CIVIL LAW

BAR REVIEW LECTURE

BAR EXAMINATION 2009

PERSONS

UNIVERSALITY AND TERRITORIALITY PRINCIPLE:

Universality: Penal laws and those of general welfare and those of

public security are binding on all who reside and sojourn in the
Philippine territory. (Art. 14)

Prohibititve laws concerning persons, their acts and their

property, and those intended to promote public order and good
morals, shall not be made nugatory by any foreign laws or
judgments nor by an action or agreement made in a foreign
country. (Art. 17, p. 3)

Basis of the rule is the right of the State to protect itself and its
policies in order to achieve its ends.

“Art. 14. 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”

Thus, any offense committed by any person (Filipino or alien) within the territory of
the country is an offense against the State. The State has, therefore, the power to
prosecute and punish the offender, national of foreigner.

Exceptions:

(1.) Those, who under principles of public internal law enjoy

diplomatic immunities (from suit) such as heads of states,
foreign ambassadors or diplomats provided they do not
travel incognito.

NOTE: Consuls do not have immunities

(2.) Those expressly excluded from our jurisdiction due to

treaty stipulations

EXTRATERRITORIAL JURISDICTION:

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 “The juridical power of the State extending beyond the physical
limits of a particular state or country.” (Blacks Law Dictionary., 6th
Ed.)

Where the State has jurisdiction over specific crimes although

the same was committed outside its jurisdiction.

“Art. 2 (RPC) Application of its provisions. – Except as provided in the treaties

and laws of preferential application, the provisions of this Code shall be enforced not
only within the Philippine Archipelago, including its atmosphere, its interior waters
and maritime zone, but also outside its jurisdiction, against those who:

1. Should commit an offense while on a Philippine ship or airship;

2. Should forge or counterfeit any coin or currency note if the Philippine

Islands or obligations and securities issued by the Government of the Philippine
Islands;

3. Should be liable for acts connected with the introduction into these Islands
of the obligations and securities mentioned in the preceding number;

4. While being public officers or employees, should commit an offense in the

exercise of their functions; or

5. Should commit any of the crimes against national security and the law of
nations, x x x

Public and merchant vessels as well as airships of Philippine

registry are also considered parts of the Philippine territory. Crimes
committed within these vessels and airships are triable by Philippine
courts although said vessels or airships are in international waters
or space.

Crimes committed on board private or merchant Vessels of

foreign registry. - Crimes perpetrated on board foreign merchant
vessels found within the 3-mile limit of Philippine territorial waters
are triable in Philippine courts un the English rule (People vs. Wong
Cheng, 46 Phil. 729).

a. If the crime committed aboard a private merchant vessel

occurred on the high seas, the country of the flag of the vessel has
jurisdiction. Our courts do not have jurisdiction EXCEPT in the
instances enumerated under Art. 2 of the RPC (such as crime of
piracy);

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 b. If the crime aboard a private or merchant vessel of a
foreign state took place INSIDE Phil. Territorial waters – two
theories, the English rule (emphasizes the territorial principle) and
the French rule (emphasizes the nationality theory)

English Rule – the territory where the crime was committed will
have jurisdiction, except:

1. in matters relating to the internal order and discipline in

the vessel’

2. and those which affect solely the ship and its occupants
such as minor or petty criminal offenses committed by members of
the crew.

French Rule - the state whose flag is flown by the vessel, would
have jurisdiction except if the crime affects the peace, order,
security, and safety of the territory.

i.e. If aboard a German ship anchored in Manila Bay, the crime

murder is committed, under the English Rule, the Philippines would
have jurisdiction in view of the general rule, under French rule, the
Philippines would also have jurisdiction, under the exception for the
crime affects the peace and security of the territory.

Supreme Court ruling:

1. The mere possession of opium aboard a foreign vessel in

transit is not triable by our Courts because mere possession
thereof, without being used in our territory, is not considered a
disturbance of the public order (U.S. vs. Look Chaw, 18Phil. 573)

2. “to smoke opium within our territorial limits, even though

aboard a foreign merchant ship, is a breach of the public order
because it causes such drug to produce its pernicious effects within
our territory. (Pp. v. Wong Cheng)

NATIONALITY PRINCIPLE:

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 “Art. 15. Laws relating to family rights and duties, or to the status, condition and
legal capacity of persons are binding upon the citizens of the Philippines even though
living abroad.”

In the Philippines, we follow the nationality or citizenship theory,

that is, the national law of the person is applied in matters involving
personal relations. In the U.S, and Great Britain, the domiciliary or
territoriality theory is followed such that, the law of the domicile is
applied on matters involving personal relations.

Examples:

(1) ON MARRIAGE:

(a.) A Filipino spouse who secures a divorce abroad. The

divorce will not be recognized in the Phils.

(b.) A Filipino first cousins get married in California,

where the marriage is considered valid. The Phils.
Will not recognize the marriage because it is
incestuous.

NOTE Art. 26 par. 1 of the Family Code which recognizes

marriages solemnized abroad for as long as it is in
accordance with the laws of that country will also be
recognized here , except:

Art. 35. (1) below 18 years of age;

(4) Bigamous or polygamous marriages
not falling under Art. 41;
(5) Those contracted through mistake of
one contracting party as to the identity of the other;
(6) Those subsequent marriages that
are void under Art. 53.

(36) Psychological Incapacity

(37) Void for being highly incestuous

(38) Void by reason of public policy

(2) Capacity – governed by the national law of each party

LEX LOCI CELEBRATIONIS

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 “Art. 17. The forms and solemnities of contracts, wills, and other public instruments
shall be governed by the laws of the country in which they are executed.”

Refers to the formal or extrinsic validity

LEX REI SITAE:

“Art. 16. Real property as well as personal property is subject to the law of the
country where it is situated.”

i.e. A Japanese donated in France in favor of a Filipino a parcel of

land in the Philippines.

(a) What law governs the formalities of the donation?

The law of the Philippines in accordance with the lex rei

sitae rule, will govern the formalities of the donation. The
lex loci celebrationis principle does not apply because the
transaction relates to land situated in the Phils. And is
thus governed by the law of the place where it is situated.

(b) The law of which country governs the capacity of the

Japanese to make the alienation?

The law of the Philippines governs the capacity of the

Japanese to alienate because it refers to property found in
the Phils.

© The law of which country governs the intrinsic validity of

the donation?

The law of the Phils. The general rule of lex loci voluntatis
(law of the place voluntarily agreed upon) or lex loci
intentionis (law of the place intended) yields to the lex rei
sitae because the subject matter is land found in the
Philippines.

EXCEPTIONS TO LEX REI SITAE:

(1) In case of successional rights to real property, the law that

governs is the national law of the decedent (Art. 16, par. 2
Civil Code); as well as capacity to succeed (in inheritance)
is also governed by the national law of the decedent (Art.
1039, CC);

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 (2) Contracts involving real property but which do not deal
with the title to such real property shall not necessarily be
governed by the lex rei sitae. The proper law of the
contract governs

(3) In contracts where real property is given by way of

security, the principal contract of i.e loan is governed by
the proper law of the contract; the accessory contract of
mortgage is governed, however, by the law of the state
where the real property mortgaged is situated.

Relation between criminal cases and civil action (Civil

Obligation ex delicto)

General Rule – Pendency of the criminal action is a bar to the

filing of the civil action on the same facts.

Exceptions to the general rule:

(a.) A civil action for damages, entirely separate and distinct

from the criminal action, may be brought by offended
party in the following cases:

(b.) In all these cases, the civil action shall proceed

independently of the criminal prosecution and shall require
only a preponderance of evidence (not proof beyond a
reasonable doubt) (Arts. 32, 33, 34)

PREJUDICIAL QUESTION

Concept: A prejudicial civil question refers to a dispute of purely

civil character but so connected in such a manner to the crime on
which the criminal case is based that it is determinative of the
guilt or innocence of the accused.

FAMILY CODE

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 Validity of Marriage – in determining the validity of marriage, it is to
be tested by the law in force at the time the marriage was contracted.

1. Requisites for validity of marriage:

a. Essential requisites:

i. Legal capacity of the contracting parties who

must be a male and a female; and

• Legal capacity defined: male or female of

the age of 18 years or upwards not under any
of the impediments in Articles 37 (incestuous
marriages), 38 void marriages by reason of
public policy). (Art. 5)

• “to grant the changes in name and sex

sought by petitioner will substantially
reconfigure and greatly alter the laws on
marriage and family relations – it will allow the
union of a man with another man who has
undergone sex reassignment, a male-to-female
post operative transsexual. (Silverio vs.
Republic, 537 SCRA 373) Such a marriage is
void.

ii. Consent freely given in the presence of the

solemnizing officer (Art. 2, FC) – consent of the
contracting parties and not their parents should they
18 years old and up.

b. Formal requisites: (Art. 3)

1. Authority of the solemnizing officer

The authority of the officer or clergyman shown to

have performed a marriage ceremony will be
presumed in the absence of any showing to the
contrary. (Alcantara vs. Alcantara, 531 SCRA 446)

• Authorized solemnizing officers are:

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 1.1. incumbent member of the judiciary
within the court’s jurisdiction;

1.2. 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 him;

1.3. any ship captain or airplane chief

only when the marriage is in articulo
mortis;

1.4. any military commander of a unit

to which a chaplain is assigned, in the
absence of the latter, during military
operation where the marriage is in articulo
mortis;

1.5. any consul-general, consul or vice

consul where the marriage is abroad
between Filipino citizens ;

1.6. mayors (Local Government Code)

Absence of authority of the solemnizing officer- the

marriage is void, however, where either or both of
the contracting parties believing in good faith that
the solemnizing officer had the legal authority to do
so, the marriage is valid (Art. 35, p. 2)

2. A valid marriage license except where no

marriage license is necessary:

a. marriage in articulo mortis (art. 27)

b. residence of either or both parties are
in far areas and no means of transportation to
appear before the local civil registrar; (Art. 28)
c. marriage among Muslims or among
members of the ethnic cultural communities,
provided they are solemnized in accordance with
their customs, rites, practices; (Art. 33)

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 d. co-habitation for at least five years and
without any legal impediments to marry each
other; (Art. 34)

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
witness of legal age.

Note that “No prescribed form or religious rite for the

solemnization of the marriage is required. It shall be
necessary however, 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.” (Art. 6)

2. Effect of absence or defect in any of the

requisites:

a. The absence of any of the essential for

formal requisites shall render the marriage void (Art. 4)

Note: Case of Navarro vs. Domagtoy, July 19, 1996

where the court held that “where judge solemnizing a
marriage outside his court’s jurisdiction, there is a
resultant irregularity in the formal requisite, which,
while it may not affect the validity of the marriage,
may subject the officiating official to administrative
liability.”

b. A defect in any of the essential requisites

shall render the marriage voidable; (Art. 4, par. 2)

c. An irregularity in the formal 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. (Art. 4
par. 3)

C. Void Marriages

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1. Void marriages under Art. 35

1.1. those contracted by any party below 18 years of age

1.2. Those solemnized by any person not legally
authorized to perform marriages
1.3. Those solemnized without a license
1.4. Those bigamous or polygamous marriages not falling
under Art. 41

Article 41 refers to a valid bigamous marriage

1.5. Those contracted through mistake of one contracting

party as to the identity of the other; and
1.6. Those subsequent marriages that are void under Art.
53

2. Psychological Incapacity of one or both of the contracting

parties to perform his or her essential marital obligations
(Art. 36)

3. Incestuous marriages, whether the relationship between

the parties be legitimate or illegitimate (Art. 37)

3.1 Between ascendants and descendants of any degree;

and
3.2 Between brothers and sisters, whether of the full or
half-blood

4. Marriages declared void by reason of public policy (Art. 38)

4.1. Between collateral blood relatives, whether

legitimate or illegitimate, up to the fourth civil
degree;
4.2. Between step-parents and step-children
4.3. Between parents-in-law and children-in-law
4.4. Between the adopting parent and the adopted child;
4.5. Between the surviving spouse of the adopting
parents and the adopted child;
4.6. Between the surviving spouse of the adopted child
and the adopter;
4.7. Between an adopted child and a legitimate child of
the adopter
4.8. Between the adopted children of the same adopter

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 4.9. Between parties where one, with the intention to
marry the other, killed that other person’s spouse or
his or her own spouse
5. Marriages under Art. 40

“The absolute nullity of a previous marriage may be

invoked for purposes of remarriage on the basis of a final
judgment declaring such previous marriage void.

6. Marriages under Art. 44

“If both spouses of the subsequent marriage acted in bad

faith, said marriage shall be void ab initio and all donations
by reason of the marriage and testamentary dispositions
made by one in favor of the other are revoked by
operation of law.”

7. Failure to comply with the recording requirements under

Art. 52 (Art. 53)

Either of the former spouses may marry again after

complying with the requirements in Art. 52; otherwise, the
subsequent marriage is void.

“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. (Art. 52)

A. Voidable Marriages (Art. 45)

KINDS:

1. No parental consent for a contracting party who is 18

years of age or over but below 21 years of age;
2. Unsound mind
3. Consent was obtained through fraud

3.1 Non-disclosure of a previous conviction by final

judgment of a crime involving moral turpitude
3.2 Concealment by the wife of the fact that at the time
of the marriage , she was pregnant by a man other
than her husband

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 3.3 Concealment of sexually transmissible disease,
regardless of its nature, existing at the time of the
marriage; or
3.4 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 marriage. (Art. 46)

4. Consent was obtained by force, intimidation, or undue

influence
5. Physical incapability to consummate the marriage which
appears incurable
6. Affliction with a sexually transmissible disease found to be
serious and appears to be incurable

NOTE: “Only an aggrieved or injured spouse may file

petitions for annulment of voidable marriages and
declarations of absolute nullity of marriages – such petitions
cannot be filed by the compulsory or intestate heirs of the spouses
or by the State. They do not have the legal right to file the
petition. Compulsory or intestate heirs have only inchoate rights
prior to the death of their predecessor, and hence can only question
the validity of the marriage of the spouses upon the death of a
spouse in a proceeding for the settlement of the estate of the
deceased spouse filed in the regular courts. (Enrico vs. Heirs of
Sps. Eulogio B. Medinaceli and Trinidad Catli-Medinaceli, 534 SCRA
418)

B. Marriage under Article 26

All marriages solemnized outside of the Philippines, in

accordance with the laws in force in the country where they are
solemnized, and valid there as such, shall also be valid in the
Philippines except:

1. those contracted by any party below 18 years of age

2. Those bigamous or polygamous marriages not falling
under Art. 41
3. Those contracted through mistake of one contracting party
as to the identity of the other; and

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 4. Those subsequent marriages that are void under Art. 53

Art. 26, 2nd par.:

“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 likewise
have capacity to remarry”

Note: Applies to marriages where both were

Filipinos at the time of the marriage and
subsequently, one of the spouses becomes a
foreigner, provided the requisites under Art. 26 par.
2 are complied with.

Presentation solely of the divorce decree is

insufficient and that proof of its authenticity and due
execution must be presented. (San Luis vs. San Luis,
514 SCRA 294)

C. PROPERTY RELATIONS

1. Kinds:

a. Absolute Community Property

b. Conjugal Partnership of Gains
c. Complete Separation of Property
d. Any other regime

2. Marriage Settlement ; Form and Modification (Art. 76 and

77)

a. Must be in writing
b. Signed by the parties
c. Executed before the marriage
d. Any subsequent modification must be made before the
celebration of the marriage

3. Donations By Reason of Marriage – those made before the

celebration of the marriage, in consideration of the same, and
in favor or one or both of the future spouses (Art. 82)

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 a. Limitation – If the future spouses agree upon a regime
other than the ACP, they cannot donate to each other in
their marriage settlements more than 1/5 of their present
property. Any excess shall be considered void. (Art. 84)
b. Revocation of donation by reason of marriage: (Art. 86)
DPN may be revoke by the donor in the following cases:

1. If the marriage is not

celebrated or judicially declared void an initio except
donations made in the marriage settlements, which in
these cases are considered void if the marriage does not
take place.

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 provided in the
provisions of the Civil Code on donations in general.

D. Absolute Community of Property

1. When ACP governs property regime of the spouses:

a. when the spouses have entered into marriage without

having chosen any property regime;
b. when the property regime chosen is void
c. when the choose the ACP to govern their property relations
during the marriage

2. What constitutes Community Property

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 Consists of all the property owned by the spouses at the time
of the celebration of the marriage or acquired thereafter.
(Art. 91)

Presumption of property acquired during the marriage, is that

it belongs to the community property (Art. 93)

Winnings is game of chance, betting or any other kind of

gambling but not losses which shall be borne by the loser.
(Art. 95)

3. Excluded from ACP

a. Property acquired during the marriage by gratuitous title by

either spouse, and the fruits as well as the income thereof,
if any, unless expressly provided by the donor, testator or
grantor that they shall form part of the ACP
b. Property for personal and exclusive use of either spouse.
However, jewelry shall form part of the community
property;
c. Property acquired before the marriage by either spouse who
has legitimate descendants by a former marriage, and the
fruits as well as the income thereof;

E. Conjugal Partnership of Gains

1. Concept:

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 settlement. (Art. 105)

2. What forms Part of CPG

a. 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. (Art. 116)

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b. Art. 117

1. those acquired by onerous

titled during the marriage at the expense of the
common fund;

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.
Losses shall be borne exclusively by the loser-spouse.

c. 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
installments on the principal shall be exclusive property of
the spouse. However, interest falling due during the
marriage on the principal shall belong to the conjugal
partnership. (Art. 119)

d. Art. 120 Ownership of improvements made on the separate

property of the spouses at the expense of the partnership or
efforts of either or both spouses depending on cost of
improvement made by the CP and the resulting increase in
value. If it is more than the value of the property at the

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 time of improvement, the entire property of one spouse
shall belong to the CPG. (Art. 120)

3. Excluded from the CPG

a. That which is brought to the marriage as his or her own;

b. That which each acquires during the marriage by gratuitous
title;
c. That which is acquired by right of redemption, by barter or
by exchange with property belonging to only one of the
spouses; and
d. That which is purchased with exclusive money of the wife or
of the husband (Art. 109)
4. Dissolution of the CPG; same grounds as in the ACP
(Art. 126)

F. Complete Separation of Property

G. Property Regime or Unions without Marriage

Art. 147. When a man and a woman who are capacitated to

marry each other, live exclusively with each other as husband
and wife, without the benefit or 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. X x x

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 default of or
waiver of 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.

• Relationships included under Art. 147:

1. the man and the woman must (a) be capacitated to

marry each other; (b) live exclusively with each other as
husband and wife; and )c) be without the benefit of
marriage;

2. Void marriages under:

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 (a) Articles 36 (psychological incapacity;

(b) Art. 44 marriage where the absent spouse has

been declared presumptively dead and the present spouse
as well as the 2nd spouse of the subsequent marriage are in
bad faith; and

© Art. 53. Failure to comply with the recording

requirements after a marriage is declared void

Art. 148. In cases of cohabitation not falling under Art. 147,

only 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 , their contribution shall be
deemed equal.

In one of the parties is validly married to another, his or

her share in the co-ownership shall accrue to the ACP or CPG
existing in such valid marriage. If the party who acted in bad
faith is not validly married to another, his or her share shall be
forfeited in the manner provided in art. 147.

• Relationships included under Art. 148:

1. a man and a woman living together as husband and wife,

without he benefit of marriage, but are NOT CAPACITATED
to marry;
2. an adulterous relationship;
3. a bigamous or polygamous marriage;
4. incestuous void marriages under Art. 37; and
5. void marriages by reason of public policy under Art. 38

H. Paternity and Filiation

1. Legitimate children

Children conceived or born during the marriage of the

parents are legitimate. (Art. 164)

2. Illegitimate Children

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 Children conceived and born outside a valid marriage are
illegitimate; unless otherwise provided by the Family code.
(Art. 165)

• PRESUMPTION OF FILIATION IN CASE OF TWO

MARRIAGES. The rules in Article 168 will not apply in
case there are convincing proofs of filiation that the father
of the child is the husband of the previous or the
subsequent husband.

• Whether the child is legitimate or illegitimate depends

upon the status of the first marriage.

3. Legitimated Children

Only children conceived and born outside 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. (Art. 177)

Legitimation shall take place by a subsequent valid

marriage between parents. The annulment of a voidable
marriage shall not affect the legitimation. (Art. 178)

The effects of legitimation shall retroact to the time of the

child’s birth. (Art. 180)

4. Adopted children

Purely personal between the adopted child and the

adopted parent.

M. IMPUGNING THE LEGITIMACY OF A CHILD

Art. 166. 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;

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 b.) the fact that the husband and wife were living
separately in such a way that sexual intercourse was not possible;

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 par. Of Art.
164; or

3. That in case of children conceived through artificial

insemination, the written authoritization or ratification of
wither parent was obtained through mistake, fraud,
violence, intimidation, or undue influence.

Where the husband was able to prove any of the grounds

enumerated above, the child will neither be considered
legitimate or illegitimate in so far as he is concerned because
they are not related to each other. In so far as the mother is
concerned, the child will be considered her illegitimate child.

Art. 167. The child shall be considered legitimate although the mother
may have declared against its legitimacy or may have been sentenced as
an adulteress.

Only the husband is given the legal standing to impugn the

legitimacy of a child supposedly his, and only under circumstances
enumerated in Art. 171 are his heirs given the standing to impugn the
legitimacy of his supposed child. His heirs can substitute him only if
he dies before the expiration of the period (one year from knowledge
of the birth or its recording in the civil register should the husband or
his heirs live in the city where the birth took place or was recorded, 2
yrs if reside in the Phils, and 3 years if reside abroad) provided by the
law for bringing the action or after filing of the same, without him
having desisted therefrom, or if the child was born after his death.

“If H and W are married and if the wife gives birth to a child of
her paramour, the said child is born inside the valid marriage of the
wife and the husband. The child is considered legitimate as to H and
W. Only the husband can impugn the legitimacy of the child. If the
paramour files an action for the custody of the child contending that he
is the natural father, the action will fail because only the husband, as a
general rule, can claim that the child is illegitimate in a direct action
for that purpose and only under the grounds provided by law.”

20
 Not even the child can bring an action to claim his filiation with
his mother’s paramour. To do so would allow him to repudiate his own
legitimacy.

If the husband was informed by his wife that their four year old
child is not his, he can no longer file an action to impugn the
legitimacy of the child since the law specifically stats that the
prescriptive period begins to run from knowledge of the birth of the
child or its recording in the civil registrar and not from subsequent
knowledge that the child is not his.

The concealment provided by law does not refer to the

concealment that the child was not the husband’s but the concealment
that a child was in fact born or registered in the civil registry as having
been delivered by the wife.

PROPERTY

• A building is by itself an immovable property irrespective of

whether or not said structure and the land on which it is adhered to
belong to the same owner. Hence, a valid real estate mortgage can be
constituted only on the building erected on the land belonging to
another.

• Chattel mortgage on real property – Under certain

conditions, a property may have a character different from that
provided in Article 415 and 416 (enumerations of immovable and
movable properties). The parties to a contract of chattel mortgage
may, by agreement, treat as personal that which by nature would be
real, i.e. building which by its nature is considered real property. Said
chattel mortgage over a building is binding between the parties to said
agreement since they are estopped from claiming otherwise. With
respect to third persons, not parties to the contract, the building is
considered immovable property.

• Machinery, receptacles, instruments, or implements – The

machinery, etc. must be placed by the owner of the tenement or his
agent to be considered as immovable property. Machinery is movable
by nature and becomes immobilized only when placed on a plant by
the owner of the property or plant, but not so when placed by a
tenant, usufructuary, or a person having only a temporary right,
unless such person acted as an agent of the owner.

21
 Thus, where a tenant places the machinery under the express
provision of lease that it shall become part of the plant belonging
to the owner upon the termination of the lease without
compensation to the lessee, the tenant acts as an agent of the
owner and the immobilization of the machinery takes place by
reason of permanent destination to the machinery. But if the
attachment or immobilization is for the use of the lessee which
does not inure to the lessor at the end of the lease contract,
then it remains personal property.

For the machinery, etc. to be considered immovable property,

said machinery, etc. must tend directly to meet the needs of the
industry or works carried on in a building or on a piece land.
The movable (machinery, etc.) must first be “essentially and
principal elements of an industry or works without which, such
industry or works would be unable to function or carry on the
industrial purpose for which it was established.”

Where the movables are merely incidental e.g. cash registers,

typewriters found in hotels and restaurants are merely incidental
for these businesses can continue or carry on their functions
without these equipments and thus retain their nature as
movable property.

• OWNERSHIP – Limitations on the right of ownership:

1. those imposed by the state in the exercise of the power of

taxation, police power and power of eminent domain;
2. those imposed by law such as legal easement and the
requirement of legitime succession;
3. those imposed by the grantor of the property on the
grantee, either by contract e.g. donation, or by last will;
4. those imposed by the owner himself such as voluntary
easement, mortgage, pledge and lease; and
5. those imposed by the Constitution e.g. prohibition of
alienation in favor of aliens

• Article 441. to the owner belongs the natural, industrial and civil
fruits. Thus all fruits belong to the owner of a thing. Exceptions;
a person, other than the owner of a property, owns the fruits
thereof:

22
 a. possession in good faith by another – the possessor
in good faith is entitled to the fruits received before
the possession is legally interrupted (Art. 544);

b. usufruct – the usufructuary is entitled to all the fruits

of the property in usufruct (Art. 566);

c. lease of rural lands – the lessee is entitled to the

fruits of the land together with the owner, getting
the civil fruits in the form of rents paid by the lessee;
(Art. 1680 and 1654);

d. pledge – the pledge is entitled to receive the fruits,

income, dividends, pr interests which the pledge
earns or produces but with the obligation to
compensate or set-off what he receives with those
which are owing him. (Art. 2102);;

e. antichresis – the creditor acquires the right to

receive the fruits of an immovable of his debtor, but
with the obligation to apply them, first, to the
interest if owing, and then to the principal amount of
the credit. (Art. 2132)

• When the fruits or crop have already been gathered or

harvested when the owner recovers the possession, the
possessor in bad faith shall return the fruits gathered but has the
right to deduct the expenses of planting and harvesting. A
possessor in bad faith or good faith is entitled to reimbursement
for the necessary expenses of preservation of the land (Art.
452);

• The good faith or bad faith of the possessor is material where

the fruits are still pending (ungathered) at the time he gave
up his possession. A builder, planter or sower, in bad faith has
no right of reimbursement for expenses, nor to the fruits. The
owner gets the fruits without indemnity by the principle of
accession continua. But the possessor in bad faith is entitled to
reimbursement for the necessary expenses of preservation of the
land.

• Art. 449. Builder, sower, or planter (BPS) in Bad faith – The BPS
FORFEITS what he has built, planted or sown without any right
to be paid indemnity therefore. He is, however, entitled to

23
 reimbursement for necessary expenses of preservation of the
land incurred by him (Art. 452) but without the right of retention
until reimbursement which is given to a possessor in good faith
(Art. 546)

- If the products have already been gathered (separated

from the land) by the builder, planter or sower and they
are ordered delivered to the owner of the land, the builder
etc. should be reimbursed for the expenses incurred for
the production, gathering and preservation of the fruits
(Art. 443) if the crop is still standing or growing at the
time the owner of the land recovers it, the planter in bad
faith loses them without the right to any indemnity (Art.
449).

• Accretions affecting lands registered under the Torrens

system:

- In case of diminution of area – accretion are natural

incidents to land bordering on running rivers or streams
and are not affected by the registration law. Hence,
registration does not protect the riparian owner against
diminution of the area of his land through the gradual
changes in the course of the adjoining stream. Accretions
which the banks of rivers may gradually receive from the
effect of the current becomes the property of the owners
of the banks.

- In case of increase in area – although an alluvion is

automatically owned by the riparian owner from the
moment the soil deposit can be seen, it does not
automatically become registered land, just because the
land which receives such accretion is covered by a Torrens
title, thereby making the alluvial property imprescriptible.
Ownership of a piece of land is one thing and registration
under the Torrens system of that ownership is another.
So, alluvial deposit acquired by a riparian owner of
registered land by accretion may be subjected to
acquisition through prescription by a third person, by
failure of the owner to register the said accretion within
the prescribed period.

• CO-OWNERSHIP

24
  Co-owners obligation to contribute to expenses:

1. Preservation of the thing co-owned – the expenses of

preservation of the thing or right owned in common and
the amount of taxes due thereon should be borne by ALL.
A co-owner who advanced them has a right to demand
reimbursement from the others in proportion to their
respective interests in the co-ownership. These are
NECESSARY EXPENSES

2. Useful expenses – even if the value of the

community property is thereby increased, they are not
covered, the purpose of co-ownership not being for profit,
unless such expenses were incurred with the consent of
the others.

3. Expenses for pure luxury or mere pleasure – are not

also refundable not being for preservation. However,
should any improvements be made to embellish the thing
or right owned in common, the consent of the MAJORITY of
the co-owners is required and all shall contribute.

4. Any alteration made on the right or thing owned in

common needs the UNANIMOUS CONSENT of the co-
owners and not a mere majority since acts of alteration is
an act of ownership and not mere administration.
Alteration is a change in the thing which involves a change
from the state or essence in which the others believe it
should remain, or withdrawal of the thing from the use to
which they wish it to be intended; or any other
transformation which prejudices the condition or substance
of the thing or its enjoyment by the others.

• SALE MORTGAGE OF COMMON PROPERTY – each co-owner

has the absolute right to freely dispose of his pro indiviso share
and of the fruits and other benefits arising from that share but
the transferee does not acquire any specific or determinate
physical portion of the whole, his right being limited to the
portion which may be allotted to him upon the partition of the
property.

- If a deed of sale appears to convey a definite or

segregated portion of the property under co-ownership
that is still undivided, does not make the sale a nullity

25
 per se. The sale is valid subject only to the condition
that the interests acquired by the vendee must be
limited to the part that may be assigned to the co-
owner-vendor in the division upon the termination of
the co-ownership.

- Even if the co-owner sells the whole property as his

own, the sale is valid insofar as his ideal portion is
concerned unless the sale is authorized by the other co-
owners. Since a co-owner is entitled to sell his
undivided share, a sale of the entire property by one
co-owner will only transfer the rights of said co-owner
to the buyer, and the buyer thus becomes a co-owner
of the property.

• PARTITION – Article 494 grants the each co-owner the right to

demand at any time partition of the thing owned in common,
insofar as his share is concerned for “no co-owner shall be
obliged to remain in the co-ownership.” The action to demand
partition is imprescriptible or cannot be barred by laches absent
a clear repudiation of the co-ownership by a co-owner clearly
communicated to the other co-owners.

• EXCEPTION to the right to demand partition:

1. when the co-owners have agreed to keep the thing

undivided for a certain period of time, not exceeding 10
years; which term may be extended provided each
extension does not exceed 10 years.

2. when the partition is prohibited by the donor or testator for

a certain period not exceeding 20 years;

3. when the partition is prohibited by law i.e. the community

or conjugal property of the husband and wife; the family
home; party walls and fences ;

4. when partition would render the thing unserviceable for

the use which it is intended. The co=ownership in this
case may be terminated in accordance with Article 498.

5. when another co-owner has possessed the property as

exclusive owner and for a period sufficient to acquire it by

26
 prescription ( repudiation of the co-ownership having been
successful)

• REDEMPTION in co-ownership redounds to the benefit of

all.

Where a lot and improvement were mortgaged by the deceased

parents, a co-ownership existed among the heirs during the
period given by law to redeem the foreclosed property.
Redemption by one heir during this period would inure to the
benefit of all. But where the heir purchased the property from
the mortgagee (to whom the property was sold at the
foreclosure sale) after the redemption period had expired and
after the mortgagee had consolidated its ownership and a new
title was issued in his name, there was no longer any co-
ownership to speak of. When the heirs allowed the one year
period of redemption to expire without redeeming their parent’s
former property and permitted the consolidation of ownership
and the issuance of a new title, the co-ownership was
extinguished.

• After partition, co-ownership ceases to exists; not right of

legal redemption exists- Where the party seeking to redeem
is the owner of a portion already determined and identifies, he
cannot be considered a co-owner and, hence, he cannot redeem
under Art. 1620 of the New Civil Code. Once the property is
subdivided and distributed among the co-owners, the community
is considered to have been terminated and there is no reason to
sustain any right of legal redemption.

• Registration in the name of co-owner merely creates a

trust – registration of land subject of co-ownership in the name
of one co-owner is not repudiation of co-ownership for purposes
of prescription. Article 494(5) provides that no prescription shall
run in favour of a co-owner or co-heirs as long as he expressly
or impliedly recognizes the co-ownership. The registration
merely created a trust in favour of his co-owners.

• An oral partition among co-heirs is valid and does not fall

under the Statute of Frauds – Oral partition is valid as there
is no law that required partition among heirs to be in writing to
be valid. The requirement that partition be put in a public
document and registered has for its purpose the protection of
creditors and at the same time the protection of the heirs

27
 themselves against tardy claims. Partition is not covered by the
Statute of Frauds because partition is not a conveyance of
property but simply a segregation and designation of the part of
the property which belongs to the co-owners.

• Possession as a fact cannot be recognized at the same

time in two different personalities except in the case of
co-possession –(Art. 538) possession as a fact ma exist at
the same time in two or more distinct personalities but, as a
general rule, the law will recognized only one as the actual or
real possessor. Thus the rule on preference of possession as
follows:

1. The present or actual possessor shall be preferred

If X, through force and intimidation, ejected Y, actual

possessor, from the land, Y will still be considered as the present
possessor and will be preferred because X cannot be said to
have acquired possession (Art. 536)

2. if there are two possessors the longer in possession

If both X and Y occupied a portion of a land both claiming

ownership of the entire parcel of land but Y was first is taking
possession, Y shall be preferred.

3. If the dates of possession are the same, the possessor

with a title i.e. right or document evidencing his right to
support his possession; and

If they possessed at the same time but X is a squatter

while Y is a lessee, preference shall be in favor of Y. The
lease contract with the owner is Y’s title.

4. if all the above are equal, the fact of possession shall be

judicially determined, and in the meantime, the thing
shall be placed in judicial deposit (Arts. 2005-2009)

• 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 (art. 562)

28
  Obligations of the usufructuary:

a. BEFORE the U. begins

 to make an inventory of the property; and

 to give security

b. during the usufruct

 to take care of the property

 to replace with the young thereof animals that die
or are lost in certain cases when the usufruct is
constituted on flock or herd of livestock
 to make ordinary repairs
 to notify the owner of urgent extraordinary repairs
 to permit works and improvements by the naked
owner not prejudicial to the usufructuary
 to pay annual taxes and charges of the FRUITS
 to pay interest on CAPITAL paid by the naked owner
 to pay debts when the usufruct is constituted on the
whole of a patrimony
 to secure the naked owner’s or court’s approval to
collect credits in certain cases
 to notify the owner of any prejudicial act committed
by third persons ; and
 to pay for court expenses and costs regarding the
usufruct

c. at the termination of the usufruct

 to return the thing in usufruct to the naked owner

unless there is a right of retention
 to pay legal interest at the time that the usufruct
lasts, on the amount spent by the owner for
extraordinary repairs (Art. 594); and the proper
interest on the sums paid as taxes by the owner
(Art. 596); and
 to indemnify the naked owner for any losses due to
his negligence or of his transferees (Arts. 589-590)

• When no security is needed to be given by the usufurctuary:

1. the donor who has reserved the usufruct of the property

donated;

29
 2. the parents who are the usufructuaries of their children’s
property, except when the parents contract a second (or
subsequent) marriage;

3. when the naked owner renounces or waives his right to the

inventory or security;

4. where the title constituting the usufruct relieves the

usufructuary from the obligation ;

5. where the usufructuary asks that he be exempt from the

obligation and no one will be injured thereby

6. when the usufructuary is under obligation to give security

but cannot afford to do so and no one is wiling to give
security for them, the court on humane considerations (i.e.
poor family badly in need of a house_ may allow the
usufructuary to enjoy the property upon taking an oath
–“by virtue of a promise under oath”- to take care of the
property and retain it until the termination of the usufruct
(Art. 612) I lieu of giving a security.

NOTE: under this instance (no. 6) the usufructuary cannot

alienate or lease the property for this means that he does
not need it if he does alienate his right of usufruct. The
oath is what is called “CAUCION JURATORIA”

• DONATIONS

o Kinds:

1. SIMPLE – or that cvause of which is the pure

liberality of the donor in consideration of the donee’s
merits

2. remunatory or compensatory – that which is given

out of gratitude on account of the services rendered by the
donee to the donor, provided they do not constitute a
demandable debt.

3. modal – that which imposes upon the donee a burden

(e.g. services to be performed in the future) less than the
value of the gift;

30
 4. onerous – that the value of which is considered the
equivalent of the consideration for which it is given and is
thus governed by the rules on obligations and contracts
(Art. 733)

NOTE: Illegal or impossible conditions in SIMPLE and

REMUNATORY donations shall be considered as not
imposed. (Art. 727)

In modal donations, a burden (which is necessarily future)

less than the value of the gift is imposed upon the donee.
If the burden is considered the equivalent of the thing or
right given, then the donation is an onerous one.

If the donation is onerous (or modal as to the onerous

portion), the illegal or impossible condition will render the
donation void. Being contractual in nature, the rule
applicable would be Art. 1183 on obligations and contracts.

• REVOCATION OF DONATION – affects the whole donation and

is allowed during the lifetime of the donor:

1. birth, appearance, or adoption of a child of the donor

subsequent to the donation;
2. non-fulfillment of a resolutory condition imposed by the
donor (Art. 765)
3. Ingratitude of the donee (Art. 765)

• REDUCTION OF DONATION – this generally affects a portion

only of the donation and is allowed during the lifetime of the
donor or after his death:

1. failure of the donor to reserve sufficient means for support

of himself or his dependent relatives (Art. 750)
2. failure of the donor to reserve sufficient property to pay off
his existing debts (Art. 759)
3. Inofficiousness; the donation exceeds that which the donor
can give by will (Arts. 752, 771); and
4. birth, appearance, or adoption of a child of the donor (Art.
760)

• Who may ask for reduction? Only those who at the time of the
donor’s death have a right to the legitime and their heirs and
successors in interest may ask for the reduction of inofficious

31
 donations. They cannot renounce their right during the lifetime
of the donor. (Art. 771)

Donees, devisees and legatees who are not entitled to the

legitime and the creditors of the deceased can neither ask for
the reduction nor avail themselves thereof (Art. 772)

LAND TITLES AND DEEDS

• The Regalian doctrine does not negate NATIVE TITLE to lands

held in private ownership since time immemorial. In carino vs.
Insular the supreme Court ruled and recognized the existence of
native title to land, or ownership of land by Filipinos b virtue of
possession under a claim of ownership since time immemorial
and independent of any grant from the Spanish Crown as an
exception to the theory of jura regalia.

• Registration does not vest title. It is merely evidence of such

title over a particular land. Our land registration laws does not
give the holder any better title than what he actually has.

• Registration is not a mode of acquiring ownership but is merely a

procedure to establish evidence of title over realty. It is merely
evidence of ownership previously conferred by any of the
recognized modes of acquiring ownership.

• A certificate of title issued pursuant to a public land patent has

the same validity and efficacy as a certificate of title issued
through ordinary registration proceedings.

• A certificate of title shall not be subject to collateral attack nor

shall it be altered, modified or cancelled except in a direct
proceeding in accordance with law.

• Private corporations or associations may not hold such alienable

lands of the public domain except by lease, for a period not
exceeding 25 years, renewable for not more than 25 years and
not to exceed 1,000 hectares in area.

• Private corporations or associations are disqualified from

acquiring alienable lands of the public domain. However, where
at the time the corporation acquired the land, its predecessor-in-
interest had been in possession and occupation thereof in the

32
 manner and for the period prescribed by law as to entitle him to
registration in his name, then the proscription against
corporations acquiring alienable lands of the public domain
except through lease does not apply for the land was no longer
public land but private property.

• If the possession of alienable and disposable land commenced

only after June 12, 1945, one can still apply for registration of
the property through prescription (Sec. 14[2] PRD). Properties
classified as alienable public land may be converted into private
property by ordinary prescription of 10 years or extraordinary
prescription of 30 years, without need of title or good faith.

• Application for confirmation of title under the PRD:

1. The public shall be given notice of the initial hearing by

means of publication, mailing and posting. The requirement of
giving notice by all three modes is MANDATORY.

 Purpose of publication- (a) to confer jurisdiction

upon the court over the res; and (b) to apprise the
whole world of the pending registration case so that
they may assert their rights or interests in the land,
if any, and oppose the application, if so minded.

 A land registration is a proceeding in rem, and the

proceeding requires constructive seizure of the land
as against all persons, including the state.

 Publication is a newspaper is necessary to accord

with the due process requirement. Publication in a
newspaper of general circulation remains an
indispensable procedural requirement.

2. AMENDMENT OF THE APPLICATION - Where the

amendment consists in a substantial change in the boundaries or
increase in area of land, or involve the inclusion of additional
are, the amendment shall be subject to the same requirement of
publication and notice as in the case of an original application.

Where no publication has even been made except the

initial publication, and this did not include the additional area,

33
the registration court had no jurisdiction over the said included
and additional area and its adjudication to the applicant over the
additional area is a nullity.

3. ORDER OF GENERAL DEFAULT – if no person appears and

answers within the time allowed, the court shall, up[on motion of
the application, order a default to be entered and require the
applicant to present evidence. The notice states :TO ALL WHOM
IT MAY CONCERN” - all the world are made parties defendants
and shall be included in the default order, the general default is
addressed to the whole world.

4. ORDER OF SPECIAL DEFAULT – when an appearance has

been entered and an answer filed, a default order shall be
entered against persons who did not appear and answer. This
special order of default is directed only against those who did not
enter their appearance and file an answer.

5. WHEN JUDGMENT BECOMES FINAL – the judgment rendered

in a land registration case becomes final upon the expiration of
fifteen (15) days to be counted from the date the party
concerned receives notice thereof, including the Solicitor General
who appears for the State.

6. Writ of possession in land registration cases –

After the registration of a land is decreed in favor of the

applicant, he as well as any subsequent purchaser of the
property has the right to the title and possession of the land, and
to that end he may ask the proper court for the issuance of a
writ of possession, provided the same has not been issued
before.

A writ of possession may be issued not only against the

person who has been defeated in a registration case but also
against anyone unlawfully and adversely occupying the land or
any portion thereof DURING the land registration proceedings UP
TO THE ISSUANCE of the final decree.

7. Writ will NOT issue against persons taking possession

AFTER issuance of final decree

When the parties against whom a writ of possession is

sought entered into possession after the issuance of the final

34
decree, and none of them had been a party in the registration
proceedings, the writ of possession will, not issue. A person who
took possession of the land after final; adjudication of the same
in registration proceedings cannot be summarily ousted through
a writ of possession secured by a mere motion and that
regardless of any title or lack of title of persons to hold
possession of the land in question, they cannot be ousted
without giving them their day in court in proper independent
proceedings. The remedy is to institute a separate action for
unlawful entry or detainer or for reinvindicatory action, as the
case may be.

8. Decree of registration cannot be issued until after the

judgment becomes final - Execution pending appeal is not
applicable in land registration proceedings. It is fraught with
dangerous consequences. Innocent purchasers may be misled
into purchasing real properties upon reliance on a judgment
which may be reversed on appeal.

9. The Torrens title becomes indefeasible and incontrovertible

after one year from the issuance of the decree.

10. REMEDIES of aggrieved party:

a. Motion for new trial or reconsideration – within the

period for taking an appeal (15 days from receipt of
the decision)

GROUNDS (FAME ; newly discovered evidence)

b. Appeal – within 15 days from receipt of a copy of the

decision

c. Relief from judgment or relief from denial of appeal

Verified, filed within 60 days after the petitioner

learns of the judgment, final order, or other
proceeding to be set aside, and not more than 6
months after such judgment or final order was
entered, or such proceeding was taken

d. Review of Decree (Sec. 32 PD 1529)

35
 Within one (1) year from the issuance of the decree
of registration and that the registration was procured
through actual fraud provided that the property has
not passed to an innocent purchaser for value

e. Reconveyance (Sec. 53 and 96) – provided the

property has not passed to an innocent purchaser for
value

f. Damages (Sec. 32)

g. Claim against the Assurance Fund
h. Reversion (Sec. 101, CA No. 141
i. Annulment of Judgment
k. Criminal Prosecution under the Revised Penal Code

11. CADASTRAL PROCEEDINGS – in the absence of fraud, title

to land in cadastral proceedings is vested on the owner, upon
the expiration of the period to appeal from the decision or
adjudication by the cadastral court, without such appeal being
perfected, and from that time the land becomes registered
property which cannot be lost by adverse possession.

12. Prohibition against alienation of lands acquired under the

HOMESTEAD and FREE PATENT Provisions
Sec. 118. Except in favor of the government or any of its
branches, units or institutions or legally constituted banking
corp. lands acquired under the free patent or homestead
provisions shall not be subject to encumbrance or alienation
from the date of the approval of the application and for a term of
five years from and after the date of issuance of the patent or
grant nor shall they become liable to the satisfaction of any debt
contracted prior to the expiration of said period; but
improvements or crops on the land may be mortgaged or
pledged to qualified persons, associations, or corporations.

No alienation, transfer, or conveyance of any homestead

after 5 years and before 25 years after the issuance of title shall
be valid without he approval of the Secretary of Agriculture and
Natural Resources, x x x.

Any encumbrance made on the parcel of land acquired

under a free patent or homestead within five years from the
grant of such patent results in the cancellation of the grant and
the reversion of the land to public domain.

36
The prohibition starts from the date of approval up to and
including the fifth year from and after the date of the issuance
of the patent or grant. The patent is considered issued once
the order for its issuance is promulgated and therefore, the five
year period is computed from this date and not from the date of
registration with the Register of Deeds or from the date of the
certificate of title.

13. PERIOD OF REPURCHASE – When mortgage and

conveyance allowed already, the 5-year period for legal
redemption starts from the date of the execution of the deed of
sale, and not from the date of registration in the office of the
Register of Deeds.

The five year period of redemption fixed in Sec. 119 of the PLA
of homestead sold at extrajudicial foreclosure begins to run from
the date after the expiration of the 1 year period of repurchase
allowed in an extrajudicial foreclosure. Five year period starts
to run after the expiration of the redemption period under Act.
3135, as amended, within which to exercise the right to
repurchase under the PLA.

14. FORECLOSURES OF MORTGAGE:

• MORTGAGOR’S EQUITY OF REDEMPTION – After the

execution of a real estate mortgage, the mortgagor
has an equity of redemption exercisable within the
period stipulated in the mortgage deed. In case of
judicial foreclosure, the equity of redemption
subsists after the sale and before it is confirmed by
the court.

• However, in case of judicial foreclosure of mortgage

in favor of banking institutions, Sec. 78 of the
General Banking Laws grants the mortgagor a right
of redemption which may be exercised within one
year from the sale – which is from the registration
of the sale with the register of deeds.

SUCCESSION

37
 The rights to the succession are transmitted from the moment of
death of the decedent. (Art. 777)

It is from the moment of death of the decedent that the heirs

acquire a definite right to the inheritance. It is immaterial
whether a short or long period of time elapses between the
death of the predecessor and the entry in the possession of the
properties of the inheritance because the right is always deemed
to retroact to the moment of death.

To the heir passes not only the right of ownership, but also the
right of possession as of the moment of death of the
predecessor. The possession of the hereditary property is
deemed transmitted to the heir without interruption and from
the moment of death of the decedent in case the inheritance is
accepted.

 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 succession. (Art. 781)

i.e. The testator gives a legacy of sum of money deposited in a

bank to A, and names B as his heir to the rest of his estate.
After the death of the testator and pending the distribution of
the estate, interests accrues on the sum which is given as
legacy. That interest goes to the legatee A, and not to the heir
B. It does not form part of the inheritance but is acquired by
right of accretion and belongs to A.

 When is there a need to probate a will?

It is only when the will disposes of property, either directly or

indirectly, that it haw to be probated. Article 838 provides,
“no will shall pass either real or personal property unless it is
proved and allowed in accordance with the Rules of Court.”

When there is no disposition of property, although the

instrument may be considered a will, it does not have to be
probated. Its dispositions which are provided by law such as
recognition of an illegitimate child can be given effect even
without probating the will.
 Where the will only provides for the disinheritance of an heir for
cause, is there a need to probate the will?

38
 The law permits a testator to disinherit a compulsory heir for any
of the causes provided by law and such disinheritance is
expressly required to be made in a will (Art. 916). A valid
disinheritance is in effect a disposition of the property of the
testator in favor of those who would succeed in the absence of
the disinherited heir. Unless the will is probated, the
disinheritance cannot be given effect.

 Characteristics of a will: (“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 his estate, to take effect after
his death.” Art. 783Civil Code)

1. purely personal
2. it is a free act without violence, fraud or deceit;
3. it is essentially revocable
4. it is formally executed
5. the testator has to have testamentary capacity
6. it is a unilateral act
7. it is an act mortis cause
8. purely statutory

 Validity of the will – The validity of the will as to its form

depends upon the observance of the law in force at the time it is
made. (Art. 795)

The validity of the execution of a will is controlled by the statue

in force at the time of the execution; and a statue enacted
subsequent to the execution and prior to the death of the
testator changing the rules respecting the form of the
instrument, the capacity of the testator, and the like has no
retrospective effect.

 CONFLICTS RULE in extrinsic requirements:

1. If one is a Filipino, use the Philippine law (nationality

principle) or lex loci celebrationis (law of the place where the
contract is celebrated)

2. If one is an alien living abroad owning properties in the

Philippines, the formal validity of the will can be determined
based on the Philippine laws, lex loci celebrationis, or the
domiciliary law.

39
 Under our Conflicts laws, when the nationality laws cannot apply,
the domiciliary laws shall apply. If one is an alien residing in the
Philippines, the nationality or domiciliary laws shall govern the
formal validity of the will.

 INTRINSIC VALIDITY OF THE WILL – shall be governed by the

national law of the decedent (Art. 16, part 2 NCC)

The intrinsic validity of a will is determined by the national law of

the decedent regardless of the place where the will was executed
or the residence of the testator. Therefore, a provision in the
testator’s will which mandates the application of the laws of
another country instead of his national law is illegal and without
effect. (Belis vs. Belis, 20 SCRA 358)

 It is the law at the time when the succession opens which must
determine the intrinsic validity of the provisions of the will,
because it is at this time that the rights are transmitted to the
heirs, devisees, or legatees.

 Our laws do not recognize NON-CUPATIVE WILLS. This is an oral

will made by the testator in contemplation of death. Our laws
only recognize holographic or notarial wills.

 SUBSCRIBING SIGNATURE DISTINGUISHED FROM ATTESTING

SIGNATURE IN A NOTARIAL WILL – aside from signing at the
logical end of the will, the testator must also sign at the left
margin of each and every page of the will. However, the
placement of the signature of the testator at the end of the will
is crucial to its validity while the placement of the signature on
each and every page on the left margin will not invalidate the
will.

The difference lies in the purpose of the signature. The

signature required in the first par. of Art. 805 is to attest,
declare, confirm that all the dispositions above it are of and by
the testator; whereas, the signature as required in the 2nd par. of
the same article is merely to identify each and every page of the
will.

An attesting signature must be found below the dispositions in

the will. An identifying or subscribing signature may be placed
anywhere in the will, preferably on the left margin.

40
 PLACEMENT OF ATTESTING SIGNATURES - the attesting
signature of the testator must be found at the logical end of the
will, otherwise the will is void. The attesting signature of the
witnessed must be found at the end of the attestation clause
otherwise, the will is void.

 PROBATE OF HOLOGRAPHIC WILL.

A holographic will may not be probated without presenting the

document in evidence since the law regards the document itself
as material proof of authenticity.

The execution and contents of a lost or destroyed holographic

will may not be proved by the bare testimony of the witnesses
who may have seen or read the holographic will. In a footnote,
however, the Supreme Court added that perhaps it may be
proven by a photographic copy. Even a mimeograph or carbon
copy or by other similar means if any, whereby the authenticity
of the handwriting of the deceased may be exhibited and tested.
Unlike holographic wills, ordinary wills may be proved by
testimonial evidence when lost or destroyed.

 GROUNDS for opposition of a will during probate of a holographic

will:

1. when the will is not in the testator’s handwriting

2. lack of testamentary capacity; and
3. failure to comply with legal formalities

 JOINT WILL OF FILIPINOS

A joint will is a will executed by two or more persons in the

same instrument, either for their reciprocal benefit or for the
benefit of a third person. (Art. 818)

Joint wills are void even if executed by a Filipino in a foreign

country where such will is allowed (Art. 819)

If executed by foreigners:

a. if executed abroad and valid in the country of

execution, it is also valid here (lex loci
celebrationis);

41
 b. If executed in the Philippines, the joint will is void
because it is against our public policy.

 RECIPROCAL OR MUTUAL WILLS – are wills that provide that the

survivor of the testators will succeed to all or some of the
properties of each decedent.

Mutual or reciprocal wills ate valid, but if made in one

instrument, they are void not because they are reciprocal, but
because they are joint.

 PERSONS DISQUALIFIED TO INHERIT UNDER ARTICLE 823 or

LOADED WITNESS (so called because the witness or their
mentioned relatives may, consciously or unconsciously, give
false testimony to protect his interest, otherwise he not be able
to inherit. His testimony is not something one could rely on.)

1. Any person who is a witness to a will and at the same time

an heir, devisee or legatee in the same will;

2. spouse of the witness unless there is already a decree of

legal separation between them;

3. parent of the witness, child of the witness, any person

claiming under the witness, his spouse , parent or child.

EXCEPTION to disqualifications:

1. if the above mentioned persons are compulsory heirs but

only with respect to their legitimes;

2. if there is a substitute witness as when there is a fourth

witness. As long as there are three other disinterested
witnesses, even the witness disqualified under Art. 823 will
be able to receive that portion given to him by the will.
Such witness will inherit but should not be allowed to
testify considering his perceive ‘perjured’ testimony.
 PROBATE OF A WILL is conclusive as to:

1. due execution of the will;

2. testamentary capacity of the testator
3. identity of the instrument as the will of the testator

42
 Whether or not the probate court has jurisdiction to settle issues
of ownership

The probate court has no jurisdiction over the question of

ownership because as a general rule it can only pass on the
question provisionally. The probate court cannot determine
these questions with finality. Res judicata does not exist
between an action for settlement of an intestate estate anf an
action for recovery of possession and ownership because of the
different causes of action. The [probate court only possesses
limited jurisdiction.

 REQUISITES FOR A VALID INSTITUTION OF HEIRS:

1. Refers only to VOLUNTARY heirs, cannot affect the

legitime;
2. Applicable also to devisees and legatees;
3. Exists only in testamentary succession
4. Even a conceived child can be instituted subject to Arts. 40
and 41 of the NCC;
5. Heirs, legatees and devisees must be certain or
ascertainable
6. There must be no preterition, except that the devices and
legacies are valid as long as the legitime is not impaired;
7. The will must be intrinsically and extrinsically valid;
8. The institution must be effective in that there is no
predecease, repudiation, or incapacity;
9. If the institution is partial, the remainder of the estate
goes to the instestate heirs.

 PRETERITION

For preterition to apply, there must be a total omission of theb

heir so as to deprive him or her or his or her legitime. It is the
omission of an heir in the will, either by not naming him or her
at all or, while mentioning her as father, son, etc., by not
instituting him or her as heir without disinheriting him or her
expressly, nor assigning to him or her some part of the
properties.

Total omission results in preterition when:

43
 1. The person is not an heir, not a devisee, not a legatee -
meaning he receives nothing by will;
2. No donation inter vivos was given to him, which may be
considered as an advance of his legitime. If he is already
given such, then he has already received part of his
legitime such that if he were omitted, his remedy would be
to demand the completion of his legitime.
3. There must not have been anything which could be
inherited by intestacy which means that the whole estate
was distributed by will.

A spouse may not claim preterition because a spouse is

not a relative in the direct line.

 Effects of preterition compared to disinheritance –

Preterition annuls the institution of heirs in toto, unless in the

will there are other testamentary dispositions in the form of
devises and legacies. In disinheritance, the nullity is limited to
that portion of the estate of which the disinherited heirs have
been illegally deprived.

 EFFECTS OF PRETERITION:

1. Annulment of the institution of heirs – in order that a

portion of the estate may be freed to satisfy the remaining
unpaid legitimes;
2. Reduction of legacieds and devises – legacies and devises
cannot be cancelled but can be reduced only if the estate is
still insufficient to pay the legitimes after the annulment of
the institution

 GUIDELINES IN PRETERITION:

1. Total omission of one, some or all of the compulsory heirs

in the direct line
2. Omission may be intentional or unintentional
3. Compulsory heirs must be in the direct line *ascendants or
descendants)\
4. Compulsory heirs may be living or conceived at the time of
the institution
5. The institution of heirs shall be annulled or voided, but
legacies and devises remain if not inofficious

44
 6. If the omitted heir predeceases the testator, the
institution is effectual without prejudice to the right of
representation
7. Illegitimate ascendants or descendants are included even
adopted children
8. If the compulsory heir was given even just a small share,
there is no preterition. Merely complete his legitime
9. If a chikld has been given a donation inter vivos, there is
no preterition. The donation is an advance of his legitime
so he is entitled only to a completion of his legitime
10. The omission of the surviving spouse in the will is not
preterition. Just give the legitime of the surviving spouse
11. Brother and sister omitted does not result in
preterition. They are not in the direct line

 VOLUNTARY HEIR who dies before the testator or who proves to

be incapacitated transmit nothing to his heirs. There is no
representation among voluntary heirs.

If T has children A and B. A has a child A-1. If T institutes his

children A and B to his P1M estate, but A dies ahead of T A-1
gets A’s legitime of P250K by representation. But the remainder
of the estate goes to B as compulsory heir and voluntary heir.

 In case of vacancy follow the order of ISRAI (Institution of heirs,

substitution, representation, accretion, intestacy)

 FIDEICOMMISSSARY SUBSTITUTION (Art. 863)

REQUISITES:

1. There must be a first heir instituted by the testator

2. There must be a second heir instituted by the testator
3. The first heir has the duty to preserve and transmit the
property or share to the 2nd heir
4. There shall be only one transfer
5. Heir 1 and heir 2 are one degree apart
6. Heir 1 and heir 2 must be living or at least conceived at
the time of the testator’s death
7. The fideicommissary substitution must be clearly
expressed in the will
8. The fideicommissary substitution is imposed on the free
portion of the estate and not on the legitime

45
  DISPOSITION CAPTATORIA – a disposition on condition that the
heir shall make in his will a provision in favor of the testator or
any other person. The disposition itself is void, not just the
condition.

 Impossible or illegal conditions and those against good customs

are deemed not imposed and do not prejudice the heir, even if
the testator should provide otherwise (Art. 873). Only the
condition is void. The disposition becomes a simple institution,
legacy or devise.

 The testator cannot impose any charge, condition, or

substitution whatsoever upon the legitime. Should he do so, the
same shall be considered as not imposed. (Art. 872)

 DISINHERITANCE:

1. Disinheritance can be made only in a will. There is no

disinheritance in legal succession;
2. Includes not only the legitime, but also the free portion;
3. If the will is revoked the disinheritance becomes
ineffective;
4. Only compulsory heirs can be disinherited. Brothers and
sisters cannot be the subject of a disinheritance;
5. A reconciliation renders the disinheritance ineffective
6. In preterition, the whole institution of heirs is annulled. In
invalid disinheritance, the heir still gets his legitime;
7. Heirs of the disinherited heir represent the latter in the
legitime but the disinherited heir shall not have the
usufruct of the property constituting the legitime.

 RESERVA TRONCAL:

CONCEPT OF RESERVA TRONCAL – is the process by which an

ascendant who inherits by operation of law from his descendant which
the latter may have acquired by gratuitous title from another
ascendant or a brother or sister, is obliged by law to reserve such
property for the benefit of third degree relatives who belong to the line
from which the property came from.

REQUISITES:

46
 1. the transfer of property by gratuitous title to the descendant
from an ascendant or brother or sister;
2. the existence in the inheritance of such property acquired by
the descendant;
3. the existence of an ascendant who inherited property from
the descendant by operation of law; and
4. the existence of relatives of the descendant within the 3rd
degree from the line from where the properties came from.

PARTIES:

1. ORIGIN – the person from whom the reservable property

comes from. This person must either be an ascendant or a
brother or sister of the prepositus;

2. PREPOSITUS – considered as the owner of the property

transferred to him by gratuitous title from the origin.

Reserva is only triggered when the prepositus dies intestate and

without issue and the same property acquired from the origin is
transferred to another ascendant by operation of law.

3. RESERVOR – must be an ascendant of the prepositus.

The transfer of the reservable property must be by operation of

law, as legitime or by intestacy.

The reservoir is the absolute owner of the property and not a

mere usufructuary or trustee, of the property subject to the
resolutory condition of existence of the 3rd degree relatives upon
the reservor’s death.

4. RESERVEES - belonging to the same line of the family as that

of the origin, they are the beneficiaries of the reservable
property. Those related to the prepositus in the 1st (parents), 2nd
(brothers
and sisters, and grandparents), and 3rd (great
grandparents, uncles and aubnts, nephews and nieces)
degree.

47
PROPERTIES SUBJECT TO RESERVA TRONCAL – the very same
property which the prepositus acquired from the ascendant or brother
or sister by gratuitous title since the reserve troncal is an
encumbrance on the property itself. The kind of property is immaterial
because as long as such property came from the origin by gratuitous
title, then there is a possibility of reserve.

 When the fact which prevents a person from succeeding is

REPUDIATION, he cannot be represented because the right of
representation obtains only in cases of PREDECEASE,
DISINHERITANCE, and INCAPACITY. If the vacancy results from
repudiation, the right of accretion shall always take place.

 WHEN DOES REPRESENTATION EXIST:

a. In TESTATE SUCCESSION:

1. exists in predecease, incapacity and disinheritance

2. covers only the legitime which goes to the representative
by operation of law;
3. there is no right to represent a voluntary heir

b. in INTESTATE SUCCESSION

1. exists in predecease and incapacity

 No ACCRETION in the legitime, only in the free portion

CREDIT TRANSACTIONS

LOAN:

 Loan is a real contract because the delivery of the thing loaned is

necessary for the perfection of the contract. There are two
kinds: Commodatum (hiram) and Mutuum (utang)

 Characteristics:

2. It is gratuitous if a consideration is paid then it is a lease;

3. Its purpose is the temporary use of the thing loaned
4. In the use of the thing, the bailee it does not include the
fruits unless there is a stipulation to the contrary

48
 5. Bailee need not be the owner of the subject matter but he
must have possessory interest over the thing
6. The death of the bailor or the bailee extinguishes the
contract of loan. It is thus personal in character

 The bailee is liable for ordinary expenses for the use and the
preservation of the thing loaned.
 A bailee is not liable for loss pr damage of the thing loaned due
to fortuitous event. Exceptions:

1. When the bailee devotes the thing to a different purpose;

2. When the bailee keeps it longer than the period stipulated
or after the accomplishment of the use for which the
commodatum was constituted;
3. If the thing loaned was delivered with an appraisal of its
value unless there is an express stipulation to the contrary
4. If the bailee lends the thing loaned to a third person who is
not a member of his household
5. If the bailee, being able to save the thing loaned or his
own property of similar nature, chose to save the latter

 the bailor has the obligation to allow the bailee to use the thing
loaned for the duration or the period stipulated or until the
accomplishment of the purpose for which the commodatum was
constituted. The bailor can demand the thing loaned when:

1. his has an urgent need of the thing loaned, during which

time the commodatum shall be suspended;
2. in cases of precarium – there is precarium when:

a. if the duration of the contract has not been

stipulated;
b. if the use or the purpose of the contract has not
been stipulated;
c. if the use of the thing is merely tolerated by the
bailor

 the bailor may also demand the return of the thing loaned when
the bailee has committed any act of ingratitude

 MUTUUM - is a contract whereby one of the parties delivers to

another money or other consumable thing with the

49
 understanding that the same amount of the same kind and
quality shall be paid.

• In mutuum, ownership is transferred to the borrower

• It may be gratuitous or onerous it is a loan for
consumption
• The legal rate of interest has been raised to 12% and this
rate applies only to loans or forbearance of money, goods or
credit and court judgments thereon. Court judgments for
damages arising from injury to persons and loss of property
which does not involve a loan is at the rate of 6% per
annum.
• Where the interest rate is not expressly stipulated, the
loan shall earn 12% per annum.

 DEPOSIT

• A deposit is constituted from the moment a person

receives a thing belonging to another, with the obligation
of safely keeping it and returning the same.

• It is a real contract because the contract is not perfected

unless there is the delivery of the subject matter.

• Distinctions between Extrajudicial and Judicial deposit:

1. E. is constituted by the will of the contracting parties

while J deposit is constituted by court order e.g.
attachment of the property
2. E. deposit refers to movable property while J deposit
refers to either to movable or immovable property;
3. The purpose of E. deposit is the safekeeping of the
thing deposited while in J deposit, it is to secure or
protect the owner’s right;
4. E. deposit is generally gratuitous while J. deposit is
always onerous;
5. In E. deposit the depositary is obligated to return the
thing deposited upon demand by the depositor, while
in J. deposit, the thing shall be delivered only upon
order of the court.

 GUARANTY

50
• Is a contract whereby a person binds himself to the
creditor to fulfill the obligation of the principal debtor in
case the latter should fail to do so.

• Characteristics:

1. It is an accessory contract
2. It is subsidiary and conditional
3. Unilateral
4. The guarantor must be a person distinct from the
principal debtor

• Guaranty and Suretyship

1. G. is only secondarily liable; while a S. is primarily

liable and is not entitled to the benefit of excussion
or exhaustion of the properties of the principal
debtor
2. Liability of the Guarantor depends upon an
independent agreement to pay the obligation if the
primary party fails to do so. The Surety is a regular
party to the undertaking;
3. The guarantor binds himself to pay only when the
principal debtor cannot pay; the surety assumes
liability as a regular party to the undertaking and
thus undertakes to pay if the principal debtor does
not pay.
4. The Guarantor is an insurer of the debtor’s solvency.
The S. is an insurer of the debt

• The guarantor’s liability cannot exceed the principal

obligation;
• A guaranty is generally gratuitous unless there is a
stipulation to the contrary

• BENEFIT OF EXCUSSION – the guarantor has the right to

the benefit of excussion before he can be compelled to
pay. Exceptions:

1. If the guarantor has expressly renounced the excussion

2. If the guarantor has bound himself solidarily with the
debtor. This would be a case of suretyship
3. In case of the debtor’s insolvency

51
 4. When the guarantor has absconded or cannot be sued
within the Philippines unless he left a manager or
representative
5. If it may be presumed that an execution on the debtor’s
property will not satisfy the obligation
6. If the guarantor does not set up the benefit of
exhaustion and fails to point out to the creditor
available property of the debtor within the Philippines
7. If he is a judicial bondsman and sub-surety
8. Where a pledge or mortgage has been given by the
guarantor as a special security
9. If the guarantor fails to interpose it as a defense before
judgment is rendered against him

• BENEFIT OF DIVISION – guarantor is likewise entitled to

the benefit of division. Where there are several
guarantors of only one debtor for the same debt. The
guarantor’s liability, in this case, is merely joint and they
are not liable beyond the shares which they respectively
bound themselves to pay.

 PLEDGE

• Is a contract by virtue of which the debtor delivers to the

creditor or to a third person a movable or document
evidencing incorporeal rights for the purpose of securing
the fulfillment of a principal obligation with the
understanding that when the obligation is fulfilled, the
thing delivered shall be returned with all its fruits and
accessions.

• Characteristics:

1. Real contract- perfected by the delivery of the thing

pledged by the debtor (pledgor) to the creditor
(pledge) or to a third person by agreement;
2. Accessory contract
3. Unilateral contract which creates an obligation only
on the part of the creditor to return the thing
pledged upon the fulfillment of the principal
obligation

52
 4. Subsidiary contract – the obligation incurred does
not arise until the fulfillment of the principal
obligation to which it secures

• Essential requirements:

1. The pledge is constituted to secure the fulfillment of

a principal obligation
2. The pledgor or mortgagor must be the absolute
owner of the thing pledged or mortgaged
3. The person(s) constituting the pledge or mortgage
have the free disposal of their property or that they
are legally authorized for the purpose

• The pledge has not right to use the thing pledged or to

appropriate the fruits thereof without the authority of the
owner. But the pledge can apply the fruits , income,
dividends or interest, if owing and thereafter to the
principal of his credit (Art. 2132) unless there is a
stipulation to the contrary.

• Pledgor cannot ask for the return of the thing pledged until
the principal obligation is fully paid including interest due
thereon and expenses incurred for its preservation. But the
pledgor is allowed to substitute the thing pledged which is
in danger of destruction or impairment with another thing
of the same kind and quality.

• The sale of the thing pledged extinguishes the principal

obligation whether the price is more or less than the
amount due.

 If the price of the sale is more than the amount due

the creditor, the debtor is not entitled to the excess
unless there is a contrary stipulation;

 If the price of the sale is less than the principal

amount due, the creditor is NOT entitled to recover
the deficiency. A contrary stipulation is void. (Art.
2115)

• A pledge renouncing a pledge, in a statement in writing,

extinguishes the pledge and the pledgee becomes a depositary.
Neither the acceptance by the pledgor or the owner, nor the

53
 return of the thing pledged is necessary for the pledge to
renounce or abandon the pledge.

 REAL MORTGAGE

• Characteristics:

1. REALTY AS SUBJECT MATTER – only real property or

alienable rights and interest therein may be the
subject matter of real estate mortgage. Even the
rights of a mortgage or other encumbrances may be
the object of another mortgage. (Art. 2124)

2. REAL RIGHT – a mortgage lien is a real right and as

such it is good and binding against the whole world
and may be enforced by real action against all
persons who may have existing rights or interest in
the same property, it registered prior to the
mortgage.

3. ACCESSORY OBLIGATION – the consideration of the

mortgage is the same as that of the principal
obligation it secures.

4. INDIVISIBILITY – even though the debt secured may

be divided among the debtors, or creditors or their
successors-in-interest, the mortgage shall remain as
one and indivisible, unless there have been several
things given in mortgage and each of them
guarantees only a determinate portion of the
obligation. In the latter case, the creditor may
claim from the third person in possession of the
mortgaged property, the payment of the aprt of the
credit secured by the property which said third
person possess.

5. INSEPARABILITY – the mortgage lien and the

property affected are inseparable so that whoever
may subsequently acquire title to the mortgaged
property is bound by the terms of the mortgage,
whether the transfer be with or without the consent
of the mortgagee. The mortgage directly and
immediately subjects the property upon which it is
imposed, whoever the possessor may be, to the

54
 fulfillment of the obligation for whose security it was
constituted.

6. RETENTION OF POSSESION – the mortgagor retains

possession of the mortgaged property inasmuch as a
mortgage is a mere lien and title to the property
does not pass to the mortgagee.

• MORTGAGE DISTINGUISHED FROM ANTICHRESIS:

1. AS TO POSSESSION – if the property given in

security, the debtor retains it in case of mortgage; the
creditor takes over it in case of Antichresis; A mortgage
coupled with the delivery of the land to the creditor becomes
an antichresis

2. WITH RESPECT TO FRUITS – in A M., the creditor

does not gather or receive them; in a., the creditor generally
receives them with the obligation to apply them to the
payment of interest due and, if any still remain, to the
principal obligation;

3. In A. the creditor is obliged to pay for the taxes and

charges upon the estate; in M. it is the debtor who pays

• REAL ESTATE MORTGAGE DISTINGUISHED FROM CHATTEL

MORTGAGE- aside from the subject matter, another
difference is in the formality required for their constitution.
REM is required to be constituted by means of a public
instrument, CM may be constituted in a private document
only provided the latter is accompanied with an Affidavit of
Good Faith.

• A stipulation forbidding the owner from alienating the

immovable mortgaged shall be void (Art. 2130)

• The mortgagee has the right to alienate or assign to a

third person, in whole or in part, his mortgage credit. The
transfer of the mortgage credit does not affect the debtor
unless he is notified of it. If the debtor pays to the original
mortgagee in ignorance of the assignment, he will be
released from debt.

• REDEMPTION BY MORTGAGOR:

55
 1. the EQUITY OF REDEMPTION is the right of the
mortgagor after the judgment in foreclosure proceedings,
within a period of not less than 90 days before the sale or
confirmation of the sale, to pay into the court the amount
of the judgment debt.

2. RIGHT OF REDEMPTION – is the right of the mortgagor,

after the sale of the mortgage property, to redeem the
property by paying to the purchaser in the sale or to the
sheriff who made the sale, the amount paid by him, with
interest, within one year from the sale.

There is no right of redemption, only equity of redemption,

in judicial foreclosure under the Rules of Court. The right
of redemption is provided in (1) foreclosure by banks or
banking institutions as provided in their charters or in the
General Banking Act; and (2) extrajudicial foreclosures
under Act No. 3135, as amended.

• CLAIM FOR DEFICIENCY – the mortgagee has the right to

claim for deficiency resulting from the price obtained in the
sale of the property at public auction and the outstanding
obligation at the time of the foreclosure proceedings. The
right to claim payment of deficiency after foreclosure of
real mortgage prescribes in ten (10) years.

CHATTEL MORTGAGE:

• SUBJECT MATTER- only personal property including equity

in shares of stock; growing crops even if they ate
‘ungathered products” they are considered personal
property that may be the subject matter of a chattel
mortgage; vessels

• SALE OF CHATTEL MORTGAGE without consent of the

mortgagee – Article 319, par. 2 of the Revised Penal Code
provides – any mortgagor who shall sell or pledge personal
property already pledged or mortgaged under the Chattel
Mortgage Law without the consent of the mortgagee
written on the back of the mortgage and noted on the
record thereof in the Office of the Register of Deeds of the
province or city where such property is located incurs
criminal liability.

56
 • AFFIDAVIT OF GOOD FAITH – “We severally swear that the
foregoing mortgage is made for the purpose of securing
the obligations specified in the condition 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.”

- the Affidavit of Good faith is required to be appended to such

mortgage and recorded therewith
- The absence of such affidavit vitiates a mortgage as against
creditors and subsequent encumbrances; unenforceable as
against third persons. The chattel mortgage may, however,
be valid as between the parties even in the absence of the
affidavit of good faith.

• REAL MORTGAGE AND CHATTEL MORTGAGE

REGISTRATION

– A deed of mortgage covering registered land is considered

registered from the time the same is recorded in the entry
book; in case of a Chattel mortgage, however, the document
must be recorded in the chattel mortgage register. In the firt,
entry in the Day Book is sufficient; while in chattel mortgage,
there must be entry, not only in the Day Book but also in the
Chattel Mortgage Register.

• FORECLOSURE OF CHATTEL MORTGAGE- it is a condition

precedent that before foreclosure may be resorted to, it is
necessary that there be a violation of the condition of the
chattel mortgage and that at least 30 days shall have
elapsed since then. (Sec. 14, CML)

• EFFECT OF FORECLOSURE – when the foreclosure is validly

confirmed by the court, title in the property rests upon the
purchaser and the confirmation retroacts to the date of the
sale. All rights of the mortgagor in the property terminates
and is vested in the purchaser.

• DEFICIENCY- Chattel mortgage creditor may maintain an

action for deficiency.

ANTICHRESIS:

57
• “By the contract of antichresis the creditor acquires the
right to receive the fruits of an immovable of his debtor,
with the obligation to apply them to the payment of the
interest, if owing and thereafter to the principal of his
credit.” Art. 2132.

• COMPARED WITH PLEDGE AND MORTGAGE – like pledge

and mortgage, antichresis is a real right and an accessory
contract, which cannot exist without a valid principal
obligation. It is not essential in antichresis that the
property pass to the possession of the creditor or a third
person. But it differs from pledge in that it refers to
immovable property , and from mortgage in that the
creditor has the right to receive the fruits of the thing,
although their application is determined by law.

• Antichresis compared with pledge –

1. Antichresis is a consensual contract in the sense that

it can be perfected without delivery of the thing
pledged.
2. As to subject matter, only real property or
immovable may be the object of A; in pledge, it is
movable or personal property’
3. to constitute a valid pledge, it is indispensable that
the possession of the property be held and retained
by the creditor or someone else designated by
common consent; in Antichresis, the contract may
still subsist even if the possession of the thing given
in security is returned to the debtor, as when the
creditor desires to be exempt from the obligation to
pay its taxes and other expenses necessary for its
preservation.

• RIGHTS OF THE CREDITOR IN ANTICHRESIS:

1. the right to the fruits and income of the thing;

2. the right to retain the thing until the debt is paid;
3. the right to have the thing sold upon non-payment at
maturity;
4. the right of preference to the proceeds of the sale of
the thing

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 • When a contract of loan with security does not stipulate
the payment of interest but provides for the delivery to the
creditor by the debtor of the real property constituted as
security for the payment thereof, in order that the creditor
may administer the same and avail himself of the fruits,
without stating that said fruits are to be applied to the
payment of interest, if any, and afterwards to that of the
principal of the credit, the contract shall be considered to
be one of mortgage and not antichresis.

• Payment of interest shall be specified in writing which is

essential for the validity of the contract of Antichresis.

• The creditor, unless there is a stipulation to the contrary,

is obliged to pay the taxes and charges upon the estate.
He is also bound to pay the expenses necessary for its
presevation and repair. The sum spent for these purposes
shall be deducted from the fruits. If the fruits are not
sufficient to cover the taxes and charges, the deficiency
shall be borne by the creditor, unless otherwise stipulated.

• EFFECT OF NON-PAYMENT OF DEBT – the creditor in

antichresis cannot by mere possession of the real property
which he received by virtue of an antichresis acquire
ownership over the same for failure of the debtor to pay
the debt within the stipulated time, any agreement to the
contrary being void. The debtor cannot recover the
enjoyment and use of the real property given in antichresis
thereon, the creditor being entitled to ask the courts that
the said real property be sold to satisfy his credit.

OBLIGATIONS AND CONTRACTS

I. SCOPE OF OBLIGATIONS.

A. OBLIGATION TO GIVE

The prestation is characterized by the purpose to transfer

title or possession of things.

a. Obligation to give a specific (individualized) thing

1. The principal obligation is to deliver the

determinate thing promised, which cannot be

59
 substituted unless the creditor agrees (Art. 1244)
or the right is reserved.

i. Effect and need of delivery in contracts: The

creditor shall acquire no real right (or title) over
the thing until the same has been delivered to him
(Art. 1164, last part).

“Delivery of a thing constitutes a necessary

and indispensable requisite for the purpose of
acquiring the ownership of the same by virtue of a
contract”

ii. Manner of delivery, see Tradition

2. Accessory obligations.

i. To preserve the thing:

“Every person obliged to give something

(specific) 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” (Art. 1163)

ii. To deliver its accessions and accessories:

“The obligation to give a determinate thing

includes that of delivering all its accessions and
accessories, even though they may not have been
mentioned”. (Art. 1166)

ACCESSION: what is incorporated to the

principal, naturally or artificially

ACCESSORY: what is required for the

completeness, use or perfection of the principal
(Art. 467). It includes what is necessary to prove
the existence of the transmitted right and its
recording

iii. To deliver the fruits:

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 “The creditor has a right to the fruits of the
thing from the time the obligation to deliver it
arises”. (Art. 1164, first part)

aa. The obligation arises from the time it

becomes binding; in contracts from the perfection
(birth) thereof.

Hence, the creditor is entitled to the

fruits of the thing promised from the time the
debtor became bound, not from the time
stipulated from delivery. (Art. 1537, 1589)

bb. The rule does not apply to obligations

under a suspensive condition, where the fruits
remain with the debtor by special provision of law.
(Art. 1189)

b. Obligation to give a generic thing.

1. Principal obligation:

The debtor must deliver a thing of the quality

specified; if non was fixed, he can not deliver a
thing of inferior (lowest) quality (Art. 1246).

2. No legal accessory obligations arise until the

things to be given are separated from others
of their kind (individualized)

B. OBLIGATION TO DO.

a. The debtor must perform the act as promised and can

not substitute another act or forbearance (Art. 1244)
unless the creditor agrees, or the right is reserved
(facultative obligations).

b. Performance by an agent is permitted, unless the

obligation is strictly personal.

C. OBLIGATION NOT TO DO:

a. The debtor must himself abstain from the conduct

prohibited.

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 1. He may not substitute another forbearance,
nor the forbearance of another, unless the
creditor consents.

b. Performance cannot be by a delegate or an agent.

c. No legal accessory obligations arise (unlike in

obligations to give)

Subsidiary Remedies of Creditor

A. ACTION IN SUBROGATION (ACCION SUBROGATORIA)

Creditors after exhausting the property in possession of

the debtor to satisfy their claims, may exercise all the rights and
bring all the actions of the debtor for the same purpose; except
those which are inherent in his person (Art. 1177).

Direct Action by the Creditor

Occasionally, the law confers on the creditor a direct (not

subragatory) action against the debtors of his debtor.
Examples:

1. Lessor against sublessee (Art. 1652)

2. Laborers of the Independent Contractor against the owner

(Art. 1729)

3. Principal against the Sub-agent (Art. 1893)

4. Vendor a retro against the transferees of the Vendee (Art.

1608)

B. RESCISSORY ACTION. (Actio Pauliana)

a. Creditors, having pursued the property in possession

of the debtor…may also impugn the acts which the
debtor may have done to defraud them (Art. 1177).
Rescission of Contracts.

b. Distinguished from Subrogatory Action:

1. In a rescissory action, the credit must exist

before the fraudulent act.

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 2. If the contract rescinded is onerous, there
must be fraudulent intent; such intent is not
required in subrogatory actions

3. There is no period for prescription of the

subrogatory action; but the rescissory action
must be brought within 4 years from the
discovery of the fraud.

C. ACTIONS TO DECLARE THE NULLITY OF ABSOLUTELY

SIMULATED TRANSFERS BY THE DEBTOR

a. This action is nowhere declared by the Civil Code;

but it follows from the fact that a simulated or
fictitious contract is inexistent (Art. 1409). Many
authors and courts tend to confuse this action with
the rescissory action, but there are fundamental
differences.

b. This action differs from a Rescissory Action in that:

1. Transfer by the debtor in a Rescissory Action is

reak and intended to be actual ; in Declaration
of Simulation, transfer is fictitious and only
apparent;

2. Intent to defraud (actual or presumptive) must

exist for rescission; while such intent is not
required in an action to declare a transfer
simulated;

3. Exhaustion or insufficiency of assets in the

debtor’s hands is not required in an action to
declare simulation of transfer’

4. The action to declare simulation (if successful)

sets aside the entirety of the transfer;
rescissory action takes effect only insofar as is
required to satisfy the claim of the rescinding
creditor

5. The action to declare simulation does not

prescribed; the rescissory action prescribed in
four (4) years.

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ANCILLARY REMEDIES OF THE CREDITOR (To insure collection of
Judgment):

a. Attachment (Rule 59)

b. Replevin (Delivery of Personal Property) (Rule 62)

c. Receivership (Rule 61)

d. Examination of the Debtor (rule 39, Sec. 34-36

SPECIAL REMEDY: Judicial Declaration of Debtor’s Insolvency (to

ensure equitable distribution of debtor’s assets among his
creditors, even if they can not all be paid in full)

But without prejudice to Preference and Priorities of

credits, as established by law (Arts. 2236-2251)

Retroactivity of Fulfillment of the Condition.

1. In obligations to give:

a. The effects of a conditional obligation to give,

once the condition has been filled shall retroact
to the day the obligation was constituted (Art.
1187), EXCEPT as to fruits and interest. Id
does not matter that the debtor is already
dead at fulfillment.

i. Fruits in Reciprocal (bilateral)

obligations:

The fruits and interest during the

pendency of the condition shall be
deemed mutually compensated (Art.
1187)

ii. Fruits in Unliateral obligations:

If the obligation is unilateral, the debtor

shall appropriate the fruits and interest
received, unless the intention of the
person constituting the obligation was
different.

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 iii. The above rules are without prejudice to
express contrary stipulation.

b. In obligations to do or not to do.

The courts shall determine in each case the

retroactive effect of the condition that has
been complied with. (Art. 1187)

LOSS, DETERIORATION OR IMPROVEMENT while the condition is

pending:

1. SUSPENSIVE CONDITION ( Art. 1189).

a. Loss - The thing is lost if it perishes, goes out of

commerce or disappears, so that its existence
is unknown or it cannot be recovered.

i. If the thing is lost without the fault of the

debtor, the obligation shall be extinguished.

Ii. If the thing is lost through the fault of debtor,

he shall be obliged to pay damages.

b. Deterioration -

i. Without the fault of the debtor, the impairment

is to be borne by the creditor;

ii. Through the fault of the debtor, the creditor

may choose: Rescission, with damages or
fulfillment, with damages,

c. Improvement.

i. If the thing is improved by nature or by time,

the improvement benefits the creditor.

ii. If it is improved at the expense of the debtor,

he shall have only the rights of a usufructuary.

2. RESOLUTORY CONDITION (Art. 1190)

65
 a. In case of loss, deterioration or improvement of the
thing, the rules of Art. 1189 shall be applied to the party who is bound
to return.

DIFFERENCES BETWEEN RESCISSION AND RESOLUTION

(Art. 1191)

RESOLUTION (Under Art. RESCISSION (Under Art. 1380)

1191)
Reason: Mutuality or Condition
Character: Primary remedy
Control by the Court: May be
refused if breach is not substantial
Implied resolution presupposes
breach by one party (except in
sales of goods)
Plaintiff must be a party or
successor of a party to the
agreement
Injury (Economic)
Secondary (Subsidiary) remedy
Cannot be refused by the Court if
all requisites are present
Breach is not required
Plaintiff may be a third person
(e.g. creditor)

THE PARTY INJURED MAY CHOOSE BETWEEN TWO REMEDIES, WHICH

ARE ALTERNATIVE.

1. Fulfillment with payment of damages for delay;

2. Rescission of the obligation with damages.

a. But if fulfillment becomes impossible, the party may
also seek rescission (Art. 1191)
b. Damages cannot be recovered by independent
action. They must be adjudicated in the same action
for rescission
c. Where a seller is conferred the right, in case of
default, to rescind and recover his interest in the
property sold without obligation to reimburse the
payments made by the buyer, and the contract is
silent on the right to demand the balance of the
price, the alternative right to demand fulfillment is
not lost.

WHEN RESOLUTION IS GRANTED:

1. Resolution shall not be granted for slight or casual breach

or if there has been substantial performance. (Art. 1234).

66
 2. “The court shall decree the rescission (resolution) claimed ,
unless there be just cause authorizing the fixing of a
period” for performing the obligation (Art. 1191)
EXCEPT: (the court may not grant further time)
a. In non-payment of rent under Art. 1659
b. In case of failure of a partner to make the
contributions promised (Art. 1788)

3. Non-performance of some obligors warrants resolution of

the whole obligation

4. Mere delay, with fulfillment still possible, does not warrant

resolution of the obligation

NOTE: In Reciprocal Obligations, the party injured by the other’s

breach has the following alternatives:

a. Refuse to perform his own obligation (exception non

adimple contractus) (Art. 1169)

b. Sue for specific performance with damages for delay (Art.

1191)

c. Sue for resolution (rescission) with damages for the

breach)

ALTERNATIVE OBLIGATIONS

CONCEPT: Alternative obligations are those that require a debtor to

perform completely only one of several obligations provided, and are
extinguished by performance of any one of them.

WHO MAY ELLECT: Election corresponds to the debtor, unless

expressly granted to the creditor (Art. 1200). But the election may
also be granted by express agreement, to a third person (Art. 1309).

 LIMITATIONS: The debtor has no right to choose those

prestations which are impossible, unlawful or could not have
been (intended as) the object of the obligation (Art. 1200).

CHOICE BY THE DEBTOR

 PREVENTION BY THE CREDITOR: If though the creditor’s

acts the debtor cannot make a choice according to the terms

67
 of the obligation, the debtor may rescind with damages (Art.
1203).
 LOSS OR IMPOSSIBILITY, BEFORE ELECTIONS:
o Of one alternative – the debtor is to choose one of
those remaining.
o Of all but one – the obligation ceases to be alternative,
and becomes simple, to be performed subject to
general rules (Art. 1202).
o Of all alternatives –
 By fault of the debtor: The creditor has the right
to indemnify for damages.
 By fortuitous event – the creditor bears the loss

CHOICE BY THE CREDITOR

 EFFECT OF NOTICE – The obligation ceases to be alternative

from the time the creditor’s selection has been communicated
to the debtor, (Art. 1204) and the debtor must comply with
the prestation chosen, unless the election is improper under
Art. 1200.
 EFFECT OF LOSS OR IMPOSSIBILITY BEFORE ELECTION (Art.
1205)
o RULES:
 If one of the thins is lost through fortuitous event,
the debtor shall comply with the obligation by the
delivery of what the creditor may choose from
among those remaining; or the one that remains
if only one subsists.
 If the loss of one of the thing (that are
alternatively due) occurs through the fault of the
debtor the creditor may claim any of those
subsisting or the value of the one lost, with
damages;
 If all the things are lost through the fault of the
debtor, the choice by the creditor shall fall upon
the price of any one of them, also with damages
 If all are lost without the debtor’s fault, the
obligation is extinguished.

CHOICE BY A THIRD PERSON

• EFFECT OF NOTICE – The decision shall not be binding until it

has been made known to both contracting parties (Art. 1309)

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 FACULTATIVE OBLIGATIONS

CONCEPT: When only one prestaion has been agreed upon (and is
due) but the obligor may render another in substitution, the
obligations is called facultative (Art. 1206)

• The creditor cannot refuse or reject the substitution

BEFORE SUBSTITUTION:

• Substitution is at the debtor’s option, can not be compelled by

the creditor, against the will of the debtor, whether or not the
main obligation is lost by the debtor’s fault; nor may the
creditor refuse to accept the substitute.
• Hence, loss or deterioration of the thing intended as
substitute, even if through negligence of the debtor does not
render the latter liable (Art. 1206)

AFTER SUBSTITUTION:

• The substitute is the thing or service owed to the creditor,

instead of the original or main obligation.
• Hence, after substitution is made, the debtor is liable for loss
of the substitute through his delay, negligence or fraud (Art.
1206)

FACULTATIVE OBLIGATIONS differ from “datio in solutum”

(dation in payment) in that in the former the consent of the
creditor to the substitution can not be refused; but the creditor
may withhold consent to a dation in payment. (Art. 1245)

JOINT OBLIGATIONS

EFFECTS:

1. If the prestation is divisible:

a. Each creditor may, by himself and

independently of the other creditors, demand
and compel performance of his share of the
credit.

2. If the prestation is indivisible (Art. 1209)

69
 a. If the division is impossible, the rights of the
creditors may be prejudiced only by their
collective acts (act of one does not prejudice
the others)

b. The debt may be enforced only by proceeding

against all debtors.

c. If any one of the debtors should be insolvent,

the others shall not be liable for his share

d. If any one of the joint debtors does not comply

with his (share of the ) undertaking, the joint
indivisible undertaking gives rise to indemnity
for damages. The debtor who may have been
ready to fulfill their promises shall not
contribute to the indemnity beyond the
corresponding portion of the price of the thing
or the value of the service in which the
obligation consists (Art. 1124)

This means that the liability for the

consequential damages is charged exclusively
to the joint debtor who was responsible for the
breach.

EFFECTS OF SEPARATION OF SHARES IN PRESTATION.

1. Neither mora, nor interruption of prescription, nor res judicata,

applicable to one creditor or one debtor alone, affects the others.

2. Vices of the obligation predicated on personal deficiencies of one

debtor do not prejudice nor benefit the others

3. Insolvency of one debtor does not affect the liability of the

others.

EFFECTS OF MULTIPLICITY OF JOINT CREDITORS OR DEBTORS.

RULES:

1. Each joint creditor can only demand his share of the credit.

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 2. Each joint debtor can only be required to pay his share of
the debt.

SOLIDARY OBLIGATIONS:

EFFECTS:

1. ACTIVE SOLIDARITY (OF CREDITORS)

A. RELATIONS WITH COMMON DEBTOR:

i. Each creditor can collect the entire debt or

extinguish it (Art. 1215).

ii. The debtor may pay any one of the solidary

creditors;

aa. But payment should be made to the one

making demand, judicial or extrajudicial (Art.
1214).

iii. Novation, compensation, confusion or

remission extinguish the obligation

B. RELATIONS BETWEEN SOLIDARY CO-CREDITORS

(ACCOUNTING).

i. But the creditor who may have executed any of

these acts (Novation, compensation, etc.) as
well as he who collects the debt shall be liable
to the others for the share in the obligation
corresponding to them (Art. 1215)

ii. Each of the solidary creditors may do whatever

may be useful to the others; (e.g., interruption
pf prescription, securing mortgages or pledges,
or guarantors, etc.); but not anything that may
be prejudicial to the others. (Art. 1212).

iii. One solidary creditor can not assign his rights

without the consent of the others. (Art. 1213).

EFFECT OF PASSIVE SOLIDARITY (OF DEBTORS)

71
a. Each debtor is bound to perform the whole obligation
(Art. 1207)

b. Each solidary debtor may utilize against the creditor

the following defenses:

1. All defenses derived from the nature of the

obligation (such as prescription, illegality,
nullity ab initio, suspensive condition, or term,
former payment, compensation, release,
compromise, etc.), that destroy or weaken the
legal tie.

2. Defenses that are personal to him

3. Those defenses that pertain to his own share

4. Those defenses that personally belong to the

other co-debtors; but he may avail himself
thereof only as regard that part of the debt for
which the latter are responsible (Art. 1222)

PERSONAL DEFENSES -

o Vices of consent (error, fraud, duress,

incapacity) but not the others;
o Modalities (peculiarities or variations)
affecting the obligation of each, but not
that of the others (unexpired period,
unfulfilled condition, etc.)
o Causes of extinction (payment,
remission) affecting exclusively the share
of one debtor.

c. Two or more solidary debtors offer to pay, the

creditor may choose which offer to accept (Art.
1217)

d. Payment by one of the solidary debtors extinguishes

the obligation (Art. 1217) to the extent of the
payment

72
 o The same extinctive leffect is produced by novation,
compensation, confusion or remission by a creditor
with any solidary debtor (Art. 1215)
o Except where –
o Remission is partial, when the balance can be
collected from any of the solidary debtors; or
o Remission is of the solidary character only,

e. If the thing was lost or if the prestation has become

impossible without fault of the solidary debtors, the
obligation shall be extinguished

f. If there was fault on the part of any one of the

debtors, all shall be responsible to the creditor, for
the price and damages and interest, without
prejudice to their action against the guilty or
negligent debtor (Art. 1221) (breach of one is breach
by all)

g. If through a fortuitous event he thing is lost or

performance has become impossible after of the
solidary debtors has incurred in delay through
judicial or extrajudicial demand upon him by the
creditor, the provisions of the preceding paragraph
shall apply (art. 1221). (Mora of one is mora of all).

RELATIONS BETWEEN SOLIDARY CO-DEBTORS INTER SE

1. The solidary debtor who made the payment may

claim from his co-debtors only the share which
corresponds to each, with interest for the payment
already made (Art. 1217) (no solidary exists after
payment.)

a. If payment is made before the debt is due, no

interest for the intervening period may be
demanded (Art. 1217).

b. Interest is due from the time of payment.

2. No contribution may be demanded in following

cases:

73
 a. If payment is made after the obligation has
prescribed or become illegal (art. 1218)

b. If remission of the whole obligation was

obtained by one of the solidary debtors (art.
120) (since the obligations was extinguished
gratuitously); EXCEPT if the debt was paid
before remission (Art. 1219)

3. 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 his
co-debtors, in case the debt was totally paid by any
one of them before the remission was effected (art.
1219)

4. When one of the solidary debtors can not, 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
(Art. 1217).

SPECIAL FORMS OF PAYMENT.

A. APPLICATIONS OF PAYMENTS

CONCEPT:

“Application of payment is the designation of the debt to which

should be applied a payment made by a debtor who owes several
debts to the same creditor.”

REQUISITES:

o That several debts are owed;

o That they are owed by the same debtor to the same
creditor
o That the debts be of the same kind
o That the debts are due
o That the payment made is not sufficient to cover all the
debts

RULES:

74
o By designation of the debtor at the time he makes the payment
(art. 1252)
o In default thereof, by the application stated in the receipt issued
by the creditor
o Unless there is a cause for invalidating the contract (Art.
1251), which means :
 Unless the payment is void, because the debt itself is
void
 Unless the acceptance of the receipt by the debtor is
voidable for vice of consent
o By operation of law, if no application is made by the debtor and
no proposal by the creditor
o If the debt produces interest, payment is not deemed
applied to the principal unless the interests are covered
(Art. 1253)
o If no application is inferable from the circumstances of
payment, the latter is applied
 To the debt most onerous (Art. 1254)
 If the debts are due of the same nature and burden,
the payment shall be applied to all in proportion (art.
1254)
 Application of payments may not be invoked by a
surety or solidary guarantor nor by a partner under
Art. 1753.
o Payment by Assignment ( Art. 1255)
o CONCEPT:
 It is the act whereby a debtor abandons all his
property to his creditors, so that the latter may apply
the proceeds to their credits.
o REQUISITES:
 Plurality of debts
 Plurality of creditors
 Partial or relative insolvency of the debtor
 Abandonment of the totality of the debtor’s
properties for the benefit of the creditors;
 Acceptance by the creditors
o Dation in Payment (dation in solutum)
o CONCEPT:
 It is an act “whereby property (of the debtor) is
alienated to the creditor in satisfaction of debt in
money” (Art. 1245)
 This is valid provided it is –
• Not in prejudice of other creditors

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 • Not “pactum commissorium”
o DATION IN PAYMENT DISTINGUISHED FROM ASSIGNMENT
FOR THE BENEFIT OF CREDITORS
 Distinctions:
• Dation transfers ownership of the substituted
thing to the creditor; assignment only entitles
creditors to sell the thing and apply the price
to the credit.
• Dation extinguishes totally the credit;
assignment, only to the extent of the price
obtained.
• Assignment requires two or more creditors; in
Dation there may be only one creditor
• Dation is novatory; assignment is not.
 Effect:
• The obligation is extinguished (Art. 1245)
• The modern doctrine considers dacion en pago
as novation by a change of object
• Dation is governed by the law of sales
o TENDER OF PAYMENT AND CONSIGNATION
 CONCEPT:
• Tender of payment is the declaration of
intention by the debtor manifesting his firm
decision to pay, coupled with a demand upon a
creditor to accept immediate performance; and
its unjustified refusal must be followed by
consignation.
• Consignation is the deposit of the thing due
made by the debtor in lawful form, whenever
the creditor refuses or cannot accept payment
• The purpose of consignation is to avoid delay.
Thus, were one of several co-owners received
the purchase price in the form of a check and
deposits it in his current account, and then the
transaction was called off, the mere offer to
return the money cannot relieve him from
liability. His duty was to consign and failure to
do so makes him answerable to the buyer.
• Tender without consignation is not valid as
payment.
• But consignation was be made without tender,
when the tender is excused, as in the following
cases:

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 o When the creditor is absent, or unknown
or does not appear at the place of
payment
o When the creditor is incapacitated to
receive payment at the time it is due
unless he has a legal representative
o When without just cause, he refuses to
give a receipt
o When two or more persons claim the
same right to collect
o When the title to the obligation has been
lost (Art. 1256)
o When the creditor notifies the debtor I
advance that he will not accept payment
 WHEN TENDER IS VALID
• It must be made in lawful currency (legal
tender)
• It should include interest due;
• It must be unconditional; but the creditor can
not vary the terms of a tender accepted by him
• An unaccepted offer in writing to pay is
equivalent to actual production and tender of
money or property
 PROCEDURE IN CONSIGNATION
• Tender of payment and unjustified rejection
(except where tender is excused)
o It must be made strictly in consonance
with the provisions that regulate
payment (Art. 1257)
 Therefore –Consignation is:
• Improper if the obligation is
not yet payable
• Improper if the consignation
is in a certified check. But
lack of prompt objection
cures this defect.
• Improper unless
unconditional
• First notice to interested parties.
o Necessity – in order that consignation
may release the obligor, it must first be
announced to the parties interested in
the obligation (Art. 1257)

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  Absence of notice invalidates
consignation of payment
o Parties interested are the creditor,
solidary co-creditors and co-debtors,
guarantors, pledges, mortgagees.
o Purpose of the notice is to give creditors
(and parties interested) a chance to
reconsider and accept payment thereby
avoiding litigation.
o Contents of the Notice
• Filing of Complaint against the Creditor
• Judicial Deposit of the thing due with proof of
tender and notice.
• Second notice to interested parties
o Failure to give second notice invalidates
consignation
 But the filing of the complaint and
the service of summons takes the
place of the second notice
• Trial and judgment
o Once the consignation has been duly
made the debtor may ask the judge to
order the cancellation of the obligation
(Art. 1260)
 The creditor at the trial may show
that consignation was improperly
made
 Until the Court decides that
consignation was properly made,
the obligation is not extinguished
• Incident of consignation
o The debtor may withdraw the thing or
sum deposited leaving the obligation I
force –
 Before the creditor accepts
consignation or
 Before a judicial declaration is
issued that the consignation was
properly made
o Expenses of consignation, if properly
made, shall be charged to the creditor
(Art. 1259)
 EFFECTS OF CONSIGNATION

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 • If the creditor accepts consignation – the
obligation is extinguished and the debtor is
liberated
• If the Court declares that consignation was
properly made – the same effect results
• If before approval of the Court, the debtor
withdraws the deposit consigned –
o With the approval of the creditor: the
obligation subsists, but-
 Guarantors and co debtors are
liberated
 Preference of the creditor over the
thing is lost (Art. 1261)
o Without approval of the creditor – the
obligation subsists without change in the
obligation of the guarantors, co-debtors
or the creditor’s right of preference.
• If the consignation is disapproved,
consignation is ineffective as payment
• Judicial Deposit of the sum due under a final
judgment does not require notices to parties
interest

COMPENSATION; CONCEPT:

It is the extinction in the concurrent amount of the obligations of

those persons who are reciprocally debtors and creditors of each other.

It is an operation whereby two obligations are balanced in order

to extinguish them to the extent that the value of one obligation is
covered by the value of the other.

It is a special mode of extinguishing reciprocal debts that

excuses both debtors form actual performance

DISTINGUISHED FROM MERGER

In merger there is only one person who is both debtor and

creditor; in compensation there are two persons who are debtors and
creditors of each other.

In merger, there is one debt; in the latter there are two

LEGAL COMPENSATION: REQUISITES:

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 1. That each one of the obligors be bound principally, and
that he be at the same time a principal creditor of the other. (Art.
1279)

2. That both debts consist in a sum of money, or if the things

due are consumable, that they be the same kind, and also of the same
quality if the latter has been stated.

3. That the two debts be due

4. That they be liquidated and demandable

5. That neither be subject to retention or controversy,

commenced by third persons and communicated in due time to the
debtor

6. That compensations of the debt be not prohibited as incase

of obligations arising from:

a. deposit

b. commodatum

c. support due by gratuitous title

d. civil liability arising from a penal offense

e. damage caused to the partnership by a partner

7. Compensation is not waived.

EFFECT OF LEGAL COMPENSATION

1. When all the requisites mentioned in Art. 1279 are

present, compensation takes effect by operation of law, and
extinguishes both debts to the concurrent amount, even though the
creditors and debtors are not aware of the compensation (Art. 1290)

2. Debts payable in different places.

Compensation takes place by operation of law though the

debts may be in different places, but there shall be an indemnity for
expenses of exchange or transportation to the place of payment (Art.
1286)

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 3. Nullity of the debt.

When one or both debts are rescissible or voidable, they

may be compensated against each other before they are judicially
rescinded or avoided (Art. 1284)

WAIVER OF COMPENSATION:

Compensation may be waived at the time the obligation is

incurred or later since its waiver is not contrary to public policy but the
waiver must be agreed to.

CONTRACTS; RULES:

1. Contracts shall be obligatory in whatever form they may have

been entered into, provided the essential requisites for their
validity are present (Art. 1356)
o Obligatory means as “between the parties”.

2. If the law requires that the contract be in some form in order

that it may be valid and enforceable or that a contract be proved
in a certain way, that requirement is absolute and indispensable
(Art. 1356). (In such cases the action granted in Art. 1357
cannot be exercised).

3. If the law requires a document or other special form, as in the

acts or contracts enumerated in Art. 1358, the parties may
reciprocally compel each other to comply with such formality
from the moment the contract has been perfected (Art. 1357).
o Essential requirements necessary for the validity of
the contract must exist in order that action can be
brought.
o This presupposes that the contract is valid and
operative inter partes
o The action to compel under Art. 1357 is not available
in cases of Solemn or Unenforceable contracts.

CONTRACTS EXCEPTED FROM THE RULES

1. Solemn contracts, which are not valid or binding until the form
prescribed by law is observed.
o Donations of real estate (Art. 749) (which require a public
instrument) or of movables if exceeding P5,000.00 (which
must be in writing) (Art. 748).

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 o Transfer of large cattle (which requires transfer of the
certificate of registration)
o Stipulation to pay interest on loans (which must be in
writing) (Art. 1956)
o Sale of land through an agent (Art. 1874) (authority must
be in writing).
o Partnership to which immovables are contributed (which
requires a signed inventory attached to the public
instrument evidencing the contract of partnership) (Art.
1773).
o Stipulations limiting carrier’s liability to less than
extraordinary diligence (which must be in writing)
o Contract of antichresis (wherein the principal and interest
must be specified in writing (Art. 2134)

2. Real Contracts that require delivery for their perfection are not
binding if tradition is not made.

3. Unenforceable contracts (Art. 1403)

o The statute applies to executory contracts only.

AGAINST THIRD PERSONS OR THEIR PRIVIES THE FOLLOWING

CONTRACTS MUST BE IN A PUBLIC INSTRUMENT (ART. 1358).

1. For the creation, transmission, modification or extinction of real

rights on immovable property.

o But the sale of realty falls under the Statute of Fraud (Art.
1403).
o Lease for more than one year is also governed by the Statute of
Frauds as between the parties (private writing is sufficient)

2. Assignment, repudiation or waiver of inheritance and property

rights in the conjugal partnership of gains.

3. Powers of attorney to administer property or to perform an act

requiring a public instrument, or which is to affect third persons.

4. Assignments of actions or rights arising from an act contained in

a public instrument.

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5. But in all other contracts contracts in which the undertaking of
one or both parties exceed 500 pesos, a private writing is
sufficient.

Therefore, if any of such contracts is not in writing, the parties

may have recourse to the action under Art. 1357 (to compel
execution of the writing) except in the following cases:

o Solemn contracts (when the action under Art. 1357 is not

available at all.)
o Real contracts (wherein the action under Art. 1357 is available if
there is consent, subject matter, cause and delivery).
o Contracts under the Statute of Frauds (when the remedy under
Art. 1357 is applicable only IF the defense of the Statute is
waived expressly or impliedly by the party charged.

But an oral promise to reduce to writing an agreement that is within

the Statute of Frauds is itself unenforceable.

RESUME OF RULES:

1. Oral contracts are generally valid between (and binding upon)

the parties
2. But oral contracts are not binding on strangers (whether the
contracts involve real property or not).
3. Parties to an oral contract may sue each other to reduce the
verbal agreements to writing (Art. 1357) Except:
o In solemn (formal) contracts, such as those enumerated;
o In real contracts where no delivery has been made;
o In contracts under the Statute of Frauds (Ärt. 1403) where the
party sued makes timely objection to the absence of a written
memorandum.

CAUSES OF RESCISSION:

ON ACCOUNT OF LESION PROPER

Contract by guardians, causing lesion to the ward by more

than ¼ of the value of things which are object of the
contract, if without judicial approval (Art. 1381)

Contract in representation of absentees, when the latter have

suffered lesion or more than ¼ unless judicially approved
(Art. 1381)

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 Partitions of inheritance when there is lesion of ¼ or more for
one heir (Art. 1098)

ON ACCOUNT OF BAD FAITH

Contract in fraud of creditors, when the latter cannot

otherwise collect what is due them. The creditor must
show that:

The credit is real and established prior to the transfer

to be rescinded

The existence of bad faith

Inability to collect. It does not require an antecedent

suit nor a prior declaration of insolvency of the
debtor

Contract regarding property in litigation made by the

defendant without the knowledge and approval of the
other party or of the court. (Art. 1381).

Payments by a debtor in a state of insolvency on account of

obligations not yet enforceable (Art. 1382)

ON ACCOUNT OF SPECIAL PROVISION OF LAW.

WHO MAY SUE:

The party injured

Representatives and heirs or successors in interest of the party

injured

Creditors of the injured party in subrogation of the latter (Art.

1177).

WHO MAY BE SUED:

1. The author of the injury and his successors in interest

2. Against acquirers in bad faith of things conveyed in fraud of
creditors, but the former must be sued jointly with the author

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CONDITIONS FOR THE EXERCISE OF THE ACTION:

1. No other remedy is available in law (Art. 1383)

2. Plaintiff must be able to return what he received under the
rescissible contract . This does not apply to creditors suing to
set aside fraudulent conveyances.
3. The things, object of the contract, are not in the possession of
third persons in good faith ( or of the latter’s transferees,
whether in good faith or bad faith); if the possessor acted in
good faith, damages may be claimed from the author of the
injury (Art. 1385)
4. The action has not prescribed.

PRESCRIPTION OF THE ACTION

4 years unless otherwise provided (Art. 1389)

1. The period is counted from the celebration of the contract.

2. Except in the case of –
o Persons under guardianship – the period runs up to the
fourth year from the termination of incapacity
o Absentees – the period commences t run when their
domicile is known.

CONVEYANCES IN FRAUD OF CREDITORS: PRESUMPTIONS.

1. Of law

In onerous transfers, fraud is presumed when the

conveyance is made after issuance of a writ of attachment or
judgment in any instance (even if not final) (Art. 1387).

In gratuitous transfers, when the donor does not retain

sufficient property to pay creditors (Art. 1387, Art. 759) at the
time of donation.

2. Of fact

Fraud is shown by:

• Fictitious or inadequate consideration

• Transfer after suit is filed and while it is pending
• Sale on credit by an insolvent debtor
• Proof of large indebtedness or complete insolvency

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 • Transfer of all or nearly all of the property, especially
where the debtor is financially embarrassed
• Transfer between father and son, where other
circumstances are also present. Relationship alone is not
per se a badge of fraud
• Failure of the vendee to take exclusive possession of the
property
• Gross disparity between the price and the real value

But the inference is rebuttable.

EFFECT OF RESCISSION

• Return to the original “status quo”: The thing must be returned

with the fruits and the price with the interest (Art. 1385)
• If the return is not possible, for any cause (including fortuitous
event if there was bad faith) the transferee must pay indemnity
for damages (Art. 1388)
• If there are several alienation, the first acquirer is liable first (for
damages; but for the return of the thing fraudulently alienated,
the actual possessor will be liable (Art. 1388)

SALE

• CONTRACT OF SALE FROM CONTRACT TO SELL:

1. In a contract of sale, title passes to the vendee upon the

delivery of the thing sold, while in Contract to sell, by
agreement, ownership is reserved in the vendor and is not
to pass until full payment of the price;
2. In contract of sale, nonpayment is a negative resolutory
condition; while in contract to sell, full payment is a
positive suspensive condition;
3. In contract of sale, the vendor has lost and cannot recover
ownership until and unless the contract is resolved or
rescinded; while in contract to sell, title remains in the
vendor, and when he seeks to eject the vendee because of
noncompliance by such vendee with the suspensive
condition stipulated, he is enforcing the contract and not
resolving it.

• EMPTIO SPERATAE AND EMPTIO SPEI:

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 1. emptio res speratae is the sale of a thing having a
potential existence; while emptio spei is the sale of a hope
or expectancy;

2. in ERS, the uncertainty is with regard to the quantity and

quality but not with regard to the existence of the thing; in
ES, the uncertainty is with regard to the existence of the
thing;

3. In ERS, the contract deals with a future thing; in ES, the

contract deals with a present thing which is the hope or
expectancy;

4. In ERS, the sale is subject to the condition that the thing

should exist, so that if it does not, there is no contract for
lack of an essential requisite; in ES, the sale produces
effects even though the thing itself does not come into
existence, since the subject matter is the hope itself.

• BARTER – “if the consideration of the contract consists partly in

money, and partly in another thing, the transaction shall be
characterized by the manifest intention of the parties. Is such
intention does not clearly appear, it shall be considered a barter
if the value of the thing given as part of the consideration
exceeds the amount of the money or its equivalent; otherwise, it
is a sale.” Such that, if the cash added to the thing traded is
more than the value of such thing, the contract is a sale; if less,
the contract is a barter.

• 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 promissory of the promise is supported by a
consideration distinct from the price.

• Who between the vendor and the vendee must bear the risk of
loss after the contract of sale has been perfected, but before the
thing sold has been delivered?

If the object of a contract is lost before delivery, it is the vendor

who is still the owner and must bear the loss and not the
vendee. This is in conformity with the principle of res perit
domini. The owner of the thing must bear the risk of loss.

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• EARNEST MONEY’ “Whenever earnest money is given in a
contract of sale, it shall be considered as part of the price and as
proof of the perfection of the contract.” Earnest money is part of
the purchase price advanced by the vendee to the vendor as a
token of the perfection of the contract.

• SALE OF PERSONAL PROPERTY BY INSTALLMENT, remedies of

the vendor

1. exact fulfillment of the obligation should the vendee fail to

pay;
2. cancel the sale, should the vendee’s failure to pay cover
two or more installments;
3. Foreclose the chattel mortgage on the thing sold, if one
has been constituted, should the vendee’s failure to pay
cover two or more installments. In the last case, he shall
have no further action against the purchaser to recover
any unpaid balance of the price. Any agreement to the
contrary shall be void. (Art. 1474)

A stipulation that the installments or rents paid shall not be

returned to the vendee or lessee shall be valid insofar as the
same may not be unconscionable under the circumstances
(Art. 1486)

• A contract executed by an agent without authority to sell is not

void but simply unenforceable.

• The acceptance and encashment by the owner of a check

representing the purchase price of his property sold through his
agent constitute ratification of the contract of sale and produces
the effects of an express power of agency.

• In a contract of sale, the vendor loses ownership over the

property and cannot recover it until and unless the contract is
resolved or rescinded.

• An option to buy or a promise to sell is different and distinct

from the right to repurchase that must be reserved by means of
stipulations to that effect in the contract of sale.

• A contract of sale is consensual in nature and is perfected upon

the mere meeting of the minds. When there is merely an offer

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 by one party without acceptance by the other, there is no
contract.
• Possession along with ownership is transferred to the vendee by
virtue of the notarized deed of conveyance.

• If the deed of sale is void, then the action for the declaration of
the contract’s nullity is imprescriptible. An action for
reconveyance of the property on a void contract does not
prescribe.

• Under a pacto de retro sale, title to and ownership of property

are immediately vested in the vendee a retro, subject only to the
resolutory condition that the vendor repurchases it within the
stipulated period.

• An equitable mortgage has been defined “as one which although

lacking in some formality, or form or words, or other requisites
demanded by a statue, nevertheless reveals the intention of the
parties to charge real property as security for a debt, and
contains nothing impossible or contrary to law.”

• R.A. No. 6552 otherwise known as the “Realty Installment Buyer

Protection Act” recognizes in conditional sales of all kinds of real
estate (industrial, commercial, residential) the right of the seller
to cancel the contract upon nonpayment of an installment by the
buyer, which cancellation may be done outside the court
particularly when the buyer agrees to such cancellation provided
that such cancellation by the seller must be in accordance with
Sec. 3(b) of R.A. No. 6552, which requires a notarial act of
rescission and the refund to the buyer of the full payment of the
cash surrender value of the payments on the property. . A
demand letter is not the same as the notice of cancellation or
demand for rescission by a notarial act required under said law.

• Between two transactions concerning the same parcel of land,

the registered transaction prevails over the earlier unregistered
right. Knowledge gained by the first buyer of the second sale
cannot defeat the first buyer’s rights, except where the second
buyer registers in good faith the second sale ahead of the first.

• A contract of sale may either be absolute or conditional – one

form of conditional sale is what is now popularly termed as a
“Contract to Sell” where ownership or title is retained until the

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fulfillment of a positive suspensive condition normally the
payment of the purchase price in the manner agreed upon.

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