820 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.821 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.822 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.823 In order that representation may take place, it is necessary that the representative himself be capable of succeeding the decedent.824 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.825 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.826 A person may represent him whose inheritance he has renounced.827 Heirs who repudiate their share may not be represented.828 Succession pertains, in the first place, to the descending direct line.829 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.

820

Art. 969 Art. 970 822 Art. 971 823 Art. 972 824 Art. 973 825 Art. 974 826 Art. 975 827 Art. 976 828 Art. 977 829 Art. 978 821

149

An adopted child succeeds to the property of the adopting parents in the same manner as a legitimate child.830 The children of the deceased shall always inherit from him in their own right, dividing the inheritance in equal shares.831 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.832 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.833 If illegitimate children survive with legitimate children, the shares of the former shall be in the proportions prescribed by article 895.834 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.835 In default of legitimate children and descendants of the deceased, his parents and ascendants shall inherit from him, to the exclusion of collateral relatives.836 The father and mother, if living, shall inherit in equal shares. child.837

Should one only of them survive, he or she shall succeed to the entire estate of the In default of the father and mother, the ascendants nearest in degree shall inherit.

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.838 In the absence of legitimate descendants or ascendants, the illegitimate children shall succeed to the entire estate of the deceased.839

830

Art. 979 Art. 980 832 Art. 981 833 Art. 982 834 Art. 983 835 Art. 984 836 Art. 985 837 Art. 986 838 Art. 987 839 Art. 988 831

150

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.840 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.841 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.842 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.843 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.844 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.845 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 1001.846 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.847 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.848

840

Art. 989 Art. 990 842 Art. 991 843 Art. 992 844 Art. 993 845 Art. 994 846 Art. 995 847 Art. 996 848 Art. 997 841

151

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.849 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.850 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.851 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.852 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.853 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.854 Should the only survivors be brothers and sisters of the full blood, they shall inherit in equal shares.855 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.856 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.857 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.858 849

Art. 998 Art. 999 851 Art. 1000 852 Art. 1001 853 Art. 1002 854 Art. 1003 855 Art. 1004 856 Art. 1005 857 Art. 1006 858 Art. 1007 850

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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.859 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.860 The right to inherit ab intestato shall not extend beyond the fifth degree of relationship in the collateral line.861 In default of persons entitled to succeed, the State shall inherit the whole estate.862 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.863 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.864 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.865

859

Art. 1008 Art. 1009 861 Art. 1010 862 Art. 1011 863 Art. 1012 864 Art. 1013 865 Art. 1014 860

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IV.

Provisions Common to Testate and Intestate Succession

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.866 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.867 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.868

866

Art. 1015 Art. 1016 868 Art. 1027 867

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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.869 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.870

869 870

Art. 739 Art. 1032

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PARTNERSHIP I.

Contract of Partnership

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. II.

Rights and Obligations of Partnership The partnership can, in general:

solvent

a) b) c) d) e)

enter into contracts acquire and possess property of all kinds incur obligations bring civil and criminal actions be adjudged insolvent even if the individual members be each financially

f) g) h) i)

bear risk of loss871 reimburse872 operate under firm name873 bound by partner’s admission874

871

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) 872 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. 873 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) 874 Requisites to be admissible against the partnership:

156

j) bound by notice to partner875 k) liable for wrongful act of partner876 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. 4. 5. 6. 7.

Right to associate with another person in his share Right of access and inspection of partnership books Right to true and full information of all things affecting the partnership Right to a formal account of partnership affairs under certain circumstances877 Right to have partnership dissolved under certain conditions.

Obligations: 1.

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

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 Admission by a former partner not admissible in evidence against the partnership. (Congco vs. Trillana) 875 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) 876 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). 877 The ten (10) year period to demand an accounting by a partner begins at the dissolution of the partnership.

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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. 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. 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.878 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.

878

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)

158

4. 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. 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. 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.879 7. 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.

879

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.

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IV.

Obligations of Partnership/Partners to Third Persons Liability for contractual obligations:880

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 Ownership881 General rule: Act does not bind the partnership. Exception: Partnership is bound if: i. ii.

the act is authorized by all the partners; or 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 partnership882 b. Where one partner, acting within the scope of his apparent authority, receives money or property of a third person and misapplies it883 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 partnership884 880

Art. 1816 Acts which are not apparently for carrying on in the usual way the business of the partnership 882 Art. 1822 883 Art. 1823 881

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V.

Dissolution

Change in the relation of the partners caused by any partner ceasing to be associated in carrying on the business.885 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 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; 884

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 885 Art. 1828

161

(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

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. AGENCY I.

Definition of Agency

A contract whereby a person886 binds himself to render some service or to do something in representation or on behalf of another887 with the consent or authority of the latter.888 II.

Powers

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.889 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.890 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.891

886

agent principal 888 Art. 1868 889 Art. 1897 890 Art. 1898 891 Art. 1899 887

162

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.892 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.893 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.894 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.895 III.

Express vs. Implied Agency

Express Implied896 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.

892

Art. 1900 Art. 1901 894 Art. 1902 895 Art. 1883 896 The principal is still bound by the acts of the agent just as in case of express agency 893

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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.897 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.898 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.899

897

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. 899 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) 898

164

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.900 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.901 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.902 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.903 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.904 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.905 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 1544.906 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 900 Art. 1910 901 Art. 1911 902 Art. 1912 903 Art. 1913 904 Art. 1914 905 Art. 1915 906 Art. 1916

165

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.907 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.908 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.909 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. 910 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.911 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.912

907

Art. 1917 Art. 1918 909 Art. 1927 910 Art. 1928 911 Art. 1929 912 Art. 1930 908

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XI.

Modes of Extinguishment 1. 2. 3. 4. 5. 6.

Expiration of the period Death, civil interdiction, insanity or insolvency of the principal or of the agent Withdrawal of the agent913 Accomplishment of the object or the purpose of the agency Revocation 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.914 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 915

III.

Effect

The effect and authority of res judicata; but there shall be no execution except in compliance with a judicial compromise.916 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.917

913

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. 914 Art. 2028 915 Art. 2035 916 Art. 2037 917 Art. 2041

167

CREDIT TRANSACTIONS I.

Loan

By the contract of loan, one of the parties delivers to another, either something not consumable so that the latter may use the same for a certain time and return it, in which case the contract is called a commodatum; or money or other consumable thing, upon the condition that the same amount of the same kind and quality shall be paid, in which case the contract is simply called a loan or mutuum. Commodatum is essentially gratuitous. Simple loan may be gratuitous or with a stipulation to pay interest. In commodatum the bailor retains the ownership of the thing loaned, while in simple loan, ownership passes to the borrower.918 An accepted promise to deliver something by way ofcommodatum or simple loan is binding upon parties, but the commodatumor simple loan itself shall not be perfected until the delivery of the object of the contract.919 II.

Deposit

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. 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.921

Necessary deposit

Judicial deposit920

One made in compliance When an attachment or with a legal obligation, or on the seizure of property in litigation occasion of any calamity, or by is ordered. travellers in hotels and inns,922 or by travellers with common carriers.923

918

Art. 1933 Art. 1934 920 Sequestration 921 Arts. 1968 – 1995 922 Arts. 1996 - 2004 923 Arts. 1734 – 1735 919

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III.

Guaranty and Suretyship

By guaranty a person, called the guarantor, binds himself to the creditor to fulfill the obligation of the principal debtor in case the latter should fail to do so. If a person binds himself solidarily with the principal debtor, the provisions of Section 4, Chapter 3, Title I of this Book shall be observed. In such case the contract is called a suretyship.924 A guaranty is gratuitous, unless there is a stipulation to the contrary.925 A married woman may guarantee an obligation without the husband's consent, but shall not thereby bind the conjugal partnership, except in cases provided by law.926 If a guaranty is entered into without the knowledge or consent, or against the will of the principal debtor, the provisions of Articles 1236 and 1237 shall apply.927 A guaranty may be conventional, legal or judicial, gratuitous, or by onerous title. It may also be constituted, not only in favor of the principal debtor, but also in favor of the other guarantor, with the latter's consent, or without his knowledge, or even over his objection.928 A guaranty cannot exist without a valid obligation. Nevertheless, a guaranty may be constituted to guarantee the performance of a voidable or an unenforceable contract. It may also guarantee a natural obligation.929 A guaranty may also be given as security for future debts, the amount of which is not yet known; there can be no claim against the guarantor until the debt is liquidated. A conditional obligation may also be secured.930 A guarantor may bind himself for less, but not for more than the principal debtor, both as regards the amount and the onerous nature of the conditions. Should he have bound himself for more, his obligations shall be reduced to the limits of that of the debtor.931 924

Art. 2047 Art. 2048 926 Art. 2049 927 Art. 2050 928 Art. 2051 929 Art. 2052 930 Art. 2053 931 Art. 2054 925

169

A guaranty is not presumed; it must be express and cannot extend to more than what is stipulated therein. If it be simple or indefinite, it shall compromise 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.932 One who is obliged to furnish a guarantor shall present a person who possesses integrity, capacity to bind himself, and sufficient property to answer for the obligation which he guarantees. The guarantor shall be subject to the jurisdiction of the court of the place where this obligation is to be complied with.933 If the guarantor should be convicted in first instance of a crime involving dishonesty or should become insolvent, the creditor may demand another who has all the qualifications required in the preceding article. The case is excepted where the creditor has required and stipulated that a specified person should be the guarantor.934 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.935 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.936 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.937 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;938

932

Art. 2055 Art. 2056 934 Art. 2057 935 Art. 2073 936 Art. 2074 937 Art. 2075 938 Art. 2078 933

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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;939 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;940 4. For the same causes as all other obligations;941 5. When the principal obligation is extinguished; 6. Extension granted to the debtor by the creditor without the consent of the guarantor.942 IV.

Pledge

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. V.

Real Mortgage

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. Act 3135, as amended by R.A. No. 4118.943 VI.

Antichresis

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..944 VII.

Chattel Mortgage

A contract by virtue of which personal property is recorded in the Chattel Mortgage Register as a security for the performance of an obligation.945 939

Art. 2077 Art. 2080 941 Art. 1231 942 Art. 2079 943 see Reference 944 Art. 2132 940

171

Act 1508.946 VIII. Quasi-contracts Negotiorum Gestio

Solutio Indebiti -

Arises whenever a person Arises whenever a person unduly voluntarily takes charge of the agency or delivers a thing through mistake to management of the business or property another who has no right to demand it. of another without any power or authority from the latter.

IX.

Concurrence and Preference of Credits 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 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; (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; 945 946

Art. 2140 see Reference

172

(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.947 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; (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; 947

Art. 2241

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(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.948 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.949 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; (6) Support during the insolvency proceedings, and for three months thereafter; (7) Fines and civil indemnification arising from a criminal offense; 948 949

Art. 2242 Art. 2243

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(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;950 (10) Taxes and assessments due any province, other than those referred to in articles 2241, No. 1, and 2242, No. 1;951 (11) Taxes and assessments due any city or municipality, other than those indicated in articles 2241, No. 1, and 2242, No. 1;952 (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.953 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.954 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.955 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.956 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.957

950

supra ibid 952 ibid 953 Art. 2244 954 Art. 2245 955 Art. 2246 956 Art. 2247 957 Art. 2248 951

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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.958 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.959 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;960 (2) Common credits referred to in Article 2245961 shall be paid pro rata regardless of dates.962 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.963 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.964 III.

Lease of Rural and Urban Lands Qualified persons

Those not covered within the scope as provided for under Articles 1490 and 1491 965 of the Civil Code.966

958

Art. 2249 Art. 2250 960 supra 961 ibid 962 Art. 2251 963 Art. 1643 964 Art. 1644 965 See Reference 966 Art. 1646 959

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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.967 Prohibitions The lessee cannot assign the lease without the consent of the lessor, unless there is a stipulation to the contrary.968 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.969 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.970 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.971 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.972

967

Art. 1648 Art. 1649 969 Art. 1650 970 Art. 1651 971 Art. 1652 972 Art. 1654 968

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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.973 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.974 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.975 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.976 If the lessor or the lessee should not comply with the obligations set forth in articles 1654 and 1657,977 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.978 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.979 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.

973

Art. 1655 Art. 1656 975 Art. 1657 976 Art. 1658 977 supra 978 Art. 1659 979 Art. 1660 974

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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.980 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 1654.981 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.982 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.983 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.984 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.985 The lessee is liable for any deterioration caused by members of his household and by guests and visitors.986 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.987 980

Art. 1662 supra 982 Art. 1663 983 Art. 1665 984 Art. 1666 985 Art. 1667 986 Art. 1668 987 Art. 1949 981

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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.988 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.989 The lease of a piece of rural land, when its duration has not been fixed, is understood to have been for all the time necessary for the gathering of the fruits which the whole estate leased may yield in one year, or which it may yield once, although two or more years have to elapse for the purpose.990 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.991 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.992 The tenant on shares cannot be ejected except in cases specified by law.993

988

Art. 1680 Art. 1681 990 Art. 1682 991 Art. 1683 992 Art. 1684 993 Art. 1685 989

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LAND TITLES AND DEEDS I.

Torrens System

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 another994 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.995 There are two (2) laws ancillary to Act No. 496. These are the Cadastral Law of February 11, 1913996 and the Public Land Law of December 1, 1936997 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.”998 II.

Regalian Doctrine

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.999

994

Angeles vs. Samia, 66 Phil. 444 (1938) Act 496 has been amended by P.D. 1529 which was enacted on June 11, 1978 996 Act 2259 997 Com. Act No. 141 998 Sec. 20, P.D. No. 1529 999 Sec. 2, Art. XII, 1987 Constitution 995

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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.1000 III.

Citizenship Requirement 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. IV.

Original Registration 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.1001

1000

Spouses Reyes et at. v. CA, 295 SCRA 296, September 10, 1998; Cacho v. CA, 269 SCRA 159, March 3,1997 1001 Sec. 14

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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. 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.1002

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) 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) 1002 Sec. 53 (b)

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V.

Subsequent Registration

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. 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.1003 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 property1004 VII.

Dealings with Unregistered Lands

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 force; provided, that all instruments dealing with unregistered lands shall henceforth be registered under Section 113 of this Decree.1005 1003

Art. XIV, Sec. 8, New Constitution Vano vs. Government of P.I., 41 Phil. 161 (1920) 1005 Sec. 3, P.D. 1529 1004

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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.1006

1006

Sec. 113, id.

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TORTS AND DAMAGES Book I--Torts I.

Principles

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. 1007 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.1008 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.1009 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.1010 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.1011 Every person who, contrary to law, wilfully or negligently causes damage to another, shall indemnify the latter for the same.1012 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.1013

1007

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. 1008 Art. 22 1009 Art. 2154 1010 Art. 2142 1011 Art.23 1012 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. 1013 Art. 21

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II.

Classification of Torts A. According to manner of commission: Intentional

Negligent

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.1014

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.

Strict Liability When the person is made liable independent of fault or negligence upon submission of proof of certain facts specified by law.1015

B. According to scope: general or specific General

Specific

The catchall provisions on torts provided for in the Civil Code.1016 The effect is that “there is a general duty owed 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.” 1017

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,1018 product liability tort.

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) 1014 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. 1015 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. 1016 i.e. Arts. 19, 20 and 21 1017 Aquino, 2005, citing PNB v. CA, et al. 83 SCRA 237 1018 manufacturing and selling defective products

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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.1019 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.1020 B. Persons Made Responsible for Others 1. In General a. Quasi-delicts1021 and the Family Code1022 1. Father, or in case of death or incapacity, mother: a. damage caused by minor children1023 b. living in their company

1019

Art. 44 Art. 46 1021 under Art. 2180 Basis: Pater Familias. The reason for the master’s liability is the negligence in the supervision of his subordinates. 1022 Arts. 218-219, 221 1023 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. 1020

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2. Guardians: a. for minors or incapacitated persons b. under their authority c. living in their company 3. Owners and managers1024 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 4. Employers: a. damages caused by employees and household helpers1025 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 apprentices1026 1024

To be liable, the manager must be acting as an employer or with the same authority as the owner. 1025 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) 1026 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.

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c. so long as they remain in their custody.1027 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.1028 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.1029 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.1030 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.1031 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. 1032

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. 1027 Art. 2180 1028 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. 1029 Art. 218, FC 1030 Art. 219, id. 1031 Art. 221, id. 1032 Art. 2194

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IV.

Act of Omission and its Modalities

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.1033 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.1034 V.

Proximate Cause

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.1035 VI.

Legal Injury The violation of a legal right.1036

An act causing damage, which act must be not only hurtful, but wrongful. There must be damnum et injuria. VII.

Intentional Torts A tort committed by someone acting with general or specific intent.1037

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.

1033

People v. Gonzales, 183 SCRA 309, 324 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. 1035 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. 1036 th Black’s Law Dictionary, 9 Ed. 1037 th Blacks’ Law Dictionary, 9 Ed. 1034

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VIII. Negligence The omission of that degree of diligence which is required by the nature of the obligation and corresponding to the circumstances of 1038 the persons, of the time and place. 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.1039 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. IX.

Special Liability in Particular Activities Products Liability1040 1. Manufacturers or Processors

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. Consumer Act1041 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. 1038

Art. 1173 Philippine Bank of Commerce v. CA, 336 Phil. 667, 676 (1997) 1040 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 1041 R.A. 7394 1039

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A product is defective when it does not offer the safety rightfully expected of it, taking relevant circumstances into consideration, including but not limited to: a) presentation of product; b) use and hazards reasonably expected of it; c) the time it was put into circulation. A product is not considered defective because another better quality product has been placed in the market. The manufacturer, builder, producer or importer shall not be held liable when it evidences: a) that it did not place the product on the market; b) that although it did place the product on the market such product has no defect; c) that the consumer or a third party is solely at fault.1042 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.1043 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: 1042 1043

Art. 97 Art. 98

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a) that there is no defect in the service rendered; b) that the consumer or third party is solely at fault.1044 The suppliers of durable or nondurable consumer products are jointly liable for imperfections in quality that render the products unfit or inadequate for consumption for which they are designed or decrease their value, and for those resulting from inconsistency with the information provided on the container, packaging, labels or publicity messages/advertisement, with due regard to the variations resulting from their nature, the consumer being able to demand replacement to the imperfect parts. 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.1045 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; 1044 1045

Art. 99 Art. 100

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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.1046 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.1047 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.1048 The supplier's ignorance of the quality imperfections due to inadequacy of the products and services does not exempt him from any liability.1049 The legal guarantee of product or service adequacy does not require an express instrument or contractual exoneration of the supplier being forbidden.1050 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

1046

Art. 101 Art. 102 1048 Art. 103 1049 Art. 104 1050 Art. 105 1047

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product or service, its manufacturer, builder or importer and the person who incorporated the component or part are jointly liable.1051 Any person who shall violate any provision of this Chapter or its implementing rules and regulations with respect to any consumer product which is not food, cosmetic, or hazardous substance shall upon conviction, be subject to a fine of not less than Five thousand pesos (P5,000.00) and by imprisonment of not more than one (1) year or both upon the discretion of the court. 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.1052 X.

Strict Liability

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.

1051 1052

Art. 106 Art. 107

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Book II--Damages I.

General Considerations Damages may be: (1) (2) (3) (4) (5) (6)

Actual or compensatory; Moral; Nominal; Temperate or moderate; Liquidated; or Exemplary or corrective.1053

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.1054 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.1055 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.1056 Temperate or moderate damages, which are more than nominal but less than compensatory damages, may be recovered when the court finds that some pecuniary loss has been suffered but its amount cannot, from the nature of the case, be provided with certainty.1057 Liquidated damages are those agreed upon by the parties to a contract, to be paid in case of breach thereof.1058 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.1059 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, 1053

Art. 2197 Art. 2205 1055 Art. 2220 1056 Art. 2221 1057 Art. 2224 1058 Art. 2226 1059 Art. 2229 1054

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except liquidated ones, is left to the discretion of the court, according to the circumstances of each case.1060 II.

Actual and Compensatory Damages

Comprehends not only the value of the loss suffered but also that of the profits which the obligee failed to obtain.1061 Actual or compensatory damages cannot be presumed but must be duly proved.1062 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.1063 Remote and speculative damages are not recoverable. III.

Moral Damages

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.1064 In the adjudication of moral damages, the sentimental value of property, real or personal, may be considered.1065 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; (8) Malicious prosecution; (9) Acts mentioned in Article 309;1066 1060

Art. 2216 Art. 2200 1062 Malonzo vs. Galang, 109 Phil. 16 1063 Rangas vs. Raya, 22 SCRA 839 1064 Art. 2217 1065 Art. 2218 1066 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. 1061

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(10) Acts and actions referred to in Articles 21, 26, 27, 28, 29, 30, 32, 34, and 35.1067 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.1068 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.1069 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, NCC1070 3. In cases of malicious prosecution1071 IV.

Nominal Damages

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. 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.1072

1067

See reference Art. 2219 1069 Art. 2220 1070 See Reference 1071 supra 1072 Art. 2221 1068

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V.

Temperate or Moderate Damages

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.1073 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

Those agreed upon by the parties to a contract, to be paid in case of breach thereof.1074 Interest may, in the discretion of the court, be allowed upon damages awarded for breach of contract.1075 VII.

Exemplary or Corrective Damages

Imposed, by way of example or correction for the public good, in addition to the moral, temperate, liquidated or compensatory damages.1076 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.1077 2. In quasi-delicts If the defendant acted with gross negligence.1078

1073

Article 2224 Civil Code Art. 2226 1075 Art. 2210 1076 Art. 2229 1077 Art. 2230 1078 Art. 2231 1074

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3. In contracts and quasi-contracts If the defendant acted in a wanton, fraudulent, reckless, oppressive, or malevolent manner.1079 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,1080 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.1081

1079

Art. 2232 As of 2008, it is P75,000 (People vs. Robert Brodett y Pajaro, Jan. 18, 2008) 1081 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 1080

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IX.

Graduation of Damages

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.1082 Rules: 1. In crimes The damages to be adjudicated may be respectively increased or lessened according to the aggravating or mitigating circumstances.1083 2. In quasi-delict The contributory negligence of the plaintiff shall reduce the damages that he may recover.1084 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.1085 4. Liquidated damages Shall be equitably reduced if they are iniquitous or unconscionable.1086 5. Compromise The courts may mitigate the damages to be paid by the losing party who has shown a sincere desire for a compromise.1087

1082

Art. 2203 Art. 2204 1084 Art. 2214 1085 Art. 2215 1086 Art. 2227 1087 Art. 2031 1083

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X.

Miscellaneous Rules 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.1088 2. Actual and Liquidated Liquidated damages are those agreed upon by the parties to a contract, to be paid in case of breach thereof.1089 Damages that must co-exist 1.

Exemplary with compensatory1090

moral,

temperate,

liquidated

Damages that must stand alone 1. Nominal Damages1091

Include: Pertinent Supreme Court decisions promulgated up to January 31, 2013.

1088

Art. 2223 Art. 2226 1090 supra 1091 Ibid. 1089

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or

Reference Republic Act No. 8552 AN ACT ESTABLISHING THE RULES AND POLICIES ON THE DOMESTIC ADOPTION OF FILIPINO CHILDREN AND FOR OTHER PURPOSES GENERAL PROVISIONS Section 1. Short Title. – This Act shall be known as the "Domestic Adoption Act of 1998." Section 2. Declaration of Policies. – (a) It is hereby declared the policy of the State to ensure that every child remains under the care and custody of his/her parent(s) and be provided with love, care, understanding and security towards the full and harmonious development of his/her personality. Only when such efforts prove insufficient and no appropriate placement or adoption within the child's extended family is available shall adoption by an unrelated person be considered. (b) In all matters relating to the care, custody and adoption of a child, his/her interest shall be the paramount consideration in accordance with the tenets set forth in the United Nations (UN) Convention on the Rights of the Child; UN Declaration on Social and Legal Principles Relating to the Protection and Welfare of Children with Special Reference to Foster Placement and Adoption, Nationally and Internationally; and the Hague Convention on the Protection of Children and Cooperation in Respect of Intercountry Adoption. Toward this end, the State shall provide alternative protection and assistance through foster care or adoption for every child who is neglected, orphaned, or abandoned. (c) It shall also be a State policy to: (i) Safeguard the biological parent(s) from making hurried decisions to relinquish his/her parental authority over his/her child; (ii) Prevent the child from unnecessary separation from his/her biological parent(s); (iii) Protect adoptive parent(s) from attempts to disturb his/her parental authority and custody over his/her adopted child. Any voluntary or involuntary termination of parental authority shall be administratively or judicially declared so as to establish the status of the child as "legally available for adoption" and his/her custody transferred to the Department of Social Welfare and Development or to any duly licensed and accredited child-placing or child-caring agency, which entity shall be authorized to take steps for the permanent placement of the child; (iv) Conduct public information and educational campaigns to promote a positive environment for adoption;

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(v) Ensure that sufficient capacity exists within government and private sector agencies to handle adoption inquiries, process domestic adoption applications, and offer adoption-related services including, but not limited to, parent preparation and post-adoption education and counseling; and (vi) Encourage domestic adoption so as to preserve the child's identity and culture in his/her native land, and only when this is not available shall intercountry adoption be considered as a last resort. Section 3. Definition of Terms. – For purposes of this Act, the following terms shall be defined as: (a) "Child" is a person below eighteen (18) years of age. (b) "A child legally available for adoption" refers to a child who has been voluntarily or involuntarily committed to the Department or to a duly licensed and accredited child-placing or child-caring agency, freed of the parental authority of his/her biological parent(s) or guardian or adopter(s) in case of rescission of adoption. (c) "Voluntarily committed child" is one whose parent(s) knowingly and willingly relinquishes parental authority to the Department. (d) "Involuntarily committed child" is one whose parent(s), known or unknown, has been permanently and judicially deprived of parental authority due to abandonment; substantial, continuous, or repeated neglect; abuse; or incompetence to discharge parental responsibilities. (e) "Abandoned child" refers to one who has no proper parental care or guardianship or whose parent(s) has deserted him/her for a period of at least six (6) continuous months and has been judicially declared as such. (f) "Supervised trial custody" is a period of time within which a social worker oversees the adjustment and emotional readiness of both adopter(s) and adoptee in stabilizing their filial relationship. (g) "Department" refers to the Department of Social Welfare and Development. (h) "Child-placing agency" is a duly licensed and accredited agency by the Department to provide comprehensive child welfare services including, but not limited to, receiving applications for adoption, evaluating the prospective adoptive parents, and preparing the adoption home study. (i) "Child-caring agency" is a duly licensed and accredited agency by the Department that provides twenty four (24)-hour residential care services for abandoned, orphaned, neglected, or voluntarily committed children.

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(j) "Simulation of birth" is the tampering of the civil registry making it appear in the birth records that a certain child was born to a person who is not his/her biological mother, causing such child to lose his/her true identity and status. PRE-ADOPTION SERVICES Section 4. Counseling Service. – The Department shall provide the services of licensed social workers to the following: (a) Biological Parent(s) – Counseling shall be provided to the parent(s) before and after the birth of his/her child. No binding commitment to an adoption plan shall be permitted before the birth of his/her child. A period of six (6) months shall be allowed for the biological parent(s) to reconsider any decision to relinquish his/her child for adoption before the decision becomes irrevocable. Counseling and rehabilitation services shall also be offered to the biological parent(s) after he/she has relinquished his/her child for adoption. Steps shall be taken by the Department to ensure that no hurried decisions are made and all alternatives for the child's future and the implications of each alternative have been provided. (b) Prospective Adoptive Parent(s) – Counseling sessions, adoption fora and seminars, among others, shall be provided to prospective adoptive parent(s) to resolve possible adoption issues and to prepare him/her for effective parenting. (c) Prospective Adoptee – Counseling sessions shall be provided to ensure that he/she understands the nature and effects of adoption and is able to express his/her views on adoption in accordance with his/her age and level of maturity. Section 5. Location of Unknown Parent(s). – It shall be the duty of the Department or the child-placing or child-caring agency which has custody of the child to exert all efforts to locate his/her unknown biological parent(s). If such efforts fail, the child shall be registered as a foundling and subsequently be the subject of legal proceedings where he/she shall be declared abandoned. Section 6. Support Services. – The Department shall develop a pre-adoption program which shall include, among others, the above mentioned services. ELIGIBILITY Section 7. Who May Adopt. – The following may 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; 206

(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 or

(ii) one who seeks to adopt the legitimate son/daughter of his/her Filipino spouse;

(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. 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, However, that 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. Section 8. Who May Be Adopted. – The following may 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; 207

(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). Section 9. Whose Consent is Necessary to the Adoption. – After being properly counseled and informed of his/her right to give or withhold his/her approval of the adoption, the written consent of the following to the adoption is hereby required: (a) The adoptee, if ten (10) years of age or over; (b) The biological parent(s) of the child, if known, or the legal guardian, or the proper government instrumentality which has legal custody of the child; (c) The legitimate and adopted sons/daughters, ten (10) years of age or over, of the adopter(s) and adoptee, if any; (d) The illegitimate sons/daughters, ten (10) years of age or over, of the adopter if living with said adopter and the latter's spouse, if any; and (e) The spouse, if any, of the person adopting or to be adopted. PROCEDURE Section 10. Hurried Decisions. – In all proceedings for adoption, the court shall require proof that the biological parent(s) has been properly counseled to prevent him/her from making hurried decisions caused by strain or anxiety to give up the child, and to sustain that all measures to strengthen the family have been exhausted and that any prolonged stay of the child in his/her own home will be inimical to his/her welfare and interest. Section 11. Case Study. – No petition for adoption shall be set for hearing unless a licensed social worker of the Department, the social service office of the local government unit, or any child-placing or child-caring agency has made a case study of the adoptee, his/her biological parent(s), as well as the adopter(s), and has submitted the report and recommendations on the matter to the court hearing such petition. At the time of preparation of the adoptee's case study, the concerned social worker shall confirm with the Civil Registry the real identity and registered name of the adoptee. If the birth of the adoptee was not registered with the Civil Registry, it shall be the responsibility of the concerned social worker to ensure that the adoptee is registered. The case study on the adoptee shall establish that he/she is legally available for adoption and that the documents to support this fact are valid and authentic. Further, the case study of the adopter(s) shall ascertain his/her genuine intentions and that the adoption is in the best interest of the child. The Department shall intervene on behalf of the adoptee if it finds, after the conduct of the case studies, that the petition should be denied. The case studies and other relevant 208

documents and records pertaining to the adoptee and the adoption shall be preserved by the Department. Section 12. Supervised Trial Custody. – No petition for adoption shall be finally granted until the adopter(s) has been given by the court a supervised trial custody period for at least six (6) months within which the parties are expected to adjust psychologically and emotionally to each other and establish a bonding relationship. During said period, temporary parental authority shall be vested in the adopter(s). The court may motu proprio or upon motion of any party reduce the trial period if it finds the same to be in the best interest of the adoptee, stating the reasons for the reduction of the period. However, for alien adopter(s), he/she must complete the six (6)-month trial custody except for those enumerated in Sec. 7 (b) (i) (ii) (iii). If the child is below seven (7) years of age and is placed with the prospective adopter(s) through a pre-adoption placement authority issued by the Department, the prospective adopter(s) shall enjoy all the benefits to which biological parent(s) is entitled from the date the adoptee is placed with the prospective adopter(s). Section 13. Decree of Adoption. – If, after the publication of the order of hearing has been complied with, and no opposition has been interposed to the petition, and after consideration of the case studies, the qualifications of the adopter(s), trial custody report and the evidence submitted, the court is convinced that the petitioners are qualified to adopt, and that the adoption would redound to the best interest of the adoptee, a decree of adoption shall be entered which shall be effective as of the date the original petition was filed. This provision shall also apply in case the petitioner(s) dies before the issuance of the decree of adoption to protect the interest of the adoptee. The decree shall state the name by which the child is to be known. Section 14. Civil Registry Record. – An amended certificate of birth shall be issued by the Civil Registry, as required by the Rules of Court, attesting to the fact that the adoptee is the child of the adopter(s) by being registered with his/her surname. The original certificate of birth shall be stamped "cancelled" with the annotation of the issuance of an amended birth certificate in its place and shall be sealed in the civil registry records. The new birth certificate to be issued to the adoptee shall not bear any notation that it is an amended issue. Section 15. Confidential Nature of Proceedings and Records. – All hearings in adoption cases shall be confidential and shall not be open to the public. All records, books, and papers relating to the adoption cases in the files of the court, the Department, or any other agency or institution participating in the adoption proceedings shall be kept strictly confidential. If the court finds that the disclosure of the information to a third person is necessary for purposes connected with or arising out of the adoption and will be for the best interest of the adoptee, the court may merit the necessary information to be released, restricting the purposes for which it may be used.

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EFFECTS OF ADOPTION Section 16. Parental Authority. – 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). Section 17. Legitimacy. – 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 end, the adoptee is entitled to love, guidance, and support in keeping with the means of the family. Section 18. Succession. – 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. RESCISSION OF ADOPTION Section 19. Grounds for 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 919 of the Civil Code. Section 20. Effects of Rescission. – 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. VIOLATIONS AND PENALTIES Section 21. Violations and Penalties. – (a) The penalty of imprisonment ranging from six (6) years and one (1) day to twelve (12) years and/or a fine not less than Fifty thousand 210

pesos (P50,000.00), but not more than Two hundred thousand pesos (P200,000.00) at the discretion of the court shall be imposed on any person who shall commit any of the following acts: (i) obtaining consent for an adoption through coercion, undue influence, fraud, improper material inducement, or other similar acts; (ii) non-compliance with the procedures and safeguards provided by the law for adoption; or (iii) subjecting or exposing the child to be adopted to danger, abuse, or exploitation. (b) Any person who shall cause the fictitious registration of the birth of a child under the name(s) of a person(s) who is not his/her biological parent(s) shall be guilty of simulation of birth, and shall be punished by prision mayor in its medium period and a fine not exceeding Fifty thousand pesos (P50,000.00). Any physician or nurse or hospital personnel who, in violation of his/her oath of office, shall cooperate in the execution of the abovementioned crime shall suffer the penalties herein prescribed and also the penalty of permanent disqualification. Any person who shall violate established regulations relating to the confidentiality and integrity of records, documents, and communications of adoption applications, cases, and processes shall suffer the penalty of imprisonment ranging from one (1) year and one (1) day to two (2) years, and/or a fine of not less than Five thousand pesos (P5,000.00) but not more than Ten thousand pesos (P10,000.00), at the discretion of the court. A penalty lower by two (2) degrees than that prescribed for the consummated offense under this Article shall be imposed upon the principals of the attempt to commit any of the acts herein enumerated. Acts punishable under this Article, when committed by a syndicate or where it involves two (2) or more children shall be considered as an offense constituting child trafficking and shall merit the penalty of reclusion perpetua. Acts punishable under this Article are deemed committed by a syndicate if carried out by a group of three (3) or more persons conspiring and/or confederating with one another in carrying out any of the unlawful acts defined under this Article. Penalties as are herein provided, shall be in addition to any other penalties which may be imposed for the same acts punishable under other laws, ordinances, executive orders, and proclamations. When the offender is an alien, he/she shall be deported immediately after service of sentence and perpetually excluded from entry to the country. Any government official, employee or functionary who shall be found guilty of violating any of the provisions of this Act, or who shall conspire with private individuals shall, in addition to the above-prescribed penalties, be penalized in accordance with existing civil service laws, rules and regulations: Provided, That upon the filing of a case, either administrative or criminal, said government official, employee, or functionary concerned shall automatically suffer suspension until the resolution of the case. 211

Section 22. Rectification of Simulated Births. – A person who has, prior to the effectivity of this Act, simulated the birth of a child shall not be punished for such act: Provided, That the simulation of birth was made for the best interest of the child and that he/she has been consistently considered and treated by that person as his/her own son/daughter: Provided, further, That the application for correction of the birth registration and petition for adoption shall be filed within five (5) years from the effectivity of this Act and completed thereafter: Provided, finally, That such person complies with the procedure as specified in Article IV of this Act and other requirements as determined by the Department. FINAL PROVISIONS Section 23. Adoption Resource and Referral Office. – There shall be established an Adoption Resources and Referral Office under the Department with the following functions: (a) monitor the existence, number, and flow of children legally available for adoption and prospective adopter(s) so as to facilitate their matching; (b) maintain a nationwide information and educational campaign on domestic adoption; (c) keep records of adoption proceedings; (d) generate resources to help child-caring and child-placing agencies and foster homes maintain viability; and (e) do policy research in collaboration with the Intercountry Adoption Board and other concerned agencies. The office shall be manned by adoption experts from the public and private sectors. Section 24. Implementing Rules and Regulations. – Within six (6) months from the promulgation of this Act, the Department, with the Council for the Welfare of Children, the Office of Civil Registry General, the Department of Justice, Office of the Solicitor General, and two (2) private individuals representing child-placing and child-caring agencies shall formulate the necessary guidelines to make the provisions of this Act operative. Section 25. Appropriations. – Such sum as may be necessary for the implementation of the provisions of this Act shall be included in the General Appropriations Act of the year following its enactment into law and thereafter. Section 26. Repealing Clause. – Any law, presidential decree or issuance, executive order, letter of instruction, administrative order, rule, or regulation contrary to, or inconsistent with the provisions of this Act is hereby repealed, modified, or amended accordingly. Section 27. Separability Clause. – If any provision of this Act is held invalid or unconstitutional, the other provisions not affected thereby shall remain valid and subsisting. Section 28. Effectivity Clause. – This Act shall take effect fifteen (15) days following its complete publication in any newspaper of general circulation or in the Official Gazette. Approved: February 25, 1998

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REPUBLIC ACT NO. 8043 AN ACT ESTABLISHING THE RULES TO GOVERN INTER-COUNTRY ADOPTION OF FILIPINO CHILDREN, AND FOR OTHER PURPOSES. GENERAL PROVISIONS Section 1. Short Title. — This Act shall be known as the "Inter-Country Adoption Act of 1995." Sec. 2. Declaration of Policy. — It is hereby declared the policy of the State to provide every neglected and abandoned child with a family that will provide such child with love and care as well as opportunities for growth and development. Towards this end, efforts shall be exerted to place the child with an adoptive family in the Philippines. However, recognizing that inter-country adoption may be considered as allowing aliens not presently allowed by law to adopt Filipino children if such children cannot be adopted by qualified Filipino citizens or aliens, the State shall take measures to ensure that inter-country adoptions are allowed when the same shall prove beneficial to the child's best interests, and shall serve and protect his/her fundamental rights.chan robles virtual law library Sec. 3. Definition of Terms. — As used in this Act. the term: (a) Inter-country adoption refers to the socio-legal process of adopting a Filipino child by a foreigner or a Filipino citizen permanently residing abroad where the petition is filed, the supervised trial custody is undertaken, and the decree of adoption is issued outside the Philippines. (b) Child means a person below fifteen (15) years of age unless sooner emancipated by law. (c) Department refers to the Department of Social Welfare and Development of the Republic of the Philippines. (d) Secretary refers to the Secretary of the Department of Social Welfare and Development. (e) Authorized and accredited agency refers to the State welfare agency or a licensed adoption agency in the country of the adopting parents which provide comprehensive social services and which is duly recognized by the Department. (f) Legally-free child means a child who has been voluntarily or involuntarily committed to the Department, in accordance with the Child and Youth Welfare Code. (g) Matching refers to the judicious pairing of the adoptive child and the applicant to promote a mutually satisfying parent-child relationship. (h) Board refers to the Inter-country Adoption Board.

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THE INTER-COUNTRY ADOPTION BOARD Sec. 4. The Inter-Country Adoption Board. — There is hereby created the Inter-Country Adoption Board, hereinafter referred to as the Board to act as the central authority in matters relating to inter-country adoption. It shall act as the policy-making body for purposes of carrying out the provisions of this Act, in consultation and coordination with the Department, the different child-care and placement agencies, adoptive agencies, as well as non-governmental organizations engaged in child-care and placement activities. As such, it shall: (a) Protect the Filipino child from abuse, exploitation, trafficking and/or sale or any other practice in connection with adoption which is harmful, detrimental, or prejudicial to the child; (b) Collect, maintain, and preserve confidential information about the child and the adoptive parents; (c) Monitor, follow up, and facilitate completion of adoption of the child through authorized and accredited agency; (d) Prevent improper financial or other gain in connection with an adoption and deter improper practices contrary to this Act; (e) Promote the development of adoption services including post-legal adoption; (f) License and accredit child-caring/placement agencies and collaborate with them in the placement of Filipino children; (g) Accredit and authorize foreign adoption agency in the placement of Filipino children in their own country; and (h) Cancel the license to operate and blacklist the child-caring and placement agency or adoptive agency involved from the accreditation list of the Board upon a finding of violation of any provision under this Act. Sec. 5. Composition of the Board. — The Board shall be composed of the Secretary of the Department as ex officio Chairman, and six (6) other members to be appointed by the President for a nonrenewable term of six (6) years: Provided, That there shall be appointed one (1) psychiatrist or psychologist, two (2) lawyers who shall have at least the qualifications of a regional trial court judge, one (1) registered social worker and two (2) representatives from non-governmental organizations engaged in child-caring and placement activities. The members of the Board shall receive a per diem allowance of One thousand five hundred pesos (P1,500) for each meeting attended by them: Provided, further, That no compensation shall be paid for more than four (4) meetings a month.

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Sec. 6. Powers and Functions of the Board. — The Board shall have the following powers and functions: (a) to prescribe rules and regulations as it may deem reasonably necessary to carry out the provisions of this Act, after consultation and upon favorable recommendation of the different agencies concerned with the child-caring, placement, and adoption; (b) to set the guidelines for the convening of an Inter-country Adoption Placement Committee which shall be under the direct supervision of the Board; (c) to set the guidelines for the manner by which selection/matching of prospective adoptive parents and adoptive child can be made; (d) to determine a reasonable schedule of fees and charges to be exacted in connection with the application for adoption; (e) to determine the form and contents of the application for inter-country adoption; (g) to institute systems and procedures to prevent improper financial gain in connection with adoption and deter improper practices which are contrary to this Act; (h) to promote the development of adoption services, including post-legal adoption services, (i) to accredit and authorize foreign private adoption agencies which have demonstrated professionalism, competence and have consistently pursued non-profit objectives to engage in the placement of Filipino children in their own country: Provided, That such foreign private agencies are duly authorized and accredited by their own government to conduct intercountry adoption:Provided, however, That the total number of authorized and accredited foreign private adoption agencies shall not exceed one hundred (100) a year; (j) to take appropriate measures to ensure confidentiality of the records of the child, the natural parents and the adoptive parents at all times; (k) to prepare, review or modify, and thereafter, recommend to the Department of Foreign Affairs, Memoranda of Agreement respecting inter-country adoption consistent with the implementation of this Act and its stated goals, entered into, between and among foreign governments, international organizations and recognized international non-governmental organizations; (l) to assist other concerned agencies and the courts in the implementation of this Act, particularly as regards coordination with foreign persons, agencies and other entities involved in the process of adoption and the physical transfer of the child; and (m) to perform such other functions on matters relating to inter-country adoption as may be determined by the President.

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PROCEDURE Sec. 7. Inter-Country Adoption as the Last Resort. — The Board shall ensure that all possibilities for adoption of the child under the Family Code have been exhausted and that inter-country adoption is in the best interest of the child. Towards this end, the Board shall set up the guidelines to ensure that steps will be taken to place the child in the Philippines before the child is placed for inter-country adoption: Provided, however, That the maximum number that may be allowed for foreign adoption shall not exceed six hundred (600) a year for the first five (5) years. Sec. 8. Who May be Adopted. — Only a legally free child may be the subject of intercountry 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. Sec. 9. Who May 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;

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(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. Sec. 10. Where to File Application. — An application to adopt a Filipino child shall be filed either with the Philippine Regional Trial Court having jurisdiction over the child, or with the Board, through an intermediate agency, whether governmental or an authorized and accredited agency, in the country of the prospective adoptive parents, which application shall be in accordance with the requirements as set forth in the implementing rules and regulations to be promulgated by the Board. The application shall be supported by the following documents written and officially translated in English. (a) Birth certificate of applicant(s); (b) Marriage contract, if married, and divorce decree, if applicable; (c) Written consent of their biological or adoptive children above ten (10) years of age, in the form of sworn statement; (d) Physical, medical and psychological evaluation by a duly licensed physician and psychologist; (e) Income tax returns or any document showing the financial capability of the applicant(s); (f) Police clearance of applicant(s); (g) Character reference from the local church/minister, the applicant's employer and a member of the immediate community who have known the applicant(s) for at least five (5) years; and (h) Recent postcard-size pictures of the applicant(s) and his immediate family; The Rules of Court shall apply in case of adoption by judicial proceedings. Sec. 11. Family Selection/Matching. — No child shall be matched to a foreign adoptive family unless it is satisfactorily shown that the child cannot be adopted locally. The clearance, as issued by the Board, with the copy of the minutes of the meetings, shall form part of the records of the child to be adopted. When the Board is ready to transmit the Placement Authority to the authorized and accredited inter-country adoption agency and all the travel documents of the child are ready, the adoptive parents, or any one of them, shall personally fetch the child in the Philippines. Sec. 12. Pre-adoptive Placement Costs. — The applicant(s) shall bear the following costs incidental to the placement of the child; 217

(a) The cost of bringing the child from the Philippines to the residence of the applicant(s) abroad, including all travel expenses within the Philippines and abroad; and (b) The cost of passport, visa, medical examination and psychological evaluation required, and other related expenses. Sec. 13. Fees, Charges and Assessments. — Fees, charges, and assessments collected by the Board in the exercise of its functions shall be used solely to process applications for intercountry adoption and to support the activities of the Board. Sec. 14. Supervision of Trial Custody. — The governmental agency or the authorized and accredited agency in the country of the adoptive parents which filed the application for intercountry adoption shall be responsible for the trial custody and the care of the child. It shall also provide family counseling and other related services. The trial custody shall be for a period of six (6) months from the time of placement. Only after the lapse of the period of trial custody shall a decree of adoption be issued in the said country a copy of which shall be sent to the Board to form part of the records of the child.chan robles virtual law library During the trial custody, the adopting parent(s) shall submit to the governmental agency or the authorized and accredited agency, which shall in turn transmit a copy to the Board, a progress report of the child's adjustment. The progress report shall be taken into consideration in deciding whether or not to issue the decree of adoption. The Department of Foreign Affairs shall set up a system by which Filipino children sent abroad for trial custody are monitored and checked as reported by the authorized and accredited inter-country adoption agency as well as the repatriation to the Philippines of a Filipino child whose adoption has not been approved. Sec. 15. Executive Agreements. — The Department of Foreign Affairs, upon representation of the Board, shall cause the preparation of Executive Agreements with countries of the foreign adoption agencies to ensure the legitimate concurrence of said countries in upholding the safeguards provided by this Act. PENALTIES Sec. 16. Penalties. — (a) Any person who shall knowingly participate in the conduct or carrying out of an illegal adoption, in violation of the provisions of this Act, shall be punished with a penalty of imprisonment ranging from six (6) years and one (1) day to twelve (12) years and/or a fine of not less than Fifty thousand pesos (P50,000), but not more than Two hundred thousand pesos (P200.000), at the discretion of the court. For purposes of this Act, an adoption is illegal if it is effected in any manner contrary to the provisions of this Act or established State policies, its implementing rules and regulations, executive agreements, and other laws pertaining to adoption. Illegality may be presumed from the following acts: (1) consent for an adoption was acquired through, or attended by coercion, fraud, improper material inducement; 218

(2) there is no authority from the Board to effect adoption; (3) the procedures and safeguards placed under the law for adoption were not complied with; and (4) the child to be adopted is subjected to, or exposed to danger, abuse and exploitation. (b)Any person who shall violate established regulations relating to the confidentiality and integrity of records, documents and communications of adoption applications, cases and processes shall suffer the penalty of imprisonment ranging from one (1) year and one (1) day to two (2) years, and/or a fine of not less than Five thousand pesos (P5,000), but not more than Ten thousand pesos (P10,000), at the discretion of the court. A penalty lower by two (2) degrees than that prescribed for the consummated felony under this Article shall be imposed upon the principals of the attempt to commit any of the acts herein enumerated. Acts punishable under this Article, when committed by a syndicate or where it involves two or more children shall be considered as an offense constituting child trafficking and shall merit the penalty of reclusion perpetua. Acts punishable under this Article are deemed committed by a syndicate if carried out by a group of three (3) or more persons conspiring and/or confederating with one another in carrying out any of the unlawful acts defined under this Article.Penalties as are herein provided shall be in addition to any other penalties which may be imposed for the same acts punishable under other laws, ordinances, executive orders, and proclamations.chan robles virtual law library Sec. 17. Public Officers as Offenders. — Any government official, employee or functionary who shall be found guilty of violating any of the provisions of this Act, or who shall conspire with private individuals shall, in addition to the above-prescribed penalties, be penalized in accordance with existing civil service laws, rules and regulations: Provided, That upon the filing of a case, either administrative or criminal, said government official, employee or functionary concerned shall automatically suffer suspension until the resolution of the case. FINAL PROVISIONS Sec. 18. Implementing Rules and Regulations. — The Inter-country Adoption Board, in coordination with the Council for the Welfare of Children, the Department of Foreign Affairs, and the Department of Justice, after due consultation with agencies involved in child-care and placement, shall promulgate the necessary rules and regulations to implement the provisions of this Act within six (6) months after its effectivity. Sec. 19. Appropriations. — The amount of Five million pesos (P5,000,000) is hereby appropriated from the proceeds of the Lotto for the initial operations of the Board and subsequently the appropriations of the same shall be included in the General Appropriations Act for the year following its enactment. 219

Sec. 20. Separability Clause. — If any provision, or part hereof is held invalid or unconstitutional, the remainder of the law or the provision not otherwise affected, shall remain valid and subsisting. Sec. 21. Repealing Clause. — Any law, decree, executive order, administrative order or rules and regulations contrary to, or inconsistent with the provisions of this Act are hereby repealed, modified or amended accordingly.chan robles virtual law library Sec. 22. Effectivity Clause. — This Act shall take effect fifteen (15) days after its publication in two (2) newspapers of general circulation. Approved: June 7, 1995 . Republic Act No. 7610 AN ACT PROVIDING FOR STRONGER DETERRENCE AND SPECIAL PROTECTION AGAINST CHILD ABUSE, EXPLOITATION AND DISCRIMINATION, AND FOR OTHER PURPOSES Title, Policy, Principles and Definitions of Terms Section 1. Title. – This Act shall be known as the "Special Protection of Children Against Abuse, Exploitation and Discrimination Act." Section 2. Declaration of State Policy and Principles. – It is hereby declared to be the policy of the State to provide special protection to children from all firms of abuse, neglect, cruelty exploitation and discrimination and other conditions, prejudicial their development; provide sanctions for their commission and carry out a program for prevention and deterrence of and crisis intervention in situations of child abuse, exploitation and discrimination. The State shall intervene on behalf of the child when the parent, guardian, teacher or person having care or custody of the child fails or is unable to protect the child against abuse, exploitation and discrimination or when such acts against the child are committed by the said parent, guardian, teacher or person having care and custody of the same. It shall be the policy of the State to protect and rehabilitate children gravely threatened or endangered by circumstances which affect or will affect their survival and normal development and over which they have no control. The best interests of children shall be the paramount consideration in all actions concerning them, whether undertaken by public or private social welfare institutions, courts of law, administrative authorities, and legislative bodies, consistent with the principle of First Call for Children as enunciated in the United Nations Convention of the Rights of the Child.

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Every effort shall be exerted to promote the welfare of children and enhance their opportunities for a useful and happy life. Section 3. Definition of Terms. – (a) "Children" refers to person below eighteen (18) years of age or those over but are unable to fully take care of themselves or protect themselves from abuse, neglect, cruelty, exploitation or discrimination because of a physical or mental disability or condition; (b) "Child abuse" refers to the maltreatment, whether habitual or not, of the child which includes any of the following: (1) Psychological and physical abuse, neglect, cruelty, sexual abuse and emotional maltreatment; (2) Any act by deeds or words which debases, degrades or demeans the intrinsic worth and dignity of a child as a human being; (3) Unreasonable deprivation of his basic needs for survival, such as food and shelter; or (4) Failure to immediately give medical treatment to an injured child resulting in serious impairment of his growth and development or in his permanent incapacity or death. (c) "Circumstances which gravely threaten or endanger the survival and normal development of children" include, but are not limited to, the following; (1) Being in a community where there is armed conflict or being affected by armed conflict-related activities; (2) Working under conditions hazardous to life, safety and normal which unduly interfere with their normal development; (3) Living in or fending for themselves in the streets of urban or rural areas without the care of parents or a guardian or basic services needed for a good quality of life; (4) Being a member of a indigenous cultural community and/or living under conditions of extreme poverty or in an area which is underdeveloped and/or lacks or has inadequate access to basic services needed for a good quality of life; (5) Being a victim of a man-made or natural disaster or calamity; or (6) Circumstances analogous to those abovestated which endanger the life, safety or normal development of children. (d) "Comprehensive program against child abuse, exploitation and discrimination" refers to the coordinated program of services and facilities to protected children against: 221

(1) Child Prostitution and other sexual abuse; (2) Child trafficking; (3) Obscene publications and indecent shows; (4) Other acts of abuses; and (5) Circumstances which threaten or endanger the survival and normal development of children. Program on Child Abuse, Exploitation and Discrimination Section 4. Formulation of the Program. – There shall be a comprehensive program to be formulated, by the Department of Justice and the Department of Social Welfare and Development in coordination with other government agencies and private sector concerned, within one (1) year from the effectivity of this Act, to protect children against child prostitution and other sexual abuse; child trafficking, obscene publications and indecent shows; other acts of abuse; and circumstances which endanger child survival and normal development. Child Prostitution and Other Sexual Abuse Section 5. Child Prostitution and Other Sexual Abuse. – Children, whether male or female, who for money, profit, or any other consideration or due to the coercion or influence of any adult, syndicate or group, indulge in sexual intercourse or lascivious conduct, are deemed to be children exploited in prostitution and other sexual abuse. The penalty of reclusion temporal in its medium period to reclusion perpetua shall be imposed upon the following: (a) Those who engage in or promote, facilitate or induce child prostitution which include, but are not limited to, the following: (1) Acting as a procurer of a child prostitute; (2) Inducing a person to be a client of a child prostitute by means of written or oral advertisements or other similar means; (3) Taking advantage of influence or relationship to procure a child as prostitute; (4) Threatening or using violence towards a child to engage him as a prostitute; or (5) Giving monetary consideration goods or other pecuniary benefit to a child with intent to engage such child in prostitution. (b) Those who commit the act of sexual intercourse of lascivious conduct with a child exploited in prostitution or subject to other sexual abuse; Provided, That when the victims is under twelve (12) years of age, the perpetrators shall be prosecuted under Article 335, paragraph 3, for rape and Article 336 of Act No. 3815, as amended, the Revised Penal Code, for rape or lascivious conduct, as the case may be: Provided, That the penalty for lascivious 222

conduct when the victim is under twelve (12) years of age shall be reclusion temporal in its medium period; and (c) Those who derive profit or advantage therefrom, whether as manager or owner of the establishment where the prostitution takes place, or of the sauna, disco, bar, resort, place of entertainment or establishment serving as a cover or which engages in prostitution in addition to the activity for which the license has been issued to said establishment. Section 6. Attempt To Commit Child Prostitution. – There is an attempt to commit child prostitution under Section 5, paragraph (a) hereof when any person who, not being a relative of a child, is found alone with the said child inside the room or cubicle of a house, an inn, hotel, motel, pension house, apartelle or other similar establishments, vessel, vehicle or any other hidden or secluded area under circumstances which would lead a reasonable person to believe that the child is about to be exploited in prostitution and other sexual abuse. There is also an attempt to commit child prostitution, under paragraph (b) of Section 5 hereof when any person is receiving services from a child in a sauna parlor or bath, massage clinic, health club and other similar establishments. A penalty lower by two (2) degrees than that prescribed for the consummated felony under Section 5 hereof shall be imposed upon the principals of the attempt to commit the crime of child prostitution under this Act, or, in the proper case, under the Revised Penal Code. Child Trafficking Section 7. Child Trafficking. – Any person who shall engage in trading and dealing with children including, but not limited to, the act of buying and selling of a child for money, or for any other consideration, or barter, shall suffer the penalty of reclusion temporal to reclusion perpetua. The penalty shall be imposed in its maximum period when the victim is under twelve (12) years of age.Section 8. Attempt to Commit Child Trafficking. – There is an attempt to commit child trafficking under Section 7 of this Act: (a) When a child travels alone to a foreign country without valid reason therefor and without clearance issued by the Department of Social Welfare and Development or written permit or justification from the child's parents or legal guardian; (c) When a person, agency, establishment or child-caring institution recruits women or couples to bear children for the purpose of child trafficking; or (d) When a doctor, hospital or clinic official or employee, nurse, midwife, local civil registrar or any other person simulates birth for the purpose of child trafficking; or (e) When a person engages in the act of finding children among low-income families, hospitals, clinics, nurseries, day-care centers, or other child-during institutions who can be offered for the purpose of child trafficking.

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A penalty lower two (2) degrees than that prescribed for the consummated felony under Section 7 hereof shall be imposed upon the principals of the attempt to commit child trafficking under this Act. Section 9. Obscene Publications and Indecent Shows. – Any person who shall hire, employ, use, persuade, induce or coerce a child to perform in obscene exhibitions and indecent shows, whether live or in video, or model in obscene publications or pornographic materials or to sell or distribute the said materials shall suffer the penalty of prision mayor in its medium period. If the child used as a performer, subject or seller/distributor is below twelve (12) years of age, the penalty shall be imposed in its maximum period. Any ascendant, guardian, or person entrusted in any capacity with the care of a child who shall cause and/or allow such child to be employed or to participate in an obscene play, scene, act, movie or show or in any other acts covered by this section shall suffer the penalty of prision mayor in its medium period. Section 10. Other Acts of Neglect, Abuse, Cruelty or Exploitation and Other Conditions Prejudicial to the Child's Development. – (a) Any person who shall commit any other acts of child abuse, cruelty or exploitation or to be responsible for other conditions prejudicial to the child's development including those covered by Article 59 of Presidential Decree No. 603, as amended, but not covered by the Revised Penal Code, as amended, shall suffer the penalty of prision mayor in its minimum period. (b) Any person who shall keep or have in his company a minor, twelve (12) years or under or who in ten (10) years or more his junior in any public or private place, hotel, motel, beer joint, discotheque, cabaret, pension house, sauna or massage parlor, beach and/or other tourist resort or similar places shall suffer the penalty of prision mayor in its maximum period and a fine of not less than Fifty thousand pesos (P50,000): Provided, That this provision shall not apply to any person who is related within the fourth degree of consanguinity or affinity or any bond recognized by law, local custom and tradition or acts in the performance of a social, moral or legal duty. (c) Any person who shall induce, deliver or offer a minor to any one prohibited by this Act to keep or have in his company a minor as provided in the preceding paragraph shall suffer the penalty of prision mayor in its medium period and a fine of not less than Forty thousand pesos (P40,000); Provided, however, That should the perpetrator be an ascendant, stepparent or guardian of the minor, the penalty to be imposed shall be prision mayor in its maximum period, a fine of not less than Fifty thousand pesos (P50,000), and the loss of parental authority over the minor. (d) Any person, owner, manager or one entrusted with the operation of any public or private place of accommodation, whether for occupancy, food, drink or otherwise, including residential places, who allows any person to take along with him to such place or places any minor herein described shall be imposed a penalty of prision mayor in its medium period and a fine of not less than Fifty thousand pesos (P50,000), and the loss of the license to operate such a place or establishment. 224

(e) Any person who shall use, coerce, force or intimidate a street child or any other child to; (1) Beg or use begging as a means of living; (2) Act as conduit or middlemen in drug trafficking or pushing; or (3) Conduct any illegal activities, shall suffer the penalty of prision correccional in its medium period to reclusion perpetua. For purposes of this Act, the penalty for the commission of acts punishable under Articles 248, 249, 262, paragraph 2, and 263, paragraph 1 of Act No. 3815, as amended, the Revised Penal Code, for the crimes of murder, homicide, other intentional mutilation, and serious physical injuries, respectively, shall be reclusion perpetua when the victim is under twelve (12) years of age. The penalty for the commission of acts punishable under Article 337, 339, 340 and 341 of Act No. 3815, as amended, the Revised Penal Code, for the crimes of qualified seduction, acts of lasciviousness with the consent of the offended party, corruption of minors, and white slave trade, respectively, shall be one (1) degree higher than that imposed by law when the victim is under twelve (12) years age. The victim of the acts committed under this section shall be entrusted to the care of the Department of Social Welfare and Development. Section 11. Sanctions of Establishments or Enterprises which Promote, Facilitate, or

Conduct Activities Constituting Child Prostitution and Other Sexual Abuse, Child Trafficking, Obscene Publications and Indecent Shows, and Other Acts of Abuse . – All establishments and enterprises which promote or facilitate child prostitution and other sexual abuse, child trafficking, obscene publications and indecent shows, and other acts of abuse shall be immediately closed and their authority or license to operate cancelled, without prejudice to the owner or manager thereof being prosecuted under this Act and/or the Revised Penal Code, as amended, or special laws. A sign with the words "off limits" shall be conspicuously displayed outside the establishments or enterprises by the Department of Social Welfare and Development for such period which shall not be less than one (1) year, as the Department may determine. The unauthorized removal of such sign shall be punishable by prision correccional.

An establishment shall be deemed to promote or facilitate child prostitution and other sexual abuse, child trafficking, obscene publications and indecent shows, and other acts of abuse if the acts constituting the same occur in the premises of said establishment under this Act or in violation of the Revised Penal Code, as amended. An enterprise such as a sauna, travel agency, or recruitment agency which: promotes the aforementioned acts as part of a tour for foreign tourists; exhibits children in a lewd or indecent show; provides child masseurs for adults of the same or opposite sex and said services include any lascivious conduct with the customers; or solicits children or activities constituting the aforementioned acts shall be deemed to have committed the acts penalized herein. Section 12. Employment of Children. – Children below fifteen (15) years of age may be employed except:

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(1) When a child works directly under the sole responsibility of his parents or legal guardian and where only members of the employer's family are employed: Provided, however, That his employment neither endangers his life, safety and health and morals, nor impairs his normal development: Provided, further, That the parent or legal guardian shall provide the said minor child with the prescribed primary and/or secondary education; or (2) When a child's employment or participation in public & entertainment or information through cinema, theater, radio or television is essential: Provided, The employment contract concluded by the child's parent or guardian, with the express agreement of the child concerned, if possible, and the approval of the Department of Labor and Employment: Provided, That the following requirements in all instances are strictly complied with: (a) The employer shall ensure the protection, health, safety and morals of the child; (b) the employer shall institute measures to prevent the child's exploitation or discrimination taking into account the system and level of remuneration, and the duration and arrangement of working time; and; (c) The employer shall formulate and implement, subject to the approval and supervision of competent authorities, a continuing program for training and skill acquisition of the child. In the above exceptional cases where any such child may be employed, the employer shall first secure, before engaging such child, a work permit from the Department of Labor and Employment which shall ensure observance of the above requirement. The Department of Labor Employment shall promulgate rules and regulations necessary for the effective implementation of this Section. Section 13. Non-formal Education for Working Children. – The Department of Education, Culture and Sports shall promulgate a course design under its non-formal education program aimed at promoting the intellectual, moral and vocational efficiency of working children who have not undergone or finished elementary or secondary education. Such course design shall integrate the learning process deemed most effective under given circumstances. Section 14. Prohibition on the Employment of Children in Certain Advertisements. – No person shall employ child models in all commercials or advertisements promoting alcoholic beverages, intoxicating drinks, tobacco and its byproducts and violence. Section 15. Duty of Employer. – Every employer shall comply with the duties provided for in Articles 108 and 109 of Presidential Decree No. 603. Section 16. Penalties. – Any person who shall violate any provision of this Article shall suffer the penalty of a fine of not less than One thousand pesos (P1,000) but not more than Ten thousand pesos (P10,000) or imprisonment of not less than three (3) months but not more than three (3) years, or both at the discretion of the court; Provided, That, in case of repeated violations of the provisions of this Article, the offender's license to operate shall be revoked. 226

Section 17. Survival, Protection and Development. – In addition to the rights guaranteed to children under this Act and other existing laws, children of indigenous cultural communities shall be entitled to protection, survival and development consistent with the customs and traditions of their respective communities. Section 18. System of and Access to Education. – The Department of Education, Culture and Sports shall develop and institute an alternative system of education for children of indigenous cultural communities which culture-specific and relevant to the needs of and the existing situation in their communities. The Department of Education, Culture and Sports shall also accredit and support non-formal but functional indigenous educational programs conducted by non-government organizations in said communities. Section 19. Health and Nutrition. – The delivery of basic social services in health and nutrition to children of indigenous cultural communities shall be given priority by all government agencies concerned. Hospitals and other health institution shall ensure that children of indigenous cultural communities are given equal attention. In the provision of health and nutrition services to children of indigenous cultural communities, indigenous health practices shall be respected and recognized. Section 20. Discrimination. – Children of indigenous cultural communities shall not be subjected to any and all forms of discrimination. Any person who discriminate against children of indigenous cultural communities shall suffer a penalty of arresto mayor in its maximum period and a fine of not less than Five thousand pesos (P5,000) more than Ten thousand pesos (P10,000). Section 21. Participation. – Indigenous cultural communities, through their dulydesignated or appointed representatives shall be involved in planning, decision-making implementation, and evaluation of all government programs affecting children of indigenous cultural communities. Indigenous institution shall also be recognized and respected. Section 22. Children as Zones of Peace. – Children are hereby declared as Zones of Peace. It shall be the responsibility of the State and all other sectors concerned to resolve armed conflicts in order to promote the goal of children as zones of peace. To attain this objective, the following policies shall be observed. (a) Children shall not be the object of attack and shall be entitled to special respect. They shall be protected from any form of threat, assault, torture or other cruel, inhumane or degrading treatment; (b) Children shall not be recruited to become members of the Armed Forces of the Philippines of its civilian units or other armed groups, nor be allowed to take part in the fighting, or used as guides, couriers, or spies; (c) Delivery of basic social services such as education, primary health and emergency relief services shall be kept unhampered;

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(d) The safety and protection of those who provide services including those involved in factfinding missions from both government and non-government institutions shall be ensured. They shall not be subjected to undue harassment in the performance of their work; (e) Public infrastructure such as schools, hospitals and rural health units shall not be utilized for military purposes such as command posts, barracks, detachments, and supply depots; and (f) All appropriate steps shall be taken to facilitate the reunion of families temporarily separated due to armed conflict. Section 23. Evacuation of Children During Armed Conflict. – Children shall be given priority during evacuation as a result of armed conflict. Existing community organizations shall be tapped to look after the safety and well-being of children during evacuation operations. Measures shall be taken to ensure that children evacuated are accompanied by persons responsible for their safety and well-being. Section 24. Family Life and Temporary Shelter. – Whenever possible, members of the same family shall be housed in the same premises and given separate accommodation from other evacuees and provided with facilities to lead a normal family life. In places of temporary shelter, expectant and nursing mothers and children shall be given additional food in proportion to their physiological needs. Whenever feasible, children shall be given opportunities for physical exercise, sports and outdoor games. Section 25. Rights of Children Arrested for Reasons Related to Armed Conflict. – Any child who has been arrested for reasons related to armed conflict, either as combatant, courier, guide or spy is entitled to the following rights; (a) Separate detention from adults except where families are accommodated as family units; (b) Immediate free legal assistance; (c) Immediate notice of such arrest to the parents or guardians of the child; and (d) Release of the child on recognizance within twenty-four (24) hours to the custody of the Department of Social Welfare and Development or any responsible member of the community as determined by the court. If after hearing the evidence in the proper proceedings the court should find that the aforesaid child committed the acts charged against him, the court shall determine the imposable penalty, including any civil liability chargeable against him. However, instead of pronouncing judgment of conviction, the court shall suspend all further proceedings and shall commit such child to the custody or care of the Department of Social Welfare and Development or to any training institution operated by the Government, or duly-licensed agencies or any other responsible person, until he has had reached eighteen (18) years of age or, for a shorter period as the court may deem proper, after considering the reports and recommendations of the Department of Social Welfare and Development or the agency or responsible individual under whose care he has been committed. 228

The aforesaid child shall subject to visitation and supervision by a representative of the Department of Social Welfare and Development or any duly-licensed agency or such other officer as the court may designate subject to such conditions as it may prescribe. The aforesaid child whose sentence is suspended can appeal from the order of the court in the same manner as appeals in criminal cases. Section 26. Monitoring and Reporting of Children in Situations of Armed Conflict. – The chairman of the barangay affected by the armed conflict shall submit the names of children residing in said barangay to the municipal social welfare and development officer within twenty-four (24) hours from the occurrence of the armed conflict. Section 27. Who May File a Complaint. – Complaints on cases of unlawful acts committed against the children as enumerated herein may be filed by the following: (a) Offended party; (b) Parents or guardians; (c) Ascendant or collateral relative within the third degree of consanguinity;1awphi1@ITC (d) Officer, social worker or representative of a licensed child-caring institution; (e) Officer or social worker of the Department of Social Welfare and Development; (f) Barangay chairman; or (g) At least three (3) concerned responsible citizens where the violation occurred. Section 28. Protective Custody of the Child. – The offended party shall be immediately placed under the protective custody of the Department of Social Welfare and Development pursuant to Executive Order No. 56, series of 1986. In the regular performance of this function, the officer of the Department of Social Welfare and Development shall be free from any administrative, civil or criminal liability. Custody proceedings shall be in accordance with the provisions of Presidential Decree No. 603. Section 29. Confidentiality. – At the instance of the offended party, his name may be withheld from the public until the court acquires jurisdiction over the case. It shall be unlawful for any editor, publisher, and reporter or columnist in case of printed materials, announcer or producer in case of television and radio broadcasting, producer and director of the film in case of the movie industry, to cause undue and sensationalized publicity of any case of violation of this Act which results in the moral degradation and suffering of the offended party.Lawphi1@alf Section 30. Special Court Proceedings. – Cases involving violations of this Act shall be heard in the chambers of the judge of the Regional Trial Court duly designated as Juvenile and Domestic Court. 229

Any provision of existing law to the contrary notwithstanding and with the exception of habeas corpus, election cases, and cases involving detention prisoners and persons covered by Republic Act No. 4908, all courts shall give preference to the hearing or disposition of cases involving violations of this Act. Section 31. Common Penal Provisions. – (a) The penalty provided under this Act shall be imposed in its maximum period if the offender has been previously convicted under this Act; (b) When the offender is a corporation, partnership or association, the officer or employee thereof who is responsible for the violation of this Act shall suffer the penalty imposed in its maximum period; (c) The penalty provided herein shall be imposed in its maximum period when the perpetrator is an ascendant, parent guardian, stepparent or collateral relative within the second degree of consanguinity or affinity, or a manager or owner of an establishment which has no license to operate or its license has expired or has been revoked; (d) When the offender is a foreigner, he shall be deported immediately after service of sentence and forever barred from entry to the country; (e) The penalty provided for in this Act shall be imposed in its maximum period if the offender is a public officer or employee: Provided, however, That if the penalty imposed is reclusion perpetua or reclusion temporal, then the penalty of perpetual or temporary absolute disqualification shall also be imposed: Provided, finally, That if the penalty imposed is prision correccional or arresto mayor, the penalty of suspension shall also be imposed; and (f) A fine to be determined by the court shall be imposed and administered as a cash fund by the Department of Social Welfare and Development and disbursed for the rehabilitation of each child victim, or any immediate member of his family if the latter is the perpetrator of the offense. Section 32. Rules and Regulations. – Unless otherwise provided in this Act, the Department of Justice, in coordination with the Department of Social Welfare and Development, shall promulgate rules and regulations of the effective implementation of this Act. Such rules and regulations shall take effect upon their publication in two (2) national newspapers of general circulation. Section 33. Appropriations. – The amount necessary to carry out the provisions of this Act is hereby authorized to be appropriated in the General Appropriations Act of the year following its enactment into law and thereafter. Section 34. Separability Clause. – If any provision of this Act is declared invalid or unconstitutional, the remaining provisions not affected thereby shall continue in full force and effect. 230

Section 35. Repealing Clause. – All laws, decrees, or rules inconsistent with the provisions of this Acts are hereby repealed or modified accordingly. Section 36. Effectivity Clause. – This Act shall take effect upon completion of its publication in at least two (2) national newspapers of general circulation. Approved: June 17, 1992.

PRESIDENTIAL DECREE No. 957 REGULATING THE SALE OF SUBDIVISION LOTS AND CONDOMINIUMS, PROVIDING PENALTIES FOR VIOLATIONS THEREOF Section 1. Title. This Decree shall be known as THE SUBDIVISION AND CONDOMINIUM BUYERS' PROTECTIVE DECREE. Section 2. Definition of Terms When used in this Decree, the following terms shall, unless the context otherwise indicates, have the following respective meanings: (a) Person. "Person" shall mean a natural or a juridical person. A juridical person refers to a business firm whether a corporation, partnership, cooperative or associations or a single proprietorship. (b) Sale or sell. "Sale" or "sell" shall include every disposition, or attempt to dispose, for a valuable consideration, of a subdivision lot, including the building and other improvements thereof, if any, in a subdivision project or a condominium unit in a condominium project. "Sale" and "sell" shall also include a contract to sell, a contract of purchase and sale, an exchange, an attempt to sell, an option of sale or purchase, a solicitation of a sale, or an offer to sell, directly or by an agent, or by a circular, letter, advertisement or otherwise. A privilege given to a member of a cooperative, corporation, partnership, or any association and/or the issuance of a certificate or receipt evidencing or giving the right of participation in, or right to, any land in consideration of payment of the membership fee or dues, shall be deemed a sale within the meaning of this definition. (c) Buy and purchase. The "buy" and "purchase" shall include any contract to buy, purchase, or otherwise acquire for a valuable consideration a subdivision lot, including the building and other improvements, if any, in a subdivision project or a condominium unit in a condominium project. (d) Subdivision project. "Subdivision project" shall mean a tract or a parcel of land registered under Act No. 496 which is partitioned primarily for residential purposes into individual lots with or without improvements thereon, and offered to the public for sale, in cash or in installment terms. It shall include all residential, commercial, industrial and recreational areas as well as open spaces and other community and public areas in the project.

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(e) Subdivision lot. "Subdivision lot" shall mean any of the lots, whether residential, commercial, industrial, or recreational, in a subdivision project. (f) Complex subdivision plan. "Complex subdivision plan" shall mean a subdivision plan of a registered land wherein a street, passageway or open space is delineated on the plan. (g) Condominium project. "Condominium project" shall mean the entire parcel of real property divided or to be divided primarily for residential purposes into condominium units, including all structures thereon. (h) Condominium unit. "Condominium unit" shall mean a part of the condominium project intended for any type of independent use or ownership, including one or more rooms or spaces located in one or more floors (or part of parts of floors) in a building or buildings and such accessories as may be appended thereto. (i) Owner. "Owner" shall refer to the registered owner of the land subject of a subdivision or a condominium project. (j) Developer. "Developer" shall mean the person who develops or improves the subdivision project or condominium project for and in behalf of the owner thereof. (k) Dealer. "Dealer" shall mean any person directly engaged as principal in the business of buying, selling or exchanging real estate whether on a full-time or part-time basis. (l) Broker. "Broker" shall mean any person who, for commission or other compensation, undertakes to sell or negotiate the sale of a real estate belonging to another. (m) Salesman. "Salesman" shall refer to the person regularly employed by a broker to perform, for and in his behalf, any or all functions of a real estate broker. (n) Authority. "Authority" shall mean the National Housing Authority. Section 3. National Housing Authority The National Housing Authority shall have exclusive jurisdiction to regulate the real estate trade and business in accordance with the provisions of this Decree. Section 4. Registration of Projects The registered owner of a parcel of land who wishes to convert the same into a subdivision project shall submit his subdivision plan to the Authority which shall act upon and approve the same, upon a finding that the plan complies with the Subdivision Standards' and Regulations enforceable at the time the plan is submitted. The same procedure shall be followed in the case of a plan for a condominium project except that, in addition, said Authority shall act upon and approve the plan with respect to the building or buildings included in the condominium project in accordance with the National Building Code (R.A. No. 6541). The subdivision plan, as so approved, shall then be submitted to the Director of Lands for approval in accordance with the procedure prescribed in Section 44 of the Land Registration Act (Act No. 496, as amended by R.A. No. 440): Provided, that it case of complex subdivision plans, court approval shall no longer be required. The condominium plan as likewise so approved, shall be submitted to the Register of Deeds of the province or city in which the property lies and the same shall be acted upon subject to the conditions and in accordance with the procedure prescribed in Section 4 of the Condominium Act (R.A. No. 4726). 232

The owner or the real estate dealer interested in the sale of lots or units, respectively, in such subdivision project or condominium project shall register the project with the Authority by filing therewith a sworn registration statement containing the following information: (a) Name of the owner; (b) The location of the owner's principal business office, and if the owner is a non-resident Filipino, the name and address of his agent or representative in the Philippines is authorized to receive notice; (c) The names and addresses of all the directors and officers of the business firm, if the owner be a corporation, association, trust, or other entity, and of all the partners, if it be a partnership; (d) The general character of the business actually transacted or to be transacted by the owner; and (e) A statement of the capitalization of the owner, including the authorized and outstanding amounts of its capital stock and the proportion thereof which is paid-up. The following documents shall be attached to the registration statement: (a) A copy of the subdivision plan or condominium plan as approved in accordance with the first and second paragraphs of this section. (b) A copy of any circular, prospectus, brochure, advertisement, letter, or communication to be used for the public offering of the subdivision lots or condominium units; (c) In case of a business firm, a balance sheet showing the amount and general character of its assets and liabilities and a copy of its articles of incorporation or articles of partnership or association, as the case may be, with all the amendments thereof and existing by-laws or instruments corresponding thereto. (d) A title to the property which is free from all liens and encumbrances: Provided, however, that in case any subdivision lot or condominium unit is mortgaged, it is sufficient if the instrument of mortgage contains a stipulation that the mortgagee shall release the mortgage on any subdivision lot or condominium unit as soon as the full purchase price for the same is paid by the buyer. The person filing the registration statement shall pay the registration fees prescribed therefor by the Authority. Thereupon, the Authority shall immediately cause to be published a notice of the filing of the registration statement at the expense of the applicant-owner or dealer, in two newspapers general circulation, one published in English and another in Pilipino, once a week for two consecutive weeks, reciting that a registration statement for the sale of subdivision lots or condominium units has been filed in the National Housing Authority; that the aforesaid registration statement, as well as the papers attached thereto, are open to inspection during 233

business hours by interested parties, under such regulations as the Authority may impose; and that copies thereof shall be furnished to any party upon payment of the proper fees. The subdivision project of the condominium project shall be deemed registered upon completion of the above publication requirement. The fact of such registration shall be evidenced by a registration certificate to be issued to the applicant-owner or dealer. Section 5. License to sell. Such owner or dealer to whom has been issued a registration certificate shall not, however, be authorized to sell any subdivision lot or condominium unit in the registered project unless he shall have first obtained a license to sell the project within two weeks from the registration of such project. The Authority, upon proper application therefor, shall issue to such owner or dealer of a registered project a license to sell the project if, after an examination of the registration statement filed by said owner or dealer and all the pertinent documents attached thereto, he is convinced that the owner or dealer is of good repute, that his business is financially stable, and that the proposed sale of the subdivision lots or condominium units to the public would not be fraudulent. Section 6. Performance Bond. No license to sell subdivision lots or condominium units shall be issued by the Authority under Section 5 of this Decree unless the owner or dealer shall have filed an adequate performance bond approved by said Authority to guarantee the construction and maintenance of the roads, gutters, drainage, sewerage, water system, lighting systems, and full development of the subdivision project or the condominium project and the compliance by the owner or dealer with the applicable laws and rules and regulations. The performance bond shall be executed in favor of the Republic of the Philippines and shall authorize the Authority to use the proceeds thereof for the purposes of its undertaking in case of forfeiture as provided in this Decree. Section 7. Exempt transactions. A license to sell and performance bond shall not be required in any of the following transactions: (a) Sale of a subdivision lot resulting from the partition of land among co-owners and coheirs. (b) Sale or transfer of a subdivision lot by the original purchaser thereof and any subsequent sale of the same lot. (c) Sale of a subdivision lot or a condominium unit by or for the account of a mortgagee in the ordinary course of business when necessary to liquidate a bona fide debt. Section 8. Suspension of license to sell. Upon verified complaint by a buyer of a subdivision lot or a condominium unit in any interested party, the Authority may, in its discretion, immediately suspend the owner's or dealer's license to sell pending investigation and hearing of the case as provided in Section 13 hereof. The Authority may motu proprio suspend the license to sell if, in its opinion, any information in the registration statement filed by the owner or dealer is or has become 234

misleading, incorrect, inadequate or incomplete or the sale or offering for a sale of the subdivision or condominium project may work or tend to work a fraud upon prospective buyers. The suspension order may be lifted if, after notice and hearing, the Authority is convinced that the registration statement is accurate or that any deficiency therein has been corrected or supplemented or that the sale to the public of the subdivision or condominium project will neither be fraudulent not result in fraud. It shall also be lifted upon dismissal of the complaint for lack of legal basis. Until the final entry of an order of suspension, the suspension of the right to sell the project, though binding upon all persons notified thereof, shall be deemed confidential unless it shall appear that the order of suspension has in the meantime been violated. Section 9. Revocation of registration certificate and license to sell. The Authority may, motu proprio or upon verified complaint filed by a buyer of a subdivision lot or condominium unit, revoke the registration of any subdivision project or condominium project and the license to sell any subdivision lot or condominium unit in said project by issuing an order to this effect, with his findings in respect thereto, if upon examination into the affairs of the owner or dealer during a hearing as provided for in Section 14 hereof, if shall appear there is satisfactory evidence that the said owner or dealer: (a) Is insolvent; or (b) has violated any of the provisions of this Decree or any applicable rule or regulation of the Authority, or any undertaking of his/its performance bond; or (c) Has been or is engaged or is about to engage in fraudulent transactions; or (d) Has made any misrepresentation in any prospectus, brochure, circular or other literature about the subdivision project or condominium project that has been distributed to prospective buyers; or (e) Is of bad business repute; or (f) Does not conduct his business in accordance with law or sound business principles. Where the owner or dealer is a partnership or corporation or an unincorporated association, it shall be sufficient cause for cancellation of its registration certificate and its license to sell, if any member of such partnership or any officer or director of such corporation or association has been guilty of any act or omission which would be cause for refusing or revoking the registration of an individual dealer, broker or salesman as provided in Section 11 hereof. Section 10. Registers of subdivision lots and condominium units. A record of subdivision lots and condominium units shall be kept in the Authority wherein shall be entered all orders of the Authority affecting the condition or status thereof. The registers of subdivision lots and 235

condominium units shall be open to public inspection subject to such reasonable rules as the Authority may prescribe. Section 11. Registration of dealers, brokers and salesmen. No real estate dealer, broker or salesman shall engage in the business of selling subdivision lots or condominium units unless he has registered himself with the Authority in accordance with the provisions of this section. If the Authority shall find that the applicant is of good repute and has complied with the applicable rules of the Authority, including the payment of the prescribed fee, he shall register such applicant as a dealer, broker or salesman upon filing a bond, or other security in lieu thereof, in such sum as may be fixed by the Authority conditioned upon his faithful compliance with the provisions of this Decree: Provided, that the registration of a salesman shall cease upon the termination of his employment with a dealer or broker. Every registration under this section shall expire on the thirty-first day of December of each year. Renewal of registration for the succeeding year shall be granted upon written application therefor made not less than thirty nor more than sixty days before the first day of the ensuing year and upon payment of the prescribed fee, without the necessity of filing further statements or information, unless specifically required by the Authority. All applications filed beyond said period shall be treated as original applications. The names and addresses of all persons registered as dealers, brokers, or salesmen shall be recorded in a Register of Brokers, Dealers and Salesmen kept in the Authority which shall be open to public inspection. Section 12. Revocation of registration as dealers, brokers or salesmen. Registration under the preceding section may be refused or any registration granted thereunder, revoked by the Authority if, after reasonable notice and hearing, it shall determine that such applicant or registrant: 1. Has violated any provision of this Decree or any rule or regulation made hereunder; or 2. Has made a material false statement in his application for registration; or 3. Has been guilty of a fraudulent act in connection with any sale of a subdivision lot or condominium unit; or 4. Has demonstrated his unworthiness to transact the business of dealer, broker, or salesman, as the case may be. In case of charges against a salesman, notice thereof shall also be given the broker or dealer employing such salesman. Pending hearing of the case, the Authority shall have the power to order the suspension of the dealer's, broker's, of salesman's registration; provided, that such order shall state the cause for the suspension. The suspension or revocation of the registration of a dealer or broker shall carry with it all the suspension or revocation of the registrations of all his salesmen.

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Section 13. Hearing. In the hearing for determining the existence of any ground or grounds for the suspension and/or revocation of registration certificate and license to sell as provided in Section 8 and 9 hereof, the following shall be complied with: (a) Notice. No such hearing shall proceed unless the respondent is furnished with a copy of the complaint against him or is notified in writing of the purpose of such hearing. (b) Venue. The hearing may be held before the officer or officers designated by the Authority on the date and place specified in the notice. (c) Nature of proceeding. The proceedings shall be non-litigious and summary in nature without regard to legal technicalities obtaining in courts of law. The Rules of court shall not apply in said hearing except by analogy or in a suppletory character and whenever practicable and convenient. (d) Power incidental to the hearing. For the purpose of the hearing or other proceeding under this Decree, the officer or officers designated to hear the complaint shall have the power to administer oaths, subpoena witnesses, conduct ocular inspections, take depositions, and require the production of any book, paper, correspondence, memorandum, or other record which are deemed relevant or material to the inquiry. Section 14. Contempt. (a) Direct contempt. The officer or officers designated by the Authority to hear the complaint may summarily adjudge in direct contempt any person guilty of misbehavior in the presence of or so near the said hearing officials as to obstruct or interrupt the proceedings before the same or of refusal to be sworn or to answer as a witness or to subscribe an affidavit or deposition when lawfully required to do so. The person found guilty of direct contempt under this section shall be punished by a fine not exceeding Fifty (P50.00) Pesos or imprisonment not exceeding five (5) days, or both. (b) Indirect contempt. The officer or officers designated to hear the complaint may also adjudge any person in indirect contempt on grounds and in the manner prescribed in Rule 71 of the Revised Rules of Court. Section 15. Decision. The case shall be decided within thirty (30) days from the time the same is submitted for decision. The Decision may order the revocation of the registration of the subdivision or condominium project, the suspension, cancellation, or revocation of the license to sell and/or forfeiture, in whole or in part, of the performance bond mentioned in Section 6 hereof. In case forfeiture of the bond is ordered, the Decision may direct the provincial or city engineer to undertake or cause the construction of roads and of other requirements for the subdivision or condominium as stipulated in the bond, chargeable to the amount forfeited. Such decision shall be immediately executory and shall become final after the lapse of 15 days from the date of receipt of the Decision. Section 16. Cease and Desist Order. Whenever it shall appear to the Authority that any person is engaged or about to engage in any act or practice which constitutes or will constitute a violation of the provisions of this Decree, or of any rule or regulation thereunder, it may, 237

upon due notice and hearing as provided in Section 13 hereof, issue a cease and desist order to enjoin such act or practices. Section 17. Registration. All contracts to sell, deeds of sale and other similar instruments relative to the sale or conveyance of the subdivision lots and condominium units, whether or not the purchase price is paid in full, shall be registered by the seller in the Office of the Register of Deeds of the province or city where the property is situated. Whenever a subdivision plan duly approved in accordance with Section 4 hereof, together with the corresponding owner's duplicate certificate of title, is presented to the Register of Deeds for registration, the Register of Deeds shall register the same in accordance with the provisions of the Land Registration Act, as amended: Provided, however, that it there is a street, passageway or required open space delineated on a complex subdivision plan hereafter approved and as defined in this Decree, the Register of Deeds shall annotate on the new certificate of title covering the street, passageway or open space, a memorandum to the effect that except by way of donation in favor of a city or municipality, no portion of any street, passageway, or open space so delineated on the plan shall be closed or otherwise disposed of by the registered owner without the requisite approval as provided under Section 22 of this Decree. Section 18. Mortgages. No mortgage on any unit or lot shall be made by the owner or developer without prior written approval of the Authority. Such approval shall not be granted unless it is shown that the proceeds of the mortgage loan shall be used for the development of the condominium or subdivision project and effective measures have been provided to ensure such utilization. The loan value of each lot or unit covered by the mortgage shall be determined and the buyer thereof, if any, shall be notified before the release of the loan. The buyer may, at his option, pay his installment for the lot or unit directly to the mortgagee who shall apply the payments to the corresponding mortgage indebtedness secured by the particular lot or unit being paid for, with a view to enabling said buyer to obtain title over the lot or unit promptly after full payment thereto; Section 19. Advertisements. Advertisements that may be made by the owner or developer through newspaper, radio, television, leaflets, circulars or any other form about the subdivision or the condominium or its operations or activities must reflect the real facts and must be presented in such manner that will not tend to mislead or deceive the public. The owner or developer shall answerable and liable for the facilities, improvements, infrastructures or other forms of development represented or promised in brochures, advertisements and other sales propaganda disseminated by the owner or developer or his agents and the same shall form part of the sales warranties enforceable against said owner or developer, jointly and severally. Failure to comply with these warranties shall also be punishable in accordance with the penalties provided for in this Decree. Section 20. Time of Completion. Every owner or developer shall construct and provide the facilities, improvements, infrastructures and other forms of development, including water supply and lighting facilities, which are offered and indicated in the approved subdivision or condominium plans, brochures, prospectus, printed matters, letters or in any form of advertisement, within one year from the date of the issuance of the license for the 238

subdivision or condominium project or such other period of time as may be fixed by the Authority. Section 21. Sales Prior to Decree. In cases of subdivision lots or condominium units sold or disposed of prior to the effectivity of this Decree, it shall be incumbent upon the owner or developer of the subdivision or condominium project to complete compliance with his or its obligations as provided in the preceding section within two years from the date of this Decree unless otherwise extended by the Authority or unless an adequate performance bond is filed in accordance with Section 6 hereof. Failure of the owner or developer to comply with the obligations under this and the preceding provisions shall constitute a violation punishable under Sections 38 and 39 of this Decree. Section 22. Alteration of Plans. No owner or developer shall change or alter the roads, open spaces, infrastructures, facilities for public use and/or other form of subdivision development as contained in the approved subdivision plan and/or represented in its advertisements, without the permission of the Authority and the written conformity or consent of the duly organized homeowners association, or in the absence of the latter, by the majority of the lot buyers in the subdivision. Section 23. Non-Forfeiture of Payments. 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. Section 24. Failure to pay installments. 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. Section 25. Issuance of Title. The owner or developer shall deliver the title of the lot or unit to the buyer upon full payment of the lot or unit. No fee, except those required for the registration of the deed of sale in the Registry of Deeds, shall be collected for the issuance of such title. In the event a mortgage over the lot or unit is outstanding at the time of the issuance of the title to the buyer, the owner or developer shall redeem the mortgage or the corresponding portion thereof within six months from such issuance in order that the title over any fully paid lot or unit may be secured and delivered to the buyer in accordance herewith.

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Section 26. Realty Tax. Real estate tax and assessment on a lot or unit shall de paid by the owner or developer without recourse to the buyer for as long as the title has not passed the buyer; Provided, however, that if the buyer has actually taken possession of and occupied the lot or unit, he shall be liable to the owner or developer for such tax and assessment effective the year following such taking of possession and occupancy. Section 27. Other Charges. No owner or developer shall levy upon any lot or buyer a fee for an alleged community benefit. Fees to finance services for common comfort, security and sanitation may be collected only by a properly organized homeowners association and only with the consent of a majority of the lot or unit buyers actually residing in the subdivision or condominium project. Section 28. 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. Section 29. Right of Way to Public Road. The owner or developer of a subdivision without access to any existing public road or street must secure a right of way to a public road or street and such right of way must be developed and maintained according to the requirement of the government and authorities concerned. Section 30. Organization of Homeowners Association. The owner or developer of a subdivision project or condominium project shall initiate the organization of a homeowners association among the buyers and residents of the projects for the purpose of promoting and protecting their mutual interest and assist in their community development. Section 31. Donations of roads and open spaces to local government. The registered owner or developer of the subdivision or condominium project, upon completion of the development of said project may, at his option, convey by way of donation the roads and open spaces found within the project to the city or municipality wherein the project is located. Upon acceptance of the donation by the city or municipality concerned, no portion of the area donated shall thereafter be converted to any other purpose or purposes unless after hearing, the proposed conversion is approved by the Authority. Section 32. Phases of Subdivision. For purposes of complying with the provisions of this Decree, the owner or developer may divide the development and sale of the subdivision into phases, each phase to cover not less than ten hectares. The requirement imposed by this Decree on the subdivision as a whole shall be deemed imposed on each phase. Section 33. Nullity of waivers. Any condition, stipulation, or provision in contract of sale whereby any person waives compliance with any provision of this Decree or of any rule or regulation issued thereunder shall be void. Section 34. Visitorial powers. This Authority, through its duly authorized representative may, at any time, make an examination into the business affairs, administration, and condition of any person, corporation, partnership, cooperative, or association engaged in the business of selling subdivision lots and condominium units. For this purpose, the official authorized so to do shall have the authority to examine under oath the directors, officers, stockholders or 240

members of any corporation, partnership, association, cooperative or other persons associated or connected with the business and to issue subpoena or subpoena duces tecum in relation to any investigation that may arise therefrom. The Authority may also authorize the Provincial, City or Municipal Engineer, as the case may be, to conduct an ocular inspection of the project to determine whether the development of said project conforms to the standards and specifications prescribed by the government. The books, papers, letters, and other documents belonging to the person or entities herein mentioned shall be open to inspection by the Authority or its duly authorized representative. Section 35. Take-over Development. The Authority, may take over or cause the development and completion of the subdivision or condominium project at the expenses of the owner or developer, jointly and severally, in cases where the owner or developer has refused or failed to develop or complete the development of the project as provided for in this Decree. The Authority may, after such take-over, demand, collect and receive from the buyers the installment payments due on the lots, which shall be utilized for the development of the subdivision. Section 36. Rules and Regulations. The Authority shall issue the necessary standards, rules and regulations for the effective implementation of the provisions of this Decree. Such standards, rules and regulations shall take effect immediately after their publication three times a week for two consecutive weeks in any newspaper of general circulation. Section 37. Deputization of law enforcement agencies. The Authority may deputize the Philippine Constabulary or any law enforcement agency in the execution of its final orders, rulings or decisions. Section 38. Administrative Fines. The Authority may prescribe and impose fines not exceeding ten thousand pesos for violations of the provisions of this Decree or of any rule or regulation thereunder. Fines shall be payable to the Authority and enforceable through writs of execution in accordance with the provisions of the Rules of Court. Section 39. Penalties. Any person who shall violate any of the provisions of this Decree and/or any rule or regulation that may be issued pursuant to this Decree shall, upon conviction, be punished by a fine of not more than twenty thousand (P20,000.00) pesos and/or imprisonment of not more than ten years: Provided, That in the case of corporations, partnership, cooperatives, or associations, the President, Manager or Administrator or the person who has charge of the administration of the business shall be criminally responsible for any violation of this Decree and/or the rules and regulations promulgated pursuant thereto. Section 40. Liability of controlling persons. Every person who directly or indirectly controls any person liable under any provision of this Decree or of any rule or regulation issued thereunder shall be liable jointly and severally with and to the same extent as such controlled 241

person unless the controlling person acted in good faith and did not directly or indirectly induce the act or acts constituting the violation or cause of action. Section 41. Other remedies. The rights and remedies provided in this Decree shall be in addition to any and all other rights and remedies that may be available under existing laws. Section 42. Repealing clause. All laws, executive orders, rules and regulations or part thereof inconsistent with the provisions of this Decree are hereby repealed or modified accordingly. Section 43. Effectivity. This Decree shall take effect upon its approval. Done in the City of Manila, this 12th day of July, in the year of Our Lord, nineteen hundred and seventy-six.

REPUBLIC ACT NO. 4726 AN ACT TO DEFINE CONDOMINIUM, ESTABLISH REQUIREMENTS FOR ITS CREATION, AND GOVERN ITS INCIDENTS. Sec. 1. The short title of this Act shall be "The Condominium Act". Sec. 2. A condominium is an interest in real property consisting of separate interest in a unit in a residential, industrial or commercial building and an undivided interest in common, directly or indirectly, in the land on which it is located and in other common areas of the building. A condominium may include, in addition, a separate interest in other portions of such real property. Title to the common areas, including the land, or the appurtenant interests in such areas, may be held by a corporation specially formed for the purpose (hereinafter known as the "condominium corporation") in which the holders of separate interest shall automatically be members or shareholders, to the exclusion of others, in proportion to the appurtenant interest of their respective units in the common areas. The real right in condominium may be ownership or any other interest in real property recognized by law, on property in the Civil Code and other pertinent laws. Sec. 3. As used in this Act, unless the context otherwise requires: (a) "Condominium" means a condominium as defined in the next preceding section. (b) "Unit" means a part of the condominium project intended for any type of independent use or ownership, including one or more rooms or spaces located in one or more floors (or part or parts of floors) in a building or buildings and such accessories as may be appended thereto.

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(c) "Project" means the entire parcel of real property divided or to be divided in condominiums, including all structures thereon, (d) "Common areas" means the entire project excepting all units separately granted or held or reserved. (e) "To divide" real property means to divide the ownership thereof or other interest therein by conveying one or more condominiums therein but less than the whole thereof. Sec. 4. The provisions of this Act shall apply to property divided or to be divided into condominiums only if there shall be recorded in the Register of Deeds of the province or city in which the property lies and duly annotated in the corresponding certificate of title of the land, if the latter had been patented or registered under either the Land Registration or Cadastral Acts, an enabling or master deed which 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 bee 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; (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 243

registered holders of any lien or encumbrance on the land or building or portion thereof. The term "registered owner" shall include the registered owners of condominiums in the project. Until registration of a revocation, the provisions of this Act shall continue to apply to such property. Sec. 5. Any transfer or conveyance of a unit or an apartment, office or store or other space therein, shall include the transfer or conveyance of the undivided interests 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 owned 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 sixty percent of the capital stock of which belong to Filipino citizens, except in cases of hereditary succession. Where the common areas in a condominium project are held by a corporation, no transfer or conveyance of a unit shall be valid if the concomitant transfer of the appurtenant membership or stockholding in the corporation will cause the alien interest in such corporation to exceed the limits imposed by existing laws. Sec. 6. Unless otherwise expressly provided in the enabling or master deed or the declaration of restrictions, the incidents of a condominium grant are as follows: (a) The boundary of the unit granted are the interior surfaces of the perimeter walls, floors, ceilings, windows and doors thereof. The following are not part of the unit bearing walls, columns, floors, roofs, foundations and other common structural elements of the building; lobbies, stairways, hallways, and other areas of common use, elevator equipment and shafts, central heating, central refrigeration and central air-conditioning equipment, reservoirs, tanks, pumps and other central services and facilities, pipes, ducts, flues, chutes, conduits, wires and other utility installations, wherever located, except the outlets thereof when located within the unit. (b) There shall pass with the unit, as an appurtenance thereof, an exclusive easement for the use of the air space encompassed by the boundaries of the unit as it exists at any particular time and as the unit may lawfully be altered or reconstructed from time to time. Such easement shall be automatically terminated in any air space upon destruction of the unit as to render it untenantable. (c) Unless otherwise, provided, the common areas are held in common by the holders of units, in equal shares, one for each unit. (d) A non-exclusive easement for ingress, egress and support through the common areas is appurtenant to each unit and the common areas are subject to such easements. (e) Each condominium owner shall have the exclusive right to paint, repaint, tile, wax, paper or otherwise refinish and decorate the inner surfaces of the walls, ceilings, floors, windows and doors bounding his own unit. (f) Each condominium owner shall have the exclusive right to mortgage, pledge or encumber his condominium and to have the same appraised independently of the other condominiums but any obligation incurred by such condominium owner is personal to him. 244

(g) Each condominium owner has also the absolute right to sell or dispose of his condominium unless the master deed contains a requirement that the property be first offered to the condominium owners within a reasonable period of time before the same is offered to outside parties; Sec. 7. Except as provided in the following section, the common areas shall remain undivided, and there shall be no judicial partition thereof. Sec. 8. Where several persons own condominiums in a condominium project, an action may be brought by one or more such persons for partition thereof by sale of the entire project, as if the owners of all of the condominiums in such project were co-owners of the entire project in the same proportion as their interests in the common areas:Provided, however, That a partition shall be made only upon a showing: (a) That three years after damage or destruction to the project which renders material part thereof unit for its use prior thereto, the project has not been rebuilt or repaired substantially to its state prior to its damage or destruction, or (b) That damage or destruction to the project has rendered one-half or more of the units therein untenantable and that condominium owners holding in aggregate more than thirty percent interest in the common areas are opposed to repair or restoration of the project; or (c) That the project has been in existence in excess of fifty years, that it is obsolete and uneconomic, and that condominium owners holding in aggregate more than fifty percent interest in the common areas are opposed to repair or restoration or remodeling or modernizing of the project; or (d) That the project or a material part thereof has been condemned or expropriated and that the project is no longer viable, or that the condominium owners holding in aggregate more than seventy percent interest in the common areas are opposed to continuation of the condominium regime after expropriation or condemnation of a material portion thereof; or (e) That the conditions for such partition by sale set forth in the declaration of restrictions, duly registered in accordance with the terms of this Act, have been met. Sec. 9. The owner of a project shall, prior to the 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 245

also provide for voting majorities quorums, notices, meeting date, and other rules governing such body or bodies. Such declaration of restrictions, among other things, may also provide: (a) As to any such management body; (1) For the powers thereof, including power to enforce the provisions of the declarations of restrictions; (2) For maintenance of insurance policies, insuring condominium owners against loss by fire, casualty, liability, workmen's compensation and other insurable risks, and for bonding of the members of any management body; (3) Provisions for maintenance, utility, gardening and other services benefiting the common areas, for the employment of personnel necessary for the operation of the building, and legal, accounting and other professional and technical services; (4) For purchase of materials, supplies and the like needed by the common areas; (5) For payment of taxes and special assessments which would be a lien upon the entire project or common areas, and for discharge of any lien or encumbrance levied against the entire project or the common areas; (6) For reconstruction of any portion or portions of any damage to or destruction of the project; (7) The manner for delegation of its powers; (8) For entry by its officers and agents into any unit when necessary in connection with the maintenance or construction for which such body is responsible; (9) For a power of attorney to the management body to sell the entire project for the benefit of all of the owners thereof when partition of the project may be authorized under Section 8 of this Act, which said power shall be binding upon all of the condominium owners regardless of whether they assume the obligations of the restrictions or not. (b) The manner and procedure for amending such restrictions: Provided, That the vote of not less than a majority in interest of the owners is obtained. (c) For independent audit of the accounts of the management body; (d) For reasonable assessments to meet authorized expenditures, each condominium unit to be assessed separately for its share of such expenses in proportion (unless otherwise provided) to its owners fractional interest in any common areas; (e) For the subordination of the liens securing such assessments to other liens either generally or specifically described; 246

(f) For conditions, other than those provided for in Sections eight and thirteen of this Act, upon which partition of the project and dissolution of the condominium corporation may be made. Such right to partition or dissolution may be conditioned upon failure of the condominium owners to rebuild within a certain period or upon specified inadequacy of insurance proceeds, or upon specified percentage of damage to the building, or upon a decision of an arbitrator, or upon any other reasonable condition. Sec. 10. Whenever the common areas in a condominium project are held by a condominium corporation, such corporation shall constitute the management body of the project. The corporate purposes of such a corporation shall be limited to the holding of the common areas, either in ownership or any other interest in real property recognized by law, to the management of the project, and to such other purposes as may be necessary, incidental or convenient to the accomplishment of said purposes. The articles of incorporation or by-laws of the corporation shall not contain any provision contrary to or inconsistent with the provisions of this Act, the enabling or master deed, or the declaration of restrictions of the project. Membership in a condominium corporation, regardless of whether it is a stock or non-stock corporation, shall not be transferable separately from the condominium unit of which it is an appurtenance. When a member or stockholder ceases to own a unit in the project in which the condominium corporation owns or holds the common areas, he shall automatically cease to be a member or stockholder of the condominium corporation. Sec. 11. The term of a condominium corporation shall be co-terminus with the duration of the condominium project, the provisions of the Corporation Law to the contrary notwithstanding. Sec. 12. In case of involuntary dissolution of a condominium corporation for any of the causes provided by law, the common areas owned or held by the corporation shall, by way of liquidation, be transferred pro-indiviso and in proportion to their interest in the corporation to the members or stockholders thereof, subject to the superior rights of the corporation creditors. Such transfer or conveyance shall be deemed to be a full liquidation of the interest of such members or stockholders in the corporation. After such transfer or conveyance, the provisions of this Act governing undivided co-ownership of, or undivided interest in, the common areas in condominium projects shall fully apply. Sec. 13. Until the enabling or the master deed of the project in which the condominium corporation owns or holds the common area is revoked, the corporation shall not be voluntarily dissolved through an action for dissolution under Rule 104 of the Rules of Court except upon a showing: (a) That three years after damage or destruction to the project in which the corporation owns or holds the common areas, which damage or destruction renders a 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; or (b) That damage or destruction to the project has rendered one-half or more of the units therein untenantable and that more than thirty percent of the members of the corporation, if non-stock, or the shareholders representing more than thirty percent of the capital stock entitled to vote, if a stock corporation, are opposed to the repair or reconstruction of the project, or 247

(c) That the project has been in existence in excess of fifty years, that it is obsolete and uneconomical, and that more than fifty percent of the members of the corporation, if nonstock, or the stockholders representing more than fifty percent of the capital stock entitled to vote, if a stock corporation, are opposed to the repair or restoration or remodeling or modernizing of the project; or (d) That the project or a material part thereof has been condemned or expropriated and that the project is no longer viable, or that the members holding in aggregate more than seventy percent interest in the corporation, if non-stock, or the stockholders representing more than seventy percent of the capital stock entitled to vote, if a stock corporation, are opposed to the continuation of the condominium regime after expropriation or condemnation of a material portion thereof; or (e) That the conditions for such a dissolution set forth in the declaration of restrictions of the project in which the corporation owns of holds the common areas, have been met. Sec. 14. The condominium corporation may also be dissolved by the affirmative vote of all the stockholders or members thereof at a general or special meeting duly called for the purpose: Provided, That all the requirements of Section sixty-two of the Corporation Law are complied with. Sec. 15. Unless otherwise provided for in the declaration of restrictions upon voluntary dissolution of a condominium corporation in accordance with the provisions of Sections thirteen and fourteen of this Act, the corporation shall be deemed to hold a power of attorney from all the members or stockholders to sell and dispose of their separate interests in the project and liquidation of the corporation shall be effected by a sale of the entire project as if the corporation owned the whole thereof, subject to the rights of the corporate and of individual condominium creditors. Sec. 16. A condominium corporation shall not, during its existence, sell, exchange, lease or otherwise dispose of the common areas owned or held by it in the condominium project unless authorized by the affirmative vote of all the stockholders or members. Sec. 17. 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. Sec. 18. Upon registration of an instrument conveying a condominium, the Register of Deeds shall, upon payment of the proper fees, enter and annotate the conveyance on the certificate of title covering the land included within the project and the transferee shall be 248

entitled to the issuance of a "condominium owner's" copy of the pertinent portion of such certificate of title. Said "condominium owner's" copy need not reproduce the ownership status or series of transactions in force or annotated with respect to other condominiums in the project. A copy of the description of the land, a brief description of the condominium conveyed, name and personal circumstances of the condominium owner would be sufficient for purposes of the "condominium owner's" copy of the certificate of title. No conveyance of condominiums or part thereof, subsequent to the original conveyance thereof from the owner of the project, shall be registered unless accompanied by a certificate of the management body of the project that such conveyance is in accordance with the provisions of the declaration of restrictions of such project. In cases of condominium projects registered under the provisions of the Spanish Mortgage Law or Act 3344, as amended, the registration of the deed of conveyance of a condominium shall be sufficient if the Register of Deeds shall keep the original or signed copy thereof, together with the certificate of the management body of the project, and return a copy of the deed of conveyance to the condominium owner duly acknowledge and stamped by the Register of Deeds in the same manner as in the case of registration of conveyances of real property under said laws. Sec. 19. Where the enabling or master deed provides that the land included within a condominium project are to be owned in common by the condominium owners therein, the Register of Deeds may, at the request of all the condominium owners and upon surrender of all their "condominium owner's" copies, cancel the certificates of title of the property and issue a new one in the name of said condominium owners as pro-indiviso co-owners thereof. Sec. 20. An assessment upon any condominium made in accordance with a duly registered declaration of restrictions shall be an obligation of the owner thereof at the time the assessment is made. The amount of any such assessment plus any other charges thereon, such as interest, costs (including attorney's fees) and penalties, as such may be provided for in the declaration of restrictions, shall be and become a lien upon the condominium assessed when the management body causes a notice of assessment to be registered with the Register of Deeds of the city or province where such condominium project is located. The notice shall state the amount of such assessment and such other charges thereon a may be authorized by the declaration of restrictions, a description of the condominium, unit against which same has been assessed, and the name of the registered owner thereof. Such notice shall be signed by an authorized representative of the management body or as otherwise provided in the declaration of restrictions. Upon payment of said assessment and charges or other satisfaction thereof, the management body shall cause to be registered a release of the lien. Such lien shall be superior to all other liens registered subsequent to the registration of said notice of assessment except real property tax liens and except that the declaration of restrictions may provide for the subordination thereof to any other liens and encumbrances. Such liens may be enforced in the same manner provided for by law for the judicial or extrajudicial foreclosure of mortgages of real property. Unless otherwise provided for in the declaration of restrictions, the management body shall have power to bid at foreclosure sale. The condominium owner shall have the same right of redemption as in cases of judicial or extra-judicial foreclosure of mortgages. 249

Sec. 21. No labor performed or services or materials furnished with the consent of or at the request of a condominium owner or his agent or his contractor or subcontractor, shall be the basis of a lien against the condominium of any other condominium owner, unless such other owners have expressly consented to or requested the performance of such labor or furnishing of such materials or services. Such express consent shall be deemed to have been given by the owner of any condominium in the case of emergency repairs of his condominium unit. Labor performed or services or materials furnished for the common areas, if duly authorized by the management body provided for in a declaration of restrictions governing the property, shall be deemed to be performed or furnished with the express consent of each condominium owner. The owner of any condominium may remove his condominium from a lien against two or more condominiums or any part thereof by payment to the holder of the lien of the fraction of the total sum secured by such lien which is attributable to his condominium unit. Sec. 22. Unless otherwise provided for by the declaration of restrictions, the management body, provided for herein, may acquire and hold, for the benefit of the condominium owners, tangible and intangible personal property and may dispose of the same by sale or otherwise; and the beneficial interest in such personal property shall be owned by the condominium owners in the same proportion as their respective interests in the common areas. A transfer of a condominium shall transfer to the transferee ownership of the transferor's beneficial interest in such personal property. Sec. 23. Where, in an action for partition of a condominium project or for the dissolution of condominium corporation on the ground that the project or a material part thereof has been condemned or expropriated, the Court finds that the conditions provided for in this Act or in the declaration of restrictions have not been met, the Court may decree a reorganization of the project, declaring which portion or portions of the project shall continue as a condominium project, the owners thereof, and the respective rights of said remaining owners and the just compensation, if any, that a condominium owner may be entitled to due to deprivation of his property. Upon receipt of a copy of the decree, the Register of Deeds shall enter and annotate the same on the pertinent certificate of title. Sec. 24. Any deed, declaration or plan for a condominium project shall be liberally construed to facilitate the operation of the project, and its provisions shall be presumed to be independent and severable. Sec. 25. Whenever real property has been divided into condominiums, each condominium separately owned shall be separately assessed, for purposes of real property taxation and other tax purposes to the owners thereof and the tax on each such condominium shall constitute a lien solely thereon. Sec. 26. All Acts or parts of Acts in conflict or inconsistent with this Act are hereby amended insofar as condominium and its incidents are concerned. Sec. 27. This Act shall take effect upon its approval. Approved: June 18, 1966

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ACT NO. 31351092 AN ACT TO REGULATE THE SALE OF PROPERTY UNDER SPECIAL POWERS INSERTED IN OR ANNEXED TO REAL-ESTATE MORTGAGES SECTION 1. When a sale is made under a special power inserted in or attached to any realestate mortgage hereafter made as security for the payment of money or the fulfillment of any other obligation, the provisions of the following election shall govern as to the manner in which the sale and redemption shall be effected, whether or not provision for the same is made in the power. SECTION 2. Said sale cannot be made legally outside of the province in which the property sold is situated; and in case the place within said province in which the sale is to be made is subject to stipulation, such sale shall be made in said place or in the municipal building of the municipality in which the property or part thereof is situated. SECTION 3. Notice shall be given by posting notices of the sale for not less than twenty days in at least three public places of the municipality or city where the property is situated, and if such property is worth more than four hundred pesos, such notice shall also be published once a week for at least three consecutive weeks in a newspaper of general circulation in the municipality or city. SECTION 4. The sale shall be made at public auction, between the hours or nine in the morning and four in the afternoon; and shall be under the direction of the sheriff of the province, the justice or auxiliary justice of the peace of the municipality in which such sale has to be made, or a notary public of said municipality, who shall be entitled to collect a fee of five pesos each day of actual work performed, in addition to his expenses. SECTION 5. At any sale, the creditor, trustee, or other persons authorized to act for the creditor, may participate in the bidding and purchase under the same conditions as any other bidder, unless the contrary has been expressly provided in the mortgage or trust deedunder which the sale is made. SECTION 6. In all cases in which an extrajudicial sale is made under the special power herein before referred to, the debtor, his successors in interest or any judicial creditor or judgment creditor of said debtor, or any person having a lien on the property subsequent to the mortgage or deed of trust under which the property is sold, may redeem the same at any time within the term of one year from and after the date of the sale; and such redemption shall be governed by the provisions of sections four hundred and sixty-four to four hundred and sixty-six, inclusive, of the Code of Civil Procedure, in so far as these are not inconsistent with the provisions of this Act.” SECTION 7. In any sale made under the provisions of this Act, the purchaser may petition the Court of First Instance of the province or place where the property or any part thereof is situated, to give him possession thereof during the redemption period, furnishing bond in an 1092

as amended by R.A. 4118

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amount equivalent to the use of the property for a period of twelve months, to indemnify the debtor in case it be shown that the sale was made without violating the mortgage or without complying with the requirements of this Act. Such petition shall be made under oath and filed in form of an ex parte motion in the registration or cadastral proceedings if the property is registered, or in special proceedings in the case of property registered under the Mortgage Law or under section one hundred and ninety-four of the Administrative Code, or of any other real property encumbered with a mortgage duly registered in the office of any register of deeds in accordance with any existing law, and in each case the clerk of the court shall, upon the filing of such petition, collect the fees specified in paragraph eleven of section one hundred and fourteen of Act Numbered Four hundred and ninety-six, as amended by Act Numbered Twenty-eight hundred and sixty-six, and the court shall, upon approval of the bond, order that a writ of possession issue, addressed to the sheriff of the province in which the property is situated, who shall execute said order immediately. Section 8. The debtor may, in the proceedings in which possession was requested, but not later than thirty days after the purchaser was given possession, petition that the sale be set aside and the writ of possession cancelled, specifying the damages suffered by him, because the mortgage was not violated or the sale was not made in accordance with the provisions hereof, and the court shall take cognizance of this petition in accordance with the summary procedure provided for in section one hundred and twelve of Act Numbered Four hundred and ninety-six; and if it finds the complaint of the debtor justified, it shall dispose in his favor of all or part of the bond furnished by the person who obtained possession. Either of the parties may appeal from the order of the judge in accordance with section fourteen of Act Numbered Four hundred and ninety-six; but the order of possession shall continue in effect during the pendency of the appeal. Section 9. When the property is redeemed after the purchaser has been given possession, the redeemer shall be entitled to deduct from the price of redemption any rentals that said purchaser may have collected in case the property or any part thereof was rented; if the purchaser occupied the property as his own dwelling, it being town property, or used it gainfully, it being rural property, the redeemer may deduct from the price the interest of one per centum per month provided for in section four hundred and sixty-five of the Code of Civil Procedure. SECTION 10. This Act shall take effect on its approval. Approved: March 6, 1924 _______________________________________________________________________

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ACT NO. 1508 – AN ACT PROVIDING FOR THE MORTGAGING OF PERSONAL PROPERTY AND FOR THE REGISTRATION OF THE MORTGAGES SO EXECUTED Section 1. The short title of this Act shall be "The Chattel Mortgage Law." Sec. 2. All personal property shall be subject to mortgage, agreeably to the provisions of this Act, and a mortgage executed in pursuance thereof shall be termed chattel mortgage. Sec. 3. Chattel mortgage defined. — A chattel mortgage is a conditional sale of personal property as security for the payment of a debt, or the performance of some other obligation specified therein, the condition being that the sale shall be void upon the seller paying to the purchaser a sum of money or doing some other act named. If the condition is performed according to its terms the mortgage and sale immediately become void, and the mortgagee is thereby divested of his title. Sec. 4. Validity. — A chattel mortgage shall not be valid against any person except the mortgagor, his executors or administrators, unless the possession of the property is delivered to and retained by the mortgagee or unless the mortgage is recorded in the office of the register of deeds of the province in which the mortgagor resides at the time of making the same, or, if he resides without the Philippine Islands, in the province in which the property is situated: Provided, however, That if the property is situated in a different province from that in which the mortgagor resides, the mortgage shall be recorded in the office of the register of deeds of both the province in which the mortgagor resides and that in which the property is situated, and for the purposes of this Act the city of Manila shall be deemed to be a province. Sec. 5. Form. — A chattel mortgage shall be deemed to be sufficient when made substantially in accordance with the following form, and shall be signed by the person or persons executing the same, in the presence of two witnesses, who shall sign the mortgage as witnesses to the execution thereof, and each mortgagor and mortgagee, or, in the absence of the mortgagee, his agent or attorney, shall make and subscribe an affidavit in substance as hereinafter set forth, which affidavit, signed by the parties to the mortgage as above stated, and the certificate of the oath signed by the authority administering the same, shall be appended to such mortgage and recorded therewith. FORM OF CHATTEL MORTGAGE AND AFFIDAVIT. "This mortgage made this ____ day of ______19____ by _______________, a resident of the municipality of ______________, Province of ____________, Philippine Islands mortgagor, to ____________, a resident of the municipality of ___________, Province of ______________, Philippine Islands, mortgagee, witnesseth: "That the said mortgagor hereby conveys and mortgages to the said mortgagee all of the following-described personal property situated in the municipality of ______________, Province of ____________ and now in the possession of said mortgagor, to wit: 253

(Here insert specific description of the property mortgaged.) "This mortgage is given as security for the payment to the said ______, mortgagee, of promissory notes for the sum of ____________ pesos, with (or without, as the case may be) interest thereon at the rate of ___________ per centum per annum, according to the terms of __________, certain promissory notes, dated _________, and in the words and figures following (here insert copy of the note or notes secured). "(If the mortgage is given for the performance of some other obligation aside from the payment of promissory notes, describe correctly but concisely the obligation to be performed.) "The conditions of this obligation are such that if the mortgagor, his heirs, executors, or administrators shall well and truly perform the full obligation (or obligations) above stated according to the terms thereof, then this obligation shall be null and void. "Executed at the municipality of _________, in the Province of ________, this _____ day of 19_____ ____________________ (Signature of mortgagor.) "In the presence of "_________________ "_________________ (Two witnesses sign here.) FORM OF OATH. "We severally swear that the foregoing mortgage is made for the purpose of securing the obligation specified in the conditions thereof, and for no other purpose, and that the same is a just and valid obligation, and one not entered into for the purpose of fraud." FORM OF CERTIFICATE OF OATH. "At ___________, in the Province of _________, personally appeared ____________, the parties who signed the foregoing affidavit and made oath to the truth thereof before me. "_____________________________" (Notary public, justice of the peace, 1 or other officer, as the case may be.) Sec. 6. Corporations. — When a corporation is a party to such mortgage the affidavit required may be made and subscribed by a director, trustee, cashier, treasurer, or manager thereof, or by a person authorized on the part of such corporation to make or to receive such mortgage. When a partnership is a party to the mortgage the affidavit may be made and subscribed by one member thereof. 254

Sec. 7. Descriptions of property. — The description of the mortgaged property shall be such as to enable the parties to the mortgage, or any other person, after reasonable inquiry and investigation, to identify the same. If the property mortgaged be large cattle," as defined by section one of Act Numbered Eleven and forty-seven, 2 and the amendments thereof, the description of said property in the mortgage shall contain the brands, class, sex, age, knots of radiated hair commonly known as remolinos, or cowlicks, and other marks of ownership as described and set forth in the certificate of ownership of said animal or animals, together with the number and place of issue of such certificates of ownership. If growing crops be mortgaged the mortgage may contain an agreement stipulating that the mortgagor binds himself properly to tend, care for and protect the crop while growing, and faithfully and without delay to harvest the same, and that in default of the performance of such duties the mortgage may enter upon the premises, take all the necessary measures for the protection of said crop, and retain possession thereof and sell the same, and from the proceeds of such sale pay all expenses incurred in caring for, harvesting, and selling the crop and the amount of the indebtedness or obligation secured by the mortgage, and the surplus thereof, if any shall be paid to the mortgagor or those entitled to the same. A chattel mortgage shall be deemed to cover only the property described therein and not like or substituted property thereafter acquired by the mortgagor and placed in the same depository as the property originally mortgaged, anything in the mortgage to the contrary notwithstanding. Sec. 8. Failure of mortgagee to discharge the mortgage. — If the mortgagee, assign, administrator, executor, or either of them, after performance of the condition before or after the breach thereof, or after tender of the performance of the condition, at or after the time fixed for the performance, does not within ten days after being requested thereto by any person entitled to redeem, discharge the mortgage in the manner provided by law, the person entitled to redeem may recover of the person whose duty it is to discharge the same twenty pesos for his neglect and all damages occasioned thereby in an action in any court having jurisdiction of the subject-matter thereof. Sec. 9-12.1093 Sec. 13. When the condition of a chattel mortgage is broken, a mortgagor or person holding a subsequent mortgage, or a subsequent attaching creditor may redeem the same by paying or delivering to the mortgagee the amount due on such mortgage and the reasonable costs and expenses incurred by such breach of condition before the sale thereof. An attaching creditor who so redeems shall be subrogated to the rights of the mortgagee and entitled to foreclose the mortgage in the same manner that the mortgagee could foreclose it by the terms of this Act. Sec. 14. Sale of property at public auction; Officer's return; Fees; Disposition of proceeds. — The mortgagee, his executor, administrator, or assign, may, after thirty days from the time 1093

repealed

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of condition broken, cause the mortgaged property, or any part thereof, to be sold at public auction by a public officer at a public place in the municipality where the mortgagor resides, or where the property is situated, provided at least ten days' notice of the time, place, and purpose of such sale has been posted at two or more public places in such municipality, and the mortgagee, his executor, administrator, or assign, shall notify the mortgagor or person holding under him and the persons holding subsequent mortgages of the time and place of sale, either by notice in writing directed to him or left at his abode, if within the municipality, or sent by mail if he does not reside in such municipality, at least ten days previous to the sale. The officer making the sale shall, within thirty days thereafter, make in writing a return of his doings and file the same in the office of the register of deeds where the mortgage is recorded, and the register of deeds shall record the same. The fees of the officer for selling the property shall be the same as in the case of sale on execution as provided in Act Numbered One hundred and ninety, 4 and the amendments thereto, and the fees of the register of deeds for registering the officer's return shall be taxed as a part of the costs of sale, which the officer shall pay to the register of deeds. The return shall particularly describe the articles sold, and state the amount received for each article, and shall operate as a discharge of the lien thereon created by the mortgage. The proceeds of such sale shall be applied to the payment, first, of the costs and expenses of keeping and sale, and then to the payment of the demand or obligation secured by such mortgage, and the residue shall be paid to persons holding subsequent mortgages in their order, and the balance, after paying the mortgages, shall be paid to the mortgagor or person holding under him on demand. If the sale includes any "large cattle," a certificate of transfer as required by section sixteen of Act Numbered Eleven hundred and forty-seven 5 shall be issued by the treasurer of the municipality where the sale was held to the purchaser thereof. Sec. 15.1094 1094

superseded by section 198 of the Administrative Code. The following is the present text of section 198 as amended by RA 2711, approved June 18, 1960. "SECTION 198. Registration of chattel mortgages and fees collectible in connection therewith. — Every register of deeds shall keep a primary entry book and a registration book for the chattel mortgages; shall certify on each mortgage filed for record, as well as on its duplicate, the date, hour, and minute when the same was by him received; and shall record in such books any chattel mortgage, assignment, or discharge thereof, and any other instruments relating to a recorded mortgage, and all such instruments shall be presented to him in duplicate, the original to be filed and the duplicate to be returned to the person concerned. "The recording of a mortgage shall be effected by making an entry, which shall be given a correlative number, setting forth the names of the mortgagee, and the mortgagor, the sum or obligation guaranteed, date of the instrument, name of the notary before whom it was sworn to or acknowledged, and a note that the property mortgaged, as well as the terms and conditions of the mortgage, is mentioned in detail in the instrument filed, giving the proper file number thereof. The recording of other instruments relating to a recorded mortgage shall be effected by way of annotations on the space provided therefor in the registration book, after the same shall have been entered in the primary entry book. "The register of deeds shall also certify the officer's return of sale upon any mortgage, making reference upon the record of such officer's return to the volume and page of the record of the mortgage, and a reference of such return on the record of the mortgage itself, and give a certified copy thereof, when

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requested, upon payment of the lawful fees for such copy; and certify upon each mortgage officer's return of sale or discharge of mortgage; and upon any other instrument relating to such a recorded mortgage, both on the original and on the duplicate, the date, hour, and minute when the same is received for record and record such certificate with the return itself and keep an alphabetical index of mortgagors and mortgagees, which record and index shall be open to public inspection. "Duly certified copies of such records and of filed instruments shall be receivable as evidence in any court. "The register of deeds shall collect the following fees for services rendered by him under this section: "(a) For entry or presentation of any document in the primary entry book, one peso. Supporting papers presented together with the principal document need not be charged any entry or presentation fee unless the party in interest desires that they be likewise entered. "(b) For filing and recording each chattel mortgage, including the necessary certificates and affidavits, the fees established in the following schedule shall be collected: "1. When the amount of the mortgage does not exceed six thousand pesos, three pesos and fifty centavos for the first five hundred pesos or fractional part thereof, and one peso and fifty centavos for each additional five hundred pesos or fractional part thereof. "2. When the amount of the mortgage is more than six thousand pesos but does not exceed thirty thousand pesos, twenty-four pesos for the initial amount not exceeding eight thousand pesos, and four pesos for each additional two thousand pesos or fractional part thereof. "3. When the amount of the mortgage is more than thirty thousand pesos but does not exceed one hundred thousand pesos, seventy-five pesos for the initial amount not exceeding thirty-five thousand pesos, and seven pesos for each additional five thousand pesos or fractional part thereof. "4. When the amount of the mortgage is more than one hundred thousand pesos but does not exceed five hundred thousand pesos, one hundred and seventy-six pesos for the initial amount not exceeding one hundred ten thousand pesos, and ten pesos for each additional ten thousand pesos or fractional part thereof. "5. When the amount of the mortgage is more than five hundred thousand pesos, five hundred eightyone pesos for the initial amount not exceeding five hundred twenty thousand pesos, and fifteen pesos for each additional twenty thousand pesos or fractional part thereof: Provided, however, That registration of the mortgage in the province where the property is situated shall be sufficient registration: And provided, further, That if the mortgage is to be registered in more than one city or province, the register of deeds of the city or province where the instrument is first presented for registration shall collect the full amount of the fees due in accordance with the schedule prescribed above, and the register of deeds of the other city or province where the same instrument is also to be registered shall collect only a sum equivalent to twenty per centum of the amount of fees due and paid in the first city or province, but in no case shall the fees payable in any registry be less than the minimum fixed in said schedule. "(c) For recording each instrument of sale, conveyance, or transfer of the property which is subject of a recorded mortgage, or of the assignment of mortgage credit, the fees established in the preceding schedule shall be collected on the basis of ten per centum of the amount of the mortgage or unpaid balance thereof: Provided, That the latter is stated in the instrument. "(d) For recording each notice of attachment, including the necessary index and annotations, four pesos. "(e) For recording each release of mortgage, including the necessary index and references, the fees established in the schedule under paragraph (b) above shall be collected on the basis of five per centum of the amount of the mortgage. "(f) For recording each release of attachment, including the proper annotations, two pesos. "(g) For recording each sheriff's return of sale, including the index and references, three pesos. "(h) For recording a power of attorney, appointment of judicial guardian, administrator, or trustee, or any other instrument in which a person is given power to act in behalf of another in connection with a mortgage, three pesos. "(i) For recording each instrument or order relating to a recorded mortgage, including the necessary index and references, for which no specific fee is provided above, two pesos.

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Sec. 16. This Act shall take effect on August first, nineteen hundred and six.

"(j) For certified copies of records, such fees as are allowed by law for copies kept by the register of deeds. "(k) For issuing a certificate relative to, or showing the existence or non-existence of, an entry in the registration book, or a document on file, for each such certificate containing not more than two hundred words, three pesos; if it exceeds that number, an additional fee of fifty centavos shall be collected for every one hundred words or fractional part thereof, in excess of the first two hundred words."

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