CIVIL LAW BAR NOTES 2012.doc

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University of CebuCebu College of Law UCLASS Bar Operations Civil Law Society CIVIL LAW BAR NOTES 2012 by: Restauro, Ruth Salve, Ilustrisimo Sumayod, Alejandro Bar Operations 2012: Ace the Bar, Race the Car! References: Law Textbooks, Codes, Reviewers, Notes, Compilations, Articles and Internet Sources For Private and Personal Use Only Civil Law Bar Notes University of Cebu College of Law UCLASS Bar Operations: Civil Law Society 1. 2. GENERAL PRINCIPLES Ex post facto laws; and Laws that impair obligation of contracts. D. Mandatory or prohibitory laws I. Art. 5. Acts executed against the provisions of mandatory or prohibitory laws shall be void, except when the law itself authorizes their validity. Effect and Application of Laws A. When the law takes effect (Civil Code, Art.2) EFFECT and APPLICATION OF LAWS E. Waiver of Rights (Art. 6) General Rule: Rights may be waived. Exceptions: 1. When waiver is contrary to law, public morals, public policy and good customs; and 2. When waiver is prejudicial to a third person. Effectivity of Laws (Art. 2) Laws shall take effect fifteen (15) days following the completion of their publication in the Official Gazette, or in a newspaper of general circulation, unless it is otherwise provided. This Code shall take effect one year after such publication. (Tanada vs. Tuvera, 146 SCRA 446) Requisites for a Valid Waiver of Rights 1. The waiving party must actually have the right he is renouncing. 2. He must have the full capacity to make the waiver. 3. The waiver must be clear and unequivocal. 4. The waiver must not be contrary to law, public order, public policy, morals or good customs or prejudicial to a third person with a right recognized by law. 5. When formalities are required; such must be complied with.  The New Civil Code became effective on August 30, 1950. (Lara vs. Del Rosario, Jr.,94 Phil 778).  The phrase unless it is otherwise provided “refers to the date of effectivity of laws and not to the requirement of publication. The word laws includes all laws and not only to those of general application. (Tanada vs. Tuvera, 146 SCRA 446) Waivers which are Contrary to Law 1. Waiver of future inheritance. 2. Waiver of future support 3. Waiver of political rights B. Ignorance of the law Art. 3. Ignorance of the law excuses no one from compliance therewith. C. Retroactivity of Laws General Rule: Laws have no retroactive effect, unless the contrary is provided. (Art. 4, NCC) Exceptions: 1. Expressly provided by the law; 2. Laws creating new rights; 3. Emergency laws; 4. Tax laws; 5. Remedial statutes; 6. Interpretative statutes; 7. Curative statutes; and 8. Penal laws favorable to the accused who is not a recidivist or a habitual delinquent; Exceptions to the Exceptions: Bar Operations 2012: Ace the Bar, Race the Car! For Private and Personal Use Only 2  F. Repeal of laws Laws are repealed only by subsequent ones, and their violation or non-observance shall not be excused by disuse or custom or practice to the contrary. (Art. 7, NCC) 1. 2. In express repeal, the repeal of repealing law will not revive the old law. A law is impliedly repealed when the provisions of the subsequent law are incompatible with those of the previous law. However, for this tom occur, the following must concur: a. Both laws cover the same subject matter; and Civil Law Bar Notes University of Cebu College of Law b. UCLASS Bar Operations: Civil Law Society The latter law is repugnant to the earlier law.  Statutory construction the act or process of discovering and expounding the meaning and intention of the authors of the law with respect to its application to a given case, where that intention is rendered doubtful, among others, by reason of the fact that the given case is not explicitly provided for by the law (Caltex v. Palomar, 1966)  Interpretation v. Construction (May be given as an objective type)  Interpretation makes use of intrinsic aids or those found in the statute itself.  Construction makes use of extrinsic aids or those found outside the written language of the law.  “ONE MUST CONSTRUES.”  In the case of Chartered Bank Employees Assoc. v. Ople, it said, “If the language of the law is clear and equivocal, then read the law to mean exactly what it says. If not, look at the intention of the legislature.”  In case of doubt, presumed to prevail.  “Unimpeachability of legislative journals” found in Art. VI Sec 16 (14), 1987 Constitution.  Entries and records contained in the legislative journals are declared conclusive upon the courts.  Administrative Rule and interpretation distinguished – When an administrative agency promulgates rules and regulations, it “makes” a new law with the force and effect of a valid law, while when it renders an opinion or gives a statement of policy, it merely interprets a preexisting law. Rules promulgated to law are binding on to the courts, even if they are not in agreement. On the other hand, administrative interpretation of the law is at best merely advisory, for it is the courts that finally determine what the law means. Judicial Decisions, NCC Art. 8 Art. 8. Judicial decisions applying or interpreting the laws or the Constitution shall form a part of the legal system of the Philippines. (n) Duty to Render Judgment, NCC Art. 9 Art. 9. No judge or court shall decline to render judgment by reason of the silence, obscurity or insufficiency of the laws. (6) A judge must decide the case assigned to him whether or not he knows what law shall be applied. In case of silence or insufficiency of the law, a judge may still be guided by the following: 1) Customs which are not contrary to law, public order or public policy; 2) Court decisions, foreign or local, in similar cases; 3) Legal opinions of qualified writers and professors; 4) General principls of justice and equity; and 5) Rules of Statutory construction. In criminal cases, however, it is an established rule that there is no crime where there is no law punishing it – “Nulla poena sine lege”. The judge must dismiss the case if there is no law punishing it. Presumption and Applicability of Custom, NCC Arts 10-12 Art. 10. In case of doubt in the interpretation or application of laws, it is presumed that the lawmaking body intended right and justice to prevail. (n) Art. 11. Customs which are contrary to law, public order or public policy shall not be countenanced. (n) Art. 12. A custom must be proved as a fact, according to the rules of evidence. (n) Terms & Principles in Interpretation and Construction Bar Operations 2012: Ace the Bar, Race the Car! For Private and Personal Use Only 3 INTERPRET right BEFORE and justice HE is Civil Law Bar Notes University of Cebu College of Law  UCLASS Bar Operations: Civil Law Society Stare Decisis - legal maxim which requires that past decisions of the court be followed in the adjudication of cases. Exception: Should not be applied when there is conflict between the precedent and the law. The duty of the court is to forsake and abandon any doctrine or rule found to be in violation of law in force. But this can only be done by the Supreme Court and cannot be done by an inferior court.  Obiter Dictum - does not fall within the doctrine of stare Decisis. It is an opinion expressed by a court upon some question of law which is not necessary to the decision of the case before it.  Spirit of the law prevails over the letter of the law. (Only applies when there is ambiguity provided by the law itself)  Literal import must yield to intent.  Cessante ratione legis, cessate et ipsa lex - when the reason for the law ceases the law itself ceases  Ratio legis et anima- Reason of the law is its soul  Surplusagum non noceat - surplusages does not vitiate the statute  Utile per inutile non vitiatur - the useful is not vitiate by the non-useful  Ibi quid generaliter conceditur; inest exception, si non aliquid sit contras jus basque - Where anything is granted generally, this exception is implied; that nothing shall be contrary to law and right. (Every rule is not without exception)  Sumon jus, summa injuria - Rigor of the law would become the highest injustice  Nemo tenetur ad impposible - the law does not require that impossibility be done.  Impossibilium nulla onligatio est - no obligation to do an impossible thing.  DOCTRINE OF NECESSARY IMPLICATION Bar Operations 2012: Ace the Bar, Race the Car! For Private and Personal Use Only 4 It is expressed in the maxim, ex necessitate legis which means that every statutory grant of power, right or privilege is deemed to include all incidental power, right and privilege. Except: Authority to charge against public funds may not be implied unless a statute expressly provides so.  Statutes in Pari material - they relate to the same person or thing, or have the same purpose or object, or cover the same specific or particular subject matter. If they cannot be harmonized then the earlier one must yield to the later one, it being a later expression of legislative will.  Strictissimi Juris - laws which are strictly construed: 1) Penal statutes 2) Tax exceptions 3) Statutes in derogation of rights 4) Statutes authorizing authorizations 5) Statutes granting privileges 6) Legislative grants to local government units 7) Statutory grounds for removal of officials 8) Naturalization laws 9) Statutes imposing taxes and construction duties 10) Statutes concerning the sovereign 11) Statutes authorizing suits against the government 12) Statutes prescribing the formalities of a will  Statutes liberally construed: 1) Social legislation (labor laws, land reform laws, social security laws and tenacy laws) 2) General welfare clause (LGC) 3) Grant of power to the LGU’s-full autonomy of LGU’s 4) Statutes granting taxing power 5) Statutes prescribing prescriptive period to collect taxes 6) Statutes imposing penalties for nonpayment of taxes 7) Election laws 8) Amnesty procalamations (amnesty and pardon are used synonymously in this sense) 9) Statutes prescribing prescription of crimes 10) Adoption statutes 11) Veteran and pension laws 12) Rules of Court 13) Curative statutes Civil Law Bar Notes University of Cebu College of Law UCLASS Bar Operations: Civil Law Society 14) Redemption laws 15) Warehouse receipts laws 16) Probation laws 17) Statutes granting power of agency Mandatory and directory statues, generally Mandatory statutes is a statue which commands either positively that something be done, or performed in a particular way, or negatively that something be not done, leaving the person concerned no choice on the matter except to obey. Directory statute is a statute which is permissive or discretionary in nature and merely outlines the act to be done in such way that no injury can result from ignoring itbor that its purpose can be accomplished in a manner other than that prescribed and substantially the same result obtained.   Mandatory statutes: 1) Conferring power 2) Granting benefits 3) Prescribing jurisdictional requirements 4) Prescribing time to take action or to appeal 5) Prescribing procedural requirements 6) Election laws on conduct or elections 7) Election laws on qualification and disqualification 8) Prescribing the qualifications of office 9) Statutes relating to assessment of taxes 10) Statutes concerning public auction sale Discretionary Statutes 1) Prescribing guidance for officers 2) Prescribing manner of judicial action 3) Requiring rendition of decision within prescribed period 4) Constitutional time provision to render a decision on cases by the SC, collegiate courts and lower courts is directory (Marcelino v. Cruz)  Mala in se - those acts which are penalized by the RPC.  Mala Prohibita - when the law has been violated. J. Legal Periods, NCC Art. 13 Bar Operations 2012: Ace the Bar, Race the Car! For Private and Personal Use Only 5 Art. 13. When the laws speak of years, months, days or nights, it shall be understood that years are of three hundred sixty-five days each; months, of thirty days; days, of twenty-four hours; and nights from sunset to sunrise. If months are designated by their name, they shall be computed by the number of days which they respectively have. In computing a period, the first day shall be excluded, and the last day included. Note: Year-365 Days Month- 30 days Day-24 hours Nighttime- From sunset to sunrise Month: If designated by its name: compute by the number of days which it respectively has. Week: 7 successive days regardless of which day it would start Calendar week: Sunday to Saturday What is the manner of counting periods? Exclude the first, include the last Step 1. From the reckoning date, add the period or number of days which will expire. Eg: Calendar days, not leap year: Date of commission=Sept 3, 2005 Prescriptive period=90 days from commission 3+90=93 Step 2. From the total, subtract the number f days, calendar or not, until the difference is less than the number of days in a month. This difference shall be the date of the month immediately succeeding the last month whose number of days was subtracted. 93 Civil Law Bar Notes University of Cebu College of Law Less: September 30=63 Less: October 31=32 Less: Nobember 30=2 UCLASS Bar Operations: Civil Law Society Art. 14. Penal laws and those of public security and safety shall be obligatory upon all who live or sojourn in the Philippine territory, subject to the principles of public international law and to treaty stipulations. (December) November is the last month whose number of days was subtracted; hence, the remaining difference of 2 shall be the date in December, the month immediately succeeding November. Hence, the last day for filing the action is December 2, 2005. How to compute leap years? Namarco v. Tuazon held that Feb 28 and 29 of a leap year should be counted as separate days in computing periods of prescription. Since this case was filed on Sept 3, 1965, it was filed one day too late; considering that the 730th day fell on Sept 2, 1965-the year 1964 being a leap year. Rule if the last day falls on a Sunday or a legal holiday? Depends: If the act to be performed wihin the period is: 1) Prescribed or allowed by the: a) The Rules of Court b) Order of the court; or c) Any Other applicable statute The last day will automatically be the next working day. 2) Arises from a contractual relationship-the act will still become due despite the fact that the last day falls on a Sunday or legal holiday. K. Applicability of Penal Laws, NCC Art. 14 Bar Operations 2012: Ace the Bar, Race the Car! For Private and Personal Use Only 6 L. Conflict of Laws (Civil Code, Art. 15-18) [Note: See last part of the Review Notes for the distinctions & other relevant matters.] Theories on Personal Law 1. Domiciliary Theory – the personal laws of a person are determined by his domicile. 2. Nationality Theory – the citizenship of a person is the basis for determining the personal laws of an individual. Nationality Rule ( Art. 15) Laws relating to family rights and duties or to the status, condition and legal capacity of persons are binding upon citizens of the Philippines, even though living abroad. Exception: When 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/ her to remarry, the Filipino spouse shall likewise have the capacity to remarry under Philippine law. (Art. 26[2], Family Code). RULES ON DIVORCE FILIPINO SPOUSES: BETWEEN ALIEN & Under Article 15 of the New Civil Code, only Philippine nationals are governed by the policy against absolute divorce obtained abroad by an alien who may be recognized in the Philippines, provided it is valid according to the alien’s national law. Hence, an American national who had divorced a Filipino wife, cannot justifiably maintain that under our laws, the Filipina , despite the divorce, has to be considered still married to him and still subject to a wife’s obligation( Van Dorn vs. Romillo, L-6470, October 8, 1985) Civil Law Bar Notes University of Cebu College of Law UCLASS Bar Operations: Civil Law Society Lex Rei Sitae ( Art. 16) contract is made (Insular Government vs. Frank, 13 Phil 236) Principle which applies the law of the place where the property ( real/ personal) is situated. Exceptions: a. Order of the succession in intestacy; b. Amount of successional rights; c. Intrinsic validity of the provisions of the will; or d. Capacity to succeed.  Doctrine of Renvoi arises when our law refers a case to another country for solution, but the law of that country refers it back to our country for determination.  Doctrine of Lex Fori means law of the forum. If the application of a foreign law is invoked, that foreign law must be proved as a fact by the rules of evidence. In the absence of proof, it is presumed to be the same as that of the Philippine law.  Under Texas law, the national law of Amos Bellis, it does not provide for compulsory heirs, therefore, no legitimes. Bellis’ illegitimate heirs cannot claim that they are deprived of their legitimes under Philippine laws because the capacity to succeed is governed by the national law of the decedent. The renvoi doctrine cannot apply because it is only pertinent where the decedent is a national of one country and a domiciliary of another. Furthermore, Texas has no conflict laws which govern successional rights. (Bellis vs. Bellis, 20 SCRA 358)  Doctrine of Processual Presumption The foreign law, whenever applicable, should be proved by the proponent thereof; otherwise, such law shall be presumed to be exactly the same as the law of the forum. • Rule on Prohibitive Laws General Rule: Prohibitive laws concerning persons, their acts or property and laws which have for their object public order, public policy or good customs are not rendered ineffective by laws, judgments promulgated or conventions agreed upon in foreign country. Exception: Art. 26, par. 2 Family Code Conflict of Laws and the Law of Nations (Public International Law) distinguished [Note: See last part of the Review Notes for the distinctions & other relevant matters.] Instances where the law of the forum has to apply the internal or domestic law (lex fori) in adjudicating a conflicts problem set before it. These instances are the following: 1. 2. 3.  Lex Loci Celebrations (Art.17) Principle which applies the law of the place where the contract was executed as far as the formalities and solemnities (extrinsic validity) are concerned. Exception: Lex Loci Celebrationis does not apply to contracts of marriage involving Filipinos solemnized abroad, when such marriages are void in the Philippines. (Pineda, Persons, 2000 ed., p.60) The principle of LEX LOCI CELEBRATIONIS holds that matters bearing upon the execution, interpretation and validity of a contract are determined by the law of the place where the Bar Operations 2012: Ace the Bar, Race the Car! For Private and Personal Use Only 7 4. 5. 6. 7. 8. 9. When the law of the forum expressly so provides in the conflicts rules; When the proper foreign law has not been properly provided and pleaded; When the case involves any of the exceptions to the application of the proper foreign law (exceptions to the comity) When the foreign law, judgment or contract is contrary to a sound and established public policy of the forum When the foreign law, judgment or contract is contrary to almost universally conceded principles of morality (contra bonos mores) When the foreign law, judgment or contract involves procedural matters When the case involves penal laws, contracts and judgments When the case involves purely fiscal (that is, revenue producing) or administrative matters When the application of the foreign law, judgment or contract, ay work undeniable injustice to the citizens or residents of the forum Civil Law Bar Notes University of Cebu College of Law UCLASS Bar Operations: Civil Law Society 10. When the application of the foreign law, judgment or contract, may work against the vital interests and national security of the state of the forum 11. When the case involves real and personal property situated in the forum William F. Gemperle vs. Helen Schenker and Paul Schenker. 19 SCRA 45, Jan. 23, 1967 National Grains Authority vs. IAC , 380, Jan. 28, 1988 Puyat vs. Zabarte, CASES: Testate Estate of Bohanan vs. Bohanan, et al. 106 Phil 997 Phisec Investment vs. CA 274 SCRA 102 352 SCRA 738 Valmonte vs. Court Of Appeals, 1/22/96 252 SCRA 92, Shaffer vs. Heitner, 433 U.S 186 (1997) Vicente Caluag et al. vs. CFI Judge Pecson, 82 Phil 8 (10/29/48) Pennoyer v. Neff 95 U.S. 714 (1877) Mullane v. Central Hanover Bank & Trust Co., 339 U.S. 306 (1950). Margarita Romualdez-Licaros Vs. Abelardo B. Licaros, G.R. No. 150656. April 29, 2003 Idonah Slade Perkins Vs. Mamerto Roxas Realty Sales Enterprise, Farms, Inc. vs. IAC 157 SCRA Inc. And Macondray International Shoe Co. v. Washington, 326 U.S. 310 (1945)[1] Republic Of The Philippines vs. Hon. Elepano Spouses Patrick And Rafaela Jose vs. Spouses Helen And Romeo Boyon G.R. No. 147369. October 23, 2003 First Philippine International Bank (Formerly Producers Bank Of The Philippines) And Mercurio Rivera vs. CA PATRICIA S. VILLAREAL, for herself and as guardian of her minor children, CLAIRE HOPE and TRICIA, both surnamed VILLAREAL vs. CA In Re: Union Carbide Corporation Gas Plant Disaster At Bhopal, India In December, 1984 MDL No. 626; Misc. No. 21-38 (JFK) ALL CASES UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK 634 F. Supp. 842; 1986 U.S. Dist. LEXIS 25624 May 12, 1986 Heine vs. New York Insurance Company, 45 F2d 426 (1940) Dial Corporation Vs. Judge Soriano ( 161 SCRA 737) Bank Of America vs. CA, (400 SCRA ) Wing On Company vs. Syyap, 64 O.G. 8311 (1967) Fluemer v Hix Manila Hotel v NLRC Bar Operations 2012: Ace the Bar, Race the Car! For Private and Personal Use Only 8 CHOICE OF LAW IN PROPERTY The controlling law Immovable property-lex situs Movable property-lex domicilii, lex situs, the lex loci actus or the law of the law of transfer Old Law-mobilia squuntur personam (law of the owner’s domicile) Capacity to transfer or acquire property Governed by the law of the place where the property is located. Civil Law Bar Notes University of Cebu College of Law UCLASS Bar Operations: Civil Law Society -Llantino v. Co liong chong (188 SCRA 592) A contract is the law between the contracting parties and when there is nothing in it which is contrary to law, morals, customs, public policy or public order the contract is sustained. - Extrinsic and conveyances Intrinsic Validity of GENERAL RULE: The formalities of a contract to convey property are likewise governed by the Lex Situs. EXCEPTIONS: -Where he transaction does not affect transfer of the title to or ownership of the land. (lex intentionis or Lex Voluntatis is the governing law.) -Where real property is offered by way of a security for the performance of an obligation such as a loan, the principal contract is the loan while the mortgage of the land is only an accessory. -Testate or intestate succession and capacity to suceed are governed by the national law of the decedent. ENFORCEABILITY OF FOREIGN JUDGMENT A foreign judgment is entitled to enforcement if the defendant had an opportunity for a fair trial. DEFENSES OF ENFORCEMENT Rule of RECIPROCITY is no longer a factor now to be considered in the recognition of a foreign judgment as national legal systems and the U.S. recognition of other legal systems converged. A foreign judgment is not due recognition while it is in the process of being appealed. COMITY - a recognition that one nation extends to the legislative, executive, or judicial acts of another not a rule of law - a nation’s expression of understanding that demonstrates due regard both to international duty and convenience and the rights of persons protected by its own laws Bar Operations 2012: Ace the Bar, Race the Car! For Private and Personal Use Only 9 - should be withheld only when its acceptance would be contrary to the interest of the nation called upon to give it effect Conventions applicable - Brussels Convention on Jurisdiction and Judgments in Civil and Commercial Matters - Lugano Convention - Inter-American Convention on the Extraterritorial Validity of Foreign Judgments - Hague Convention on International Jurisdiction and Foreign Judgments in Civil and Commercial Matters - United Nations Convention on the Recognition and Enforcement of Foreign Arbitral Awards (New York Convention) The Problem »Enforcement of a judgment in a foreign country is dependent upon the nuances of enforcement in that particular country. i.e: procedural process no counterpart law applies public policy concerns The Solution Plaintiff may choose to file suit directly in the country of the defendant or to arbitrate the claim. RULE OF RECIPROCITY - a country will not enforce judgments rendered in a foreign country that does not likewise enforce its judgments. FAIR TRIAL - is predicated on the foreign court possessing personal and subject matter jurisdiction, conducting trials using regular procedures, and acting “under a system of jurisprudence likely to secure an impartial administration of justice.” (Hilton vs Guyot, 159 U.S. 113) CASE: Nelson Bunker Hunt vs. BP Exploration Company (Libya) Ltd. Civil Law Bar Notes University of Cebu College of Law UCLASS Bar Operations: Civil Law Society defect: this theory combines the defects of the others SYNOPSIS OF CONFLICTS RULES FOR OBLIGATIONS AND CONTRACTS Factual situation 1) Formal or extrinsic validity exceptions: a) alienation and ecumburance of property b) consular contracts 2) Capacity of the contracting parties (Exception: alienation and encumburance of property) 3) Intrinsic validy (including interpretation of instruments and amount of damages for breach) Point of Contract 1) Lex loci Celebrationis (Art. 17 Par. 1, Civil Code) a) Lex Situs b) Law of the Philippines 2) National law without prejudice to the case of Insular Government v. Frank where the SC adhered to the theory of lex loci celebrationis Exception: a) Lex situs The proper law of the contract-the lex contractus (lex loci voluntatis or the lex loci intentionis) Note: The other theories are: a) Lex loci celebrationis b) Lex nationalii c) Lex loci solutionis (law of the place of the perfomance) d) Prof. Minor's solution 1) Perfection of the contract (lex loci celebrationis) ) Cause or consideration(lex loci Considerationis) 3) performancelex loci solutionis Bar Operations 2012: Ace the Bar, Race the Car! For Private and Personal Use Only 10 CONFLICT RULES FOR SPECIFIC CONTRACTS Factual Situation 1) Sales and Barter a) extrinsic validty b) capacity of parties c) intrinsic validity 2) Lease of Property a) Extrinsic validity b) Capacity of parties c) Intrinsic validty 3) Lease of services a) Extrinsic validty b) Capacity of parties c) intrinsic validity 4) Contract of common carrier of goods a) extrinsic validity b) capacity of parties c) intrinsic validity d) liability of loss, destruction, or deterioration of goods in transitu 5) Contract of agency a) extrinsic validity b) capacity of parties to be principal or agent c) intrinsic validity Point of contract Lex situs Lex situs 3) a) lex loci celebrationis b) national law c) loci voluntatis or loci intentionis 4) fixed situs of carrier except d) law of destination 5) a) lex loci celebrationis b) national law of the parties except when the agency deals with the conveyance or encumbrance of property-lex situs c) lex loci voluntatis Civil Law Bar Notes University of Cebu College of Law UCLASS Bar Operations: Civil Law Society 6) Simple loan a) extrinsic validity b) capacity of the parties c) intrinsic validity 6) a) lex loci celebrationis b) national law c) lex loci volutatis or lex loci intentionis 7) Commodatum a) extrinsic validty b) capacity of the parties c) intrinsic validity 7) lex situs 8) Pledge, chattel mortgage, real mortage, and antichresis a) extrinsic validity b) capacity of the parties c) intrinsic validity 8) lex situs (note that they are accessory contracts only) 9) Guaranty and suretyship a) extrinsic validy b) capacity of parties c) intrinsic validity 9) a) lex loci celbrationis b) national law c) lex loci voluntaties or lex loci intentionis (note that they are also accessory contracts only that they are defective if the principal contract is defective) SYNOPSIS OF CONFLICTS RULES FOR TORTS Factual situation 1) Liability of damages for torts in general Point of Contact 1) Lex loci delicti commissi (law of the place where the delict was committed) note: liabilit yfor the foreign torts may be enforced in the Philippines if: Bar Operations 2012: Ace the Bar, Race the Car! For Private and Personal Use Only 11 (Locus delicti-place of the commission of torts) is faced by the problem of characterization. In civil law countries, the locus delicti is generally where the act began, in common law countries, it is where the act first became effective) a) The tort is not penal in character b) if the enforcement of the tortuitous liability will not contravene our public policy c) if our judicial machinery is adequate for such enforcement Civil Law Bar Notes University of Cebu College of Law UCLASS Bar Operations: Civil Law Society • Article 22 embodies the Roman Law principle of “nemo cum alterius derimento locupletari poest” [No one shall unjustify enrich himself at the expense of another]. (Pacific Merchandising Corp. vs. Consolacion Insurance and Surety Co., Inc, 73 SCRA 564) • Government is not exempted from the principle of unjust enrichment. (CIR vs. Fireman’s Fund Insurance Co., 148 SCRA 316)  Bad faith cannot be attributed to the acts of Dart which was supported by legitimate reasons, principally to protect its own business. The exercise of its rights was not impelled by any evil motive designed, whimsically and capriciously, to injure or prejudice the Calogcogs. (Dart Philippines v. Spouses Francisco Caloglog, GR No. 149241, August 24, 2009, 596 SCRA 614)  Nonfeasance means the omission of an act which a person ought to do; misfeasance is the improper doing of an act which a person might lawfully do; and malfeasance is the doing of an act which a person ought not to do at all. HUMAN RELATIONS Exclude: Independent Civil Actions and prejudicial questions which will be covered by the examinations in Remedial Law  Services are not included in the Article. If services were rendered by someone benefiting another. It does not mean that the latter is exempted from indemnifying the former. The liability will lie on quasi-contract. (Article 2146, NCC) ■ Article 25 Thoughtless extravagance in expenses for pleasure or display during a period of acute public want or emergency may be stopped by order of the courts at the instance of any government or private charitable institution.  Every person must, in the exercise or his rights and in the performance of his duties, act with justice, give everyone his due, and observe honesty and good faith. (Article 19, NCC; Carpio vs. Velmonte, GR 151866, September 9, 2004) Every person who, contrary to law, willfully or negligently causes damage to another, shall indemnify the latter for the same. (Article 20, NCC) Any person who willfully causes loss or injury to another in a manner that is contrary to morals, good customs or public policy shall compensate the latter for the damage. (Article 21, NCC; Aibenson Enterprise Corp. vs. CA, 217 SCRA 16) Bar Operations 2012: Ace the Bar, Race the Car! For Private and Personal Use Only 12 ■ Prejudicial Question General Rule: If both criminal and civil cases are filed in court, the criminal case takes precedence. Exception: When there is a prejudicial question or a question that arises in case, the resolution of which is a logical antecedent of the issue involved herein, and the cognizance of which pertains to another tribunal. Requisites Civil Law Bar Notes University of Cebu College of Law UCLASS Bar Operations: Civil Law Society a. Previously instituted civil action involves an issue similar or intimately related to the issue raised in the subsequent criminal action, and b. The resolution of such issue determines whether or not the criminal action may proceed (Sec. 7, Rule 111, Rules of Court) ◘ A prejudicial question is one based on a fact distinct and separate from the crime but so intimately connected with it that it determines the guilt or innocence of the accused, and for it to suspend the criminal action, it must appear not only that said case involves facts intimately related to those upon which the criminal prosecution would be based but also that in the resolution of the issue or issues raised in the civil case, the guilt or innocence of the accused would be necessarily determined. (Librado vs. Cosculluela, Jr., 116 SCRA 303) Accion in Rem Verso – action for recovery of what has been paid without just cause Requisites: 1. Defendant has been enriched 2. Plaintiff suffered a loss 3. Enrichment of defendant is without just or legal ground 4. Plaintiff has no other action based on contract, crime or quasi-delict Distinguished from solutio indebeti: Mistake is an essential element in solutio indebeti but not in accion in rem verso Art. 30. When a separate civil action is brought to demand civil liability arising from a criminal offense, and no criminal proceedings are instituted during the pendency of the civil case, a preponderance of evidence shall likewise be sufficient to prove the act complained of. Art. 31. When the civil action is based on an obligation not arising from the act or omission Bar Operations 2012: Ace the Bar, Race the Car! For Private and Personal Use Only 13 complained of as a felony, such civil action may proceed independently of the criminal proceedings and regardless of the result of the latter. Art. 32. Any public officer or employee, or any private individual, who directly or indirectly obstructs, defeats, violates or in any manner impedes or impairs any of the following rights and liberties of another person shall be liable to the latter for damages: (1) Freedom of religion; (2) Freedom of speech; (3) Freedom to write for the press or to maintain a periodical publication; (4) Freedom from arbitrary or illegal detention; (5) Freedom of suffrage; (6) The right against deprivation of property without due process of law; (7) The right to a just compensation when private property is taken for public use; (8) The right to the equal protection of the laws; (9) The right to be secure in one's person, house, papers, and effects against unreasonable searches and seizures; (10) The liberty of abode and of changing the same; (11) The privacy of communication and correspondence; (12) The right to become a member of associations or societies for purposes not contrary to law; (13) The right to take part in peaceable assembly to petition the Government for redress of grievances; (14) The right to be free from involuntary servitude in any form; (15) The right of the accused against excessive bail; (16) The right of the accused to be heard by himself and counsel, to be informed of the nature and cause of accusation against him, to have a speedy and public trial, to meet the witnesses face to face, and to have compulsory process to secure the attendance of witness in his behalf; (17) Freedom from being compelled to be a witness against one's self, or from being forced to confess guilt, or from being induced by a promise of immunity or reward to make such confession, except when the person confessing becomes a State witness; Civil Law Bar Notes University of Cebu College of Law UCLASS Bar Operations: Civil Law Society (18) Freedom from excessive fines, or cruel and unusual punishment, unless the same is imposed or inflicted in accordance with a statute which has not been judicially declared unconstitutional; and (19) Freedom of access to the courts. In any of the cases referred to in this article, whether or not the defendant's act or omission constitutes a criminal offense, the aggrieved party has a right to commence an entirely separate and distinct civil action for damages, and for other relief. Such civil action shall proceed independently of any criminal prosecution (if the latter be instituted), and may be proved by a preponderance of evidence. The indemnity shall include moral damages. Exemplary damages may also be adjudicated. The responsibility herein set forth is not demandable from a judge unless his act or omission constitutes a violation of the Penal Code or other penal statute. Art. 33. In cases of defamation, fraud, and physical injuries, a civil action for damages, entirely separate and distinct from the criminal action, may be brought by the injured party. Such civil action shall proceed independently of the criminal prosecution, and shall require only a preponderance of evidence. Art. 34. When a member of a city or municipal police force refuses or fails to render aid or protection to any person in case of danger to life or property, such peace officer shall be primarily liable for damages, and the city or municipality shall be subsidiarily responsible therefor. The civil action herein recognized shall be independent of any criminal proceedings, and a preponderance of evidence shall suffice to support such action. Rule 111, Sec. 2. Institution of separate civil action. - Except in the cases provided for in Section 3 hereof, after the criminal action has been commenced, the civil action which has been reserved cannot be instituted until final judgment has been rendered in the criminal action. (a) Whenever the offended party shall have instituted the civil action (arising from the crime ) as provided for in the first paragraph of section 1 hereof before the filing of the criminal action is subsequently commenced, the pending civil action shall be suspended, in whatever stage before final judgment it may be found, until final judgment in the criminal action has been rendered. However, if no final judgment has been rendered by the trial court in the civil action, the same may be consolidated with the criminal action upon application with the court trying the criminal action. If the application is granted, the evidence presented and admitted in the civil action shall be deemed automatically reproduced in the criminal action, without prejudice to the admission of additional evidence that any party may wish to present. In case of consolidation, both the criminal and the civil actions shall be tried and decided jointly. (b) Extinction of the penal action does not carry with it extinction of the civil, unless the extinction proceeds from a declaration (need not be an express declaration- Baltic) in a final judgment that the fact from which the civil might arise did not exist. (Rules of Court.) Art. 35. When a person, claimining to be injured by a criminal offense, charges another with the same, for which no independent civil action is granted in this Code or any special law, but the justice of the peace finds no reasonable ground to believe that a crime has been committed, or the prosecuting attorney refuses or fails to institute criminal proceedings, the complainant may bring a civil action for damages against the alleged offender. Such civil action may be supported by a preponderance of evidence. Upon the defendant's motion, the court may require the plaintiff to file a bond to indemnify the defendant in case the complaint should be found to be malicious. If during the pendency of the civil action, an information should be presented by the prosecuting attorney, the civil action shall be suspended until the termination of the criminal proceedings. Art. 36. Prejudicial questions, which must be decided before any criminal prosecution may be Bar Operations 2012: Ace the Bar, Race the Car! For Private and Personal Use Only 14 Civil Law Bar Notes University of Cebu College of Law UCLASS Bar Operations: Civil Law Society instituted or may proceed, shall be governed by rules of court which the Supreme Court shall promulgate and which shall not be in conflict with the provisions of this Code. Rule 111, Sec. 5. Elements of prejudicial question. - The two (2) essential elements of a prejudicial question are: (a) the civil action involves an issue similar or intimately related to the issue raised in the criminal action; (b) the resolution of such issue determines whether or not the criminal action may proceed. (Rules of Court.) Rule 111, Sec. 6. Suspension by reason of prejudicial question. - A petition for suspension of the criminal action based upon the pendency of a prejudicial question in a civil action may be filed in the office of the fiscal or the court conducting the preliminary investigation. When the criminal action has been filed in court for trial, the petition to suspend shall be filed in the same criminal action any time before the prosecution rests. (ibid.) Bigamy - Art. 349, RPC. Contracting of second or subsequent marriage: a. before legal dissolution of first marriage b. before declaration of presumptive death of absent spouse. PERSONS & PERSONALITY A. CAPACITY TO ACT 1. CIVIL PERSONALITY (Art. 37 of the NCC) Aptitude or being the subject, active or passive, or rights and obligations Bar Operations 2012: Ace the Bar, Race the Car! For Private and Personal Use Only 15 Judicial Capacity Fitness to be the subject of legal relations Passive Inherent Lost only thru death Can exist without capacity to act Cannot be limited or restricted Capacity to Act Power to do act with legal effects Active Merely acquired Lost thru death and other causes Cannot exist without judicial capacity Can be restricted, modified or limited THEORIES ON CAPACITY TO ACT Theory of General Capacities Applies to natural persons One has the ability to do all things with legal effects except only in those specific circumstances where the capacity to act is restrained. Theory of Special Capacities Applies to juridical persons This limits the power of juridical persons only to those that are expressly conferred upon them or those which can be implied therefrom or incidental thereto. 2. RESTRICTION ON THE CAPACITY TO ACT: (Art. 38-39) 1. Minority 2. Insanity or imbecility 3. State of being deaf-mute 4. Prodigality 5. Civil interdiction ◘ Mandatory accessory penalty is deemed imposed whenever the sentence rendered is within the range or reclusion temporal to death, if the latter is no executed by reason of commutation or pardon. 3. BIRTH (ART. 40-41) ◘ NATURAL PERSONS Beginning of Personality – at conception, such that the conceived child shall be considered born for all the purposes that are favorable to it, provided it be born later with conditions specified by law. ◘ A conceived child, although as yet unborn, is given by law a provisional personality of its own for all purposes favorable to it (Quimiguing vs. Icao, 34 SCRA 132). Civil Law Bar Notes University of Cebu College of Law UCLASS Bar Operations: Civil Law Society General Rule: For civil purposes, the fetus is considered born if it is alive at the time it is completely delivered from the mother’s womb. (Article 41, NCC) Exception: If the fetus had an intra-uterine life of less than 7 months, it is not deemed born if it dies within 24 hours after its complete delivery from the maternal womb. ◘ In case of doubt as to whether the child was born alive or dead, the presumption is that it was alive, and the burden of proof is on the party who alleges the contrary. ◘ The husband of a woman, who voluntarily procured an abortion, could not recover damages from the doctor who caused the same under Art. 2206 NCC, for such does not cover the case of an unborn fetus without personality, incapable of having rights and obligations. Parents, however, may recover moral damages on account of distress and anguish to the loss of the fetus and the disappointment of their parental expectations. (Geluz vs. Court of Appeals, 2 SCRA 801) CONTINENTAL STEEL MFG. CORP. VS. VOLUNTARY ARBITRATOR (GR No. 182836, October 13, 2009, 603 SCRA 621) FACTS: Hortillano’s wife, Marife, had a pre-mature delivery while she was in the 38th week of pregnancy which resulted to the death of Hortillano’s unborn child. ISSUE: Whether Hortillano is entitled to bereavement benefit on the death of his unborn child. HELD: Yes. Even a child inside the womb already has life. No less than the Constitution recognizes the life of the unborn from conception, that the State must protect equally with the life of the mother. If the unborn already has life, then the cessation thereof even prior to the child being delivered, qualifies as death. It was not disputed that Hortillano and his wife were validly married and that their child was conceived during said marriage, hence, making said child legitimate upon her conception, thus, Hortillano was entitled to bereavement benefits. 4. DEATH (Art 42-43) Bar Operations 2012: Ace the Bar, Race the Car! For Private and Personal Use Only 16 a) Compare Art. 43 with Rule 131, Sec. 3 (jj) presumption of survivorship ◘ SURVIVORSHIP RULE * If there is a doubt, as between two or more persons who are called to succeed each other, as to which of them died first, whoever alleges the death of one prior to the other, shall prove the same; in the absence of proof, it is presumed that they died at the same time and there shall be no transmission of rights from one to the other. (Art. 43, NCC) * The rule only applies when succession is in issue. If no successional rights are involved-Rule 131 of the ROC applies. The survivorship shall be determined from the probabilities resulting from the strength and age of the sexes according to the following rules: Age/Sex of the decedents at the time of death Decedent A Decedent B Who presumed to have survived Under 15 Under 15 Older Above 60 Above 60 Younger Uder 15 Above 60 Under 15 (younger) Above 15 but under 60 Above 15 but under 60 Different SexesMale Same SexOlder Under 25 or OVER 60 Between 15-60 Between 15-60 Art. 41. For civil purposes, the foetus is considered born if it is alive at the time it is completely delivered from the mother's womb. However, if the foetus had an intrauterine life of less than seven months, it is not deemed born if it dies within twenty-four hours after its complete delivery from the maternal womb. Civil Law Bar Notes University of Cebu College of Law UCLASS Bar Operations: Civil Law Society Tolentino: Separation from Mother.-- This is produced by the cutting of the umbilical cord, whether the removal takes place naturally or by surgical operation. Alive at Birth.-- The duration of extra-uterine life is immaterial; for acquisition of juridical personality, it is enough that the child lives even for an instant. Test of Life.-- The general opinion is that independent life required for juridical personality can be shown only by complete respiration. The cry of the child, although it is not a necessary sign of life, is evidence that it has acquired complete respiration. Another indication of complete respiration is the floating of the lungs when placed in water; this means that air has penetrated into the lungs by breathing. Viability Not Required.-- Viability means that the child is capable of living, and this is determined by the extent of the development of its organs. RESIDENCE Used to indicate a PLACE OF ABODE, whether permanent or temporary There can be several places of residence DOMICILE Denotes a FIXED PERMANENT RESIDENCE, which when absent, one has the intention of returning There can only be ONE place of domicile Elements of Domicile a. Physical presence in a fixed place b. Intention to remain permanently (animus manendi) Kinds of Domicile 1. Domicile of Origin – received by person at birth. 2. Domicile of choice – the place freely chosen by a person sui juris. 3. Constructive Domicile – assigned o a child by law at the time of his birth. Premature Birth.-- In this case, if the child does not live 24 hours completely separated from the mother's womb, it does not acquire juridical personality. This is an absolute requirement for feotuses w/c have an intrauterine life of less than 7 mos. (Balane quoting Manresa and JBL.) "The aborted creature does not reach the category of a natural person and consequently is not born in the contemplation of law." (Geluz v. CA, supra.) This is so, even if the child is killed before the period lapses and it can be proved that it could have survived that period if it had not been prevented by the wilful act of another. On the other hand, juridical personality is acquired even if the survival for 24 hours is caused only by medical or scientific means w/o w/c the child would have died before the lapse of that period. FAMILY RELATIONS * E.O. NO. 209 – The Family Code of the Philippines * Promulgated on July 6, 1987 * Took effect on August 3, 1988 EXCLUDE: Muslim Code, (PD 1083) LAW ON MARRIAGE (Family Code) B. DOMICILE and RESIDENCE (Art. 50-51) Bar Operations 2012: Ace the Bar, Race the Car! For Private and Personal Use Only 17 Civil Law Bar Notes University of Cebu College of Law UCLASS Bar Operations: Civil Law Society A. Nature of MARRIAGE – is a special contract of permanent union between a man and a woman entered into in accordance with the law for the establishment of conjugal and family life. ◘ As stated, mere breach of promise to marry is not an actionable wrong. But to formally se a wedding and to go thru all the above-described preparation and publicity, only to walk out of it when the matrimony is about to be solemnized, is quite different. This is palpably and unjustifiably contrary to good customs for which the defendant must be made answerable for damages in accordance with Art. 21 of the New Civil Code (Wassmer vs. Velez, 12 SCRA 648) REQUISITES OF VALID MARRIAGE Kinds of Requisites 1.1 Essential Requisites (Art. 5) a. Legal capacity of the contracting parties, b. male and female; (age) and c. Consent freely given in the d. presence of the solemnizing officer. (consent) 1.2 . Formal Requisites (Art. 3) a. Authority of solemnizing officer; b. Valid marriage license; and c. Marriage ceremony where the contracting parties appear before the solemnizing officer and their personal declaration that they take each other as husband and wife in the presence of not less than 2 witnesses of legal age. Other Requirements of marriage 1. If either or both parties is 18 years old and above but below 21 years of age, parental consent is necessary. 2. If either or both parties is 21 years of age and above but below 25, parental advice is needed. 3. If either or both parties is 18 years old and above but below 25, marriage counseling is needed. * Absence of the first requirement, the marriage is voidable. * Absence of the second/third requirements, it shall have no effect on the validity of the marriage. However, this will suspend the Bar Operations 2012: Ace the Bar, Race the Car! For Private and Personal Use Only 18 issuance of the marriage license for a period of 3 months from the completion of publication of the application for marriage license. * If the parties get married during the 3-month period without a license, the marriage shall be void. *If the parties were able to obtain a marriage license during the 3-monh prohibition, the marriage will be valid subject to civil and criminal liabilities on the part of the erring party or parties. ◘ A marriage license is a formal requirement; its absence render the marriage void ab initio. In addition, the marriage contract shows that the marriage license was issued in Carmona, Cavite, yet, neither petitioner nor private respondent ever resided in Carmona. (Sy vs. Court of Appeals, 330 SCRA 550) Effect of Absence, Defect or Irregularity in Requisites: (Art. 4 FCC) 1. Absence of any of the essential or formal requisites shall render the marriage void ab initio except as stated in Article 35 (2). 2. Defect in any of the essential requisites shall render the marriage voidable as provided in Art. 45. 3. An irregularity in the formal requisites shall not affect the validity of the marriage but the parties responsible for the irregularity shall be civilly, criminally and administratively liable. (Navarro vs. Domagtoy, 72 SCAD 28) ◘ Thus, credible testimony stating that a wedding took place gives rise to the presumption that an exchange of vows was made between the parties declaring that they take each other as husband and wife. (Balogbog vs. Court of Appeals, GR No. 83598, March 7, 1997) ◘ A mere Photostat copy of a marriage certificate is a worthless piece of paper but if such Photostat copy emanated from the office of the local civil registrar and duly certified by the local civil registrar as an authentic copy of the records in his office, such cerified photostatic copy is admissible as evidence (Vda. De Chua vs. Court of Appeals, GR No. 116835, March 5, 1998). Persons who may contract marriage 1. Male or female; 2. 18 years old or above; 3. Not subject to impediments in Art. 37 and Art. 38 Civil Law Bar Notes University of Cebu College of Law UCLASS Bar Operations: Civil Law Society Validity of Marriage by Proxy 1. Not valid if celebrated in the Philippines; 2. Valid if celebrated abroad and valid there as such Marriage License Duration: valid in any part of the Philippines for a period of one hundred twenty (120) days. Marriage Certificate * Not an essential or formal requisite of marriage and without which the marriage will still be valid/ ◘ Failure to sign a marriage certificate or absence of the marriage certificate itself does not render the marriage void or annullable (Madridejo vs. De Leon, 55 Phil. 1) Marriages exempt from the Requirement of Valid License 1. Among Muslims or members of ethnic cultural communities provided it was solemnize in accordance with their customs, rites and practices (Art. 33); 2. In Articulo mortis (Art. 27 & 31); 3. In Remote places (Art. 28) 4. Solemnized outside the Philippines where no marriage license is required by the country where it is solemnized. 5. Cohabitation for at least 5 years (Art. 34); Requisites: 1. The man and woman must have been living together as husband and wife for at least five years before the marriage; 2. The parties must have no legal impediment to marry each other; 3. The fact of absence of legal impediment between the parties must be present at the time of marriage; 4. The parties must execute an affidavit stating that they have lived together for at least five years [and are without legal impediment to marry each other; and 5. The solemnizing officer must execute a sworn statement that he had ascertained the qualifications of the parties and that he had found no legal impediment to their marriage (Manzano vs. Sanchez GR No. MTJ-00-1329, March 8, 2001) Special Requirements for Application of Marriage License 1. Person previously married: a. Death certificate of deceased spouse; and b. Judicial decree of annulment or declaration of nullity of previous marriage. 2. Persons between 18 and 21 years old: a. Parental consent; and b. Certificate of marriage counseling. 3. Persons between 21 and 25 years old a. Parental advice of parents or guardian; or b. Certificate of Marriage counseling. 4. Foreigners: * Certificate of legal capacity to contract marriage issued by their diplomatic or consular official. 5. Stateless persons or refuges from other countries: a. Affidavit stating circumstances showing capacity to contract marriage; and b. Marriage license issued only after 3 months following completion of publication of application. 6. Ceremony (Art. 6) What constitutes a valid marriage Ceremony? -That which takes place with the: 1) Appearance of the contracting parties before the solemnizing officer and 2) Their personal declaration that they shall take each other as husband and wife 3) In the presence of not less than 2 witness of legal age Note: No particular form of ceremony or religios rite is required by law. 7. PERSONS AUTHORIZED TO SOLEMNIZE A MARRIAGE 1. Members of the judiciary; 2. Priests, rabbis, ministers of any church; 3. Ship captains or airplane chiefs; 4. Consul generals, consuls or vice consuls; 5. Military commanders of a unit; 6. Duly elected mayors of cities and municipalities pursuant to the Local Government Code. The term includes vice-mayor who is “acting mayor” who is merely “acting as mayor”. Authorized Solemnizers of Marriage Bar Operations 2012: Ace the Bar, Race the Car! For Private and Personal Use Only 19 Civil Law Bar Notes University of Cebu College of Law UCLASS Bar Operations: Civil Law Society A. Judges * Judges can solemnize marriage only within their court’s jurisdiction. They must be incumbent and not retired. * The jurisdiction of the Court of Tax Appeals, Sandiganbayan, the Court of Appeals and the Supreme Court is national in scope. All other courts are jurisdictional. ◘ Judges who are appointed to specific jurisdiction may officiate weddings only within the said areas and not beyond. Where a judge solemnizes a marriage outside the court’s jurisdiction there is a resultant irregularity in the formal requisites, which, while it may not affect the validity of the marriage, may subject the officiating official to administrative liability. (Beso vs. Daguman, 323 SCRA 566) B. Priests, Rabbis, Imam or Minister of Any Church or Religious Sect * A priest is one especially consecrated to the service of a divinity and considered as the medium thru whom worship, prayer, sacrifice, or other service is to be offered to the being worshipped, and pardon, blessing, and deliverance, obtained by the worshipper. Requisites to Perform Marriage 1. Must be duly authorized by his or her church or religious sect; 2. Must act within the limits of the written authority granted to him or her by the church or religious sect; 3. Must be registered with the civil registrar general; and 4. At least one of the contracting parties whose marriage he or she is to solemnize belongs to his or her church or religious sect. 2. He or she must be a commissioned officer (his rank should start from a second lieutenant, ensign and above); 3. A chaplain must be assigned to such unit; 4. The said chaplain must be absent at the time of marriage; 5. The marriage must be one in ariculo mortis; 6. The contracting parties, whether members of the armed forces or civilians, must be within the zone of military operation. E. Consul-General, Consul or Vice Consul * They can solemnize marriage abroad only when the contracting parties are both Filipino citizens. * When the marriage, which in itself is a special type of contract, it to solemnized by the consulgeneral, consul or vice-consul abroad or, specifically in his place of assignment, the solemnities established by Philippine laws shall be observed in their execution (Article 17 of the Civil Code) F. Mayor * Pursuant to the Local Government Code, the mayor of a city or municipality, within their exclusive jurisdiction, is now empowered to solemnize a marriage. a) Exception – Art. 35 (2) Art. 35. The following marriages shall be void from the beginning: xxxx (2) Those solemnized by any person not legally authorized to perform marriages unless such marriages were contracted with either or both parties believing in good faith that the solemnizing officer had the legal authority to do so. C. Ship Captain and Airplane Chief Requisites to Perform Marriage 1. The marriage must be in articulo mortis (at least one of the parties is at the point of death); 2. The marriage must be between passengers or crew members; and 3. Generally, the ship must be at sea or the plane must be in flight. 8. License Required – Arts 3 (2), 9, 11, 20, 26) D. Military Commander Requisites to Perform Marriage 1. He or she must be a military commander of a unit; (2) A valid marriage license except in the cases provided for in Chapter 2 of this Title; xxx Bar Operations 2012: Ace the Bar, Race the Car! For Private and Personal Use Only 20 Art. 3. The formal requisites of marriage are: (1) xxx; Civil Law Bar Notes University of Cebu College of Law UCLASS Bar Operations: Civil Law Society Art. 9. A marriage license shall be issued by the local civil registrar of the city or municipality where either contracting party habitually resides, except in marriages where no license is required in accordance with Chapter 2 of this Title. (58a) Art. 11. Where a marriage license is required, each of the contracting parties shall file separately a sworn application for such license with the proper local civil registrar which shall specify the following: (1) Full name of the contracting party; (2) Place of birth; (3) Age and date of birth; (4) Civil status; (5) If previously married, how, when and where the previous marriage was dissolved or annulled; (6) Present residence and citizenship; (7) Degree of relationship of the contracting parties; (8) Full name, residence and citizenship of the father; (9) Full name, residence and citizenship of the mother; and (10) Full name, residence and citizenship of the guardian or person having charge, in case the contracting party has neither father nor mother and is under the age of twenty-one years. The applicants, their parents or guardians shall not be required to exhibit their residence certificates in any formality in connection with the securing of the marriage license. Art. 20. The license shall be valid in any part of the Philippines for a period of one hundred twenty days from the date of issue, and shall be deemed automatically canceled at the expiration of the said period if the contracting parties have not made use of it. The expiry date shall be stamped in bold characters on the face of every license issued. (65a) Art. 26. All marriages solemnized outside the Philippines, in accordance with the laws in force in Bar Operations 2012: Ace the Bar, Race the Car! For Private and Personal Use Only 21 the country where they were solemnized, and valid there as such, shall also be valid in this country, except those prohibited under Articles 35 (1), (4), (5) and (6), 3637 and 38. (17a) Where a marriage between a Filipino citizen and a foreigner is validly celebrated and a divorce is thereafter validly obtained abroad by the alien spouse capacitating him or her to remarry, the Filipino spouse shall have capacity to remarry under Philippine law. (As amended by Executive Order 227) a) Foreign National – Art. 21 Art. 21. When either or both of the contracting parties are citizens of a foreign country, it shall be necessary for them before a marriage license can be obtained, to submit a certificate of legal capacity to contract marriage, issued by their respective diplomatic or consular officials. Stateless persons or refugees from other countries shall, in lieu of the certificate of legal capacity herein required, submit an affidavit stating the circumstances showing such capacity to contract marriage. c. Exceptions – Arts. 27, 31-32, 34 Art. 27. In case either or both of the contracting parties are at the point of death, the marriage may be solemnized without necessity of a marriage license and shall remain valid even if the ailing party subsequently survives. Art. 31. A marriage in articulo mortis between passengers or crew members may also be solemnized by a ship captain or by an airplane pilot not only while the ship is at sea or the plane is in flight, but also during stopovers at ports of call. Art. 32. A military commander of a unit, who is a commissioned officer, shall likewise have authority to solemnize marriages in articulo mortis between Civil Law Bar Notes University of Cebu College of Law UCLASS Bar Operations: Civil Law Society General Rule: 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 shall likewise have the capacity to remarry. Exception: The general rule does not apply to a divorce obtained by a Filipino abroad from his/her Filipino spouse, which divorce is void because divorce is not allowed in this country, and a Filipino is governed by his national law wherever he goes (Article 15, NCC) persons within the zone of military operation, whether members of the armed forces or civilians. Art. 34. No license shall be necessary for the marriage of a man and a woman who have lived together as husband and wife for at least five years and without any legal impediment to marry each other. The contracting parties shall state the foregoing facts in an affidavit before any person authorized by law to administer oaths. The solemnizing officer shall also state under oath that he ascertained the qualifications of the contracting parties are found no legal impediment to the marriage. 9. Marriage Certificate, Art. 22 Art. 22. The marriage certificate, in which the parties shall declare that they take each other as husband and wife, shall also state: (1) The full name, sex and age of each contracting party; (2) Their citizenship, religion and habitual residence; (3) The date and precise time of the celebration of the marriage; (4) That the proper marriage license has been issued according to law, except in marriage provided for in Chapter 2 of this Title; (5) That either or both of the contracting parties have secured the parental consent in appropriate cases; (6) That either or both of the contracting parties have complied with the legal requirement regarding parental advice in appropriate cases; and (7) That the parties have entered into marriage settlement, if any, attaching a copy thereof. EXCLUDE: Duties of a Civil Registrar, Arts. 12-19, 23-25 B. Effect of Marriage celebrated abroad and foreign divorce ◘ ARTICLE 26 Bar Operations 2012: Ace the Bar, Race the Car! For Private and Personal Use Only 22 ◘MARRIAGES SOLEMNIZED ABROAD General Rule: Marriages solemnized in a foreign country in accordance with the laws of the foreign countries shall be valid in the Philippines. Exceptions: 1. No legal capacity to marry; 2. Marriage is immoral – bigamous or polygamous; 3. Consent is lacking due o mistake as to the identity of the other; 4. One of the parties is psychologically incapacitated. 5. Incestuous; and 6. Void by reason of public policy. B. VOID and VOIDABLE MARRIAGES 1) VOID MARRIAGES (Arts. 5, 35, 36-38, 52-53) a) Due to the ABSENCE of any of the essential requisites: 1. Legal capacity (below 18 even with the consent of parents/guardians); 2. Authority of solemnizing officer, unless both/either of the parties believe in good faith that the officer had the authority to do so; 3. Marriage license, except those exempted from license requirement; 4. Immoral (Bigamous or polygamous marriages no falling under Article 41, FCP); 5. Mistake of one of the contracting parties as to the identity of the other; 6. Subsequent marriages that are void under Article 53; and 7. Psychological incapacity, even if such becomes manifest only after is solemnization. Civil Law Bar Notes University of Cebu College of Law UCLASS Bar Operations: Civil Law Society B. INCESTUOUS marriages, whether the relationship between the parties be legitimate or illegitimate. (Art. 37): 1. Ascendants and descendants of any degree; and 2. Brothers and sisters whether full or half blood. C. Those which are declared void because they are contrary to PUBLIC POLICY (Art. 38) Between: 1. Collateral blood relatives whether legitimate or illegitimate up to the 4th civil degree; 2. Step-parents and step-children; 3. Parents-in-law and children-in-law; 4. Adopting parent and the adopted child; 5. Surviving spouse of the adopting parent of the adopted child; 6. Surviving spouse of the adopted child and the adopter; 7. Adopted child and legitimate child of the adopter; 8. Adopted children of the same adopter; 9. Parties where one with the intention to marry the other, killed that other person’s spouse, or his/her spouse. b)PSYCHOLOGICAL INCAPACITY * A marriage contracted by any party. Who, at the time of the celebration, was psychologically incapacitated to comply with the essential marital obligations of marriage, shall likewise be void if such incapacity becomes manifest only after its solemnization. Essential Elements: a. Mental condition; b. Applies to a person who is martially contracted to one another c. Marriage entered into volition\ d. Failure to perform its chronic f. Cause is psychological in nature g. Cause is serious, with juridical antecedence and must be curable; h. Incapacity results in the failure of the marriage. * The law does not define what psychological incapacity is and therefore, the determination is left solely with the courts on a case-to-case basis. Bar Operations 2012: Ace the Bar, Race the Car! For Private and Personal Use Only 23 * The ground is restricted to psychological incapacity “to comply with the essential marital obligations of marriage”. The incapacity is clearly limited to his and/or her failure or disregard to comply with his and/or her essential marital obligations. * Psychological incapacity, to perform the essential marital obligations, must be present at the time of the marriage ceremony, but can be manifested later on during the marriage. Such a marriage cannot be cured by cohabitation considering that it is void and, therefore, ratification cannot apply. ◘ Mere showing of “irreconcilable differences” and “conflicting personalities” in no wise constitutes psychological incapacity. It is enough to prove that the parties fail to meet their responsibilities and duties as married persons. It is essential that it must be shown to the incapable of doing so, due to some psychological and not physical illness. (Republic vs. CA, 268 SCRA 198) ◘ Although the respondent failed to provide material support to the family and may have resorted to physical abuse and abandonment, the totality of his acts does not lead to a conclusion of psychological incapacity on his part. There is absolutely no showing that his “defects” were already present at the inception of the marriage of that they are incurable. (Marcos vs. Marcos, 343 SCRA 755) ◘ A person who is unable to distinguish between fantasy and reality would be unable to comprehend the legal nature of the marital bond much less its psychic meaning and the obligations attached to the marriage, including parenting. One unable to adhere to reality cannot be expected to adhere as well to any legal or emotional commitments (Antonio vs. Reyes, GR No. 155800, March 10, 2006) ◘ Psychological incapacity as a ground for nullity of marriage is equally applicable to “mixed marriage” (Republic vs. Quintero-Hemano, May 20, 2004) ◘ While disagreements on money matters would, no doubt, affect the other aspects of one’s marriage as to make the wedlock unsatisfactory, this is not a sufficient ground to declare a marriage null and void. In fact, the Court takes judicial notice of the fact that disagreements’ Civil Law Bar Notes University of Cebu College of Law UCLASS Bar Operations: Civil Law Society regarding money matters is a common, and even normal, occurrence between husbands and wives. (Tongol vs. Tongol, GR No. 157610, October 19, 2007) * No prescription for action or defenses grounded on psychological incapacity. (RA 8533) Respondent’s alleged mixed personality disorder, the “leaving-the-house” attitude whenever they quarreled, the violent tendencies during epileptics attacks, the sexual infidelity, the abandonment and lack of support, and his preference to spend more time with his band mates than his family, are not rooted on some debilitating psychological condition but a mere refusal or unwillingness to assume the essential obligations of marriage. (Perez-Ferrariz vs. Ferrariz, GR No. 162368, July 17, 2006, 495 SCRA 396) ◘ BIGAMOUS MARRIAGES Guidelines Regarding Psychological Incapacity 1. Burden of proof belongs to the plaintiff 2. Root cause of the psychological incapacity must be: a. Medically or clinically identified b. Alleged in the complaint c. Sufficiently proven by experts d. Explained in the decision 3. Incapacity must be existing at the time of the celebration of marriage 4. Incapacity must be permanent or incurable 5. Illness is grave enough to bring about disability to assume marital obligations 6. Marital obligations refer to Art. 68-71 of FC as well as Art. 220, 221 and 225 of the FC 7. Interpretations of the National Appellate Matrimonal Tribunal of the Catholic Church of the Philippines while not controlling should be given great respect. 8. Trial court must order the prosecuting attorney or fiscal and the Solicitor General to appear for the state. (Republic vs. CA and Molina, GR No. 108763, February 13, 1997) * Cause of the incapacity must be: 1. Clinically identified; 2. Alleged in the complaint; 3. Sufficiently proven by experts; and 4. Clearly explained in the decision. * Either party, even the incapacitated, can file the action. psychologically * Children conceived or born before the decree of nullity of marriage are considered legitimate. Bar Operations 2012: Ace the Bar, Race the Car! For Private and Personal Use Only 24 General Rule: A marriage contracted by any person during the subsistence of a previous valid marriage shall be null and void. Exception: When the following conditions concur, the subsequent bigamous marriage shall be valid: a. Absence of other spouse must have been for four consecutive years, or two yeas where there was danger of death. b. Well-founded belief of the present spouse that absent spouse was already dead. c. Judicial declaration of presumptive death. Terminable Bigamous Marriage * Refers to a marriage conditioned on the reappearance of the absent spouse. This does not refer to Art. 35, 36, 37 and 38, FCP. Requisites for the Declaration of Presumptive Death: 1. Absent spouse has been missing for 4 consecutive years or in case of disappearance where there is danger of death, for 2 consecutive years; 2. Present spouse wishes to remarry; 3. Well-founded belief that the absentee is dead; 4. Action for a summary proceeding for the declaration of presumptive death of the absentee. ◘ A person who marries another, knowing that the latter is already married and that his marriage is valid and subsisting, can be prosecuted for bigamy. (People vs. Archilla, 1 SCRA 698) * When previous implies a marriage existent. the law states “the subsistence of a marriage”, the said phrase necessarily valid marriage. It does not mean a void because the same is technically non- * If previous marriage is void and there is a subsequent marriage without judicial declaration of nullity of the first void marriage, the subsequent marriage is also void, no because it is Civil Law Bar Notes University of Cebu College of Law UCLASS Bar Operations: Civil Law Society bigamous, but because it does not comply with Articles 40, 52, and 53. * The declaration of the absent spouse’s presumptive death does not dissolve the marital relationship, because the law says the present spouse can contact marriage without prejudice to the reappearance of the absent spouse. Effect of Reappearance * The subsequent marriage is automatically terminated by recording the Affidavit of Reappearance, unless the previous marriage has been annulled or declared void ab initio. * Declaration of nullity of marriage carries ipso facto, a judgment for the liquidation of property, custody and support of children and others. There is no need for filing a separate civil action for such purposes. Effects of the Termination of the Subsequent Marriage 1. Contracted in good faith by both spouses: a. Children of subsequent marriage conceived prior to its termination are considered legitimate; b. Absolute community of property or the conjugal partnership shall be dissolved and liquidated; and c. Donations by reason of marriage shall remain valid. 2. Contracted by one party in bad faith: a. Children of 2nd marriage conceived prior to its termination shall be considered legitimate; b. Absolute community of property or the conjugal partnership shall be dissolved and liquidated, but the spouse who acted in bad faith will have his/her share in the net profits forfeited: 1) In favor of the common children; 2) If none, in favor of the children of the guilty spouse by previous marriage; or 3) In default of children, the innocent spouse. c. Donations in favor of spouse bad faith will be revoked by operation of law. 3. Contracted by both spouses in bad faith: a. The marriage is void ab initio; b. Donations by reason of marriage shall be revoked by operation of law; and Bar Operations 2012: Ace the Bar, Race the Car! For Private and Personal Use Only 25 c. Testamentary disposition made by one in favor of another is also revoked by operation of law (Art. 44) 5. VOIDABLE MARRIAGES Grounds: 1. Non-age (18 to below 21, without parental consent) unless after attaining age of 21, part freely cohabited with the other; 2. Unsoundness of mind, unless party after coming to reason, freely cohabited with the other; 3. Fraud, unless party afterwards, with full knowledge of fraud freely cohabited with the other; 4. Force, intimidation or undue influence, unless same having disappeared or ceased, such party thereafter freely cohabited with the other; 5. Impotence; and 6. Sexually transmitted Disease, if insurable. Circumstances Constituting Fraud in Art. 45(3): Non-disclosure or concealment of: 1. Previous conviction by final judgment of the crime involving moral turpitude; 2. Pregnancy of wife by another man at time of marriage; 3. Sexually transmissible disease existing at the time of the marriage; 4. Drug addiction, habitual alcoholism, homosexuality or lesbianism existing at the time of the marriage. NOTE: No other misrepresentation as to character, health, rank, fortune or chastity shall constitute such fraud as will give grounds for action for the annulment of marriage. ◘ Non-disclosure of a husband’s premarital relationship with another woman is not one of the enumerated circumstances that would constitute a ground for fraud; and it is further excluded by the last paragraph of the article, providing that “no other misrepresentation or deceit as to… chastity” shall give ground for an action to annul a marriage. While a woman may detest such nondisclosure of premarital lewdness or feel having been cheated into giving her consent to the marriage, nevertheless the law does not assuage Civil Law Bar Notes University of Cebu College of Law UCLASS Bar Operations: Civil Law Society her grief after her consent was solemnly given, for upon marriage she entered into an institution in which society, and not herself alone, is interested. (Anaya vs. Palaroan, 36 SCRA 97). ◘ If the woman did not expressly inform the man her pregnancy, but such physical condition was readily apparent to the man (seven months pregnant), he cannot claim lack of knowledge of such pregnancy (Buccat vs. Buccat, 72 Phil. 19) Persons who may Prescriptive Period Sue 1. Force, intimidation, or undue influence. Injured Party Within 5 years from the time the force, intimidation, or undue influence ceased. 2. Fraud Injured Party Within 5 years after the celebration of the marriage. 3. Incapability to Consummate Injured Party Within 5 years after the celebration of the marriage 4. Insanity a. Sane spouse who a. Anytime before the has no knowledge of death of either party. the insanity b. Anytime before the b. Relatives, guardians death of either party. or persons having legal charge of the insane. c. During lucid interval or after regaining sanity c. Insane spouse 5. Non-consent a. Parent/legal a. Anytime before the guardian having charge “no consent” party of the “no-consent” reaches 21 party b. Within 5 years after b. “No consent” party reaching 21 Injured party 6. STD Within 5 years after the celebration of the marriage Requisites for Annulment Due to Impotence under Art. 45(5): Bar Operations 2012: Ace the Bar, Race the Car! For Private and Personal Use Only 26 1. Existing at the time of the celebration of the marriage; 2. Permanent; 3. Incurable; 4. Unknown to the other spouse; 5. Other spouse must not also be impotent. Doctrine of Triennial Cohabitation (for Husband’s Impotency) * A presumption that the husband is impotent should the wife still remain a virgin after living together with the husband for 3 years. Requisites for annulment due to Disease under Art. 45(6) 1. Either party is inflicted with a sexually transmitted disease (STD) 2. STD must exist at the time of the marriage is celebrated 3. STD must be serious 4. STD must be apparently incurable 5. Party mot afflicted by STD must be ignorant of the other’ affliction 6. Injured party must be free from STD Additional Requirements for Annulment or Declaration of Nullity 1. Prosecuting attorney or fiscal should: a. Take steps to prevent collusion between the parties b. Take care that evidence is not fabricated or suppressed. 2. The following must be accomplished: a. Partition and distribution of the properties of the spouses b. Delivery of the children’s presumptive legitimes c. Recording of the judgment of annulment or absolute nullity Drug Addiction as a Ground for Declaration of Nullity of Marriage: 1. The drug addition must amount to psychological incapacity to comply with the essential obligation of marriage; 2. It must be antecedent (existing at the time of marriage), grave and incurable; 3. The case must be filed before August 1, 1998. Civil Law Bar Notes University of Cebu College of Law UCLASS Bar Operations: Civil Law Society Drug Addiction as a Ground for Annulment of Marriage 1. The drug addiction must be concealed; 2. It must exists at the time of marriage; 3. There should be no cohabitation with full knowledge of the drug addiction; 4. The case is filed within 5 years from discovery. VOID VOIDABLE As to nature Inexistent from the Valid until annulled time of performance As to susceptibility to ratification Cannot be ratified Can be ratified either be free cohabitation or prescription As to effect on property No community Absolute community property, only exists unless another ownership (Art. 147) system is agreed upon in marriage settlement As to effect on children Children are Children are legitimate illegitimate if conceived before decree of annulment Exceptions: a. In case of psychoincapacity (Art. 36) b. Children born of subsequent marriage (Art. 53) As to how marriage may be impugned a. May be attacked a. Cannot be attacked directly of collaterally collaterally, only but for the purpose of directly, i.e. there remarriage, there must be a decree of must be judicial annulment declaration of nullity b. Can no longer be b. Can still be impugned after death impugned even after of one of the parties death of parties In the cases referred to in the preceding paragraph, no judgment shall be based upon a stipulation of facts or confession of judgment. 7. Pendency of action, Art. 49 Art. 49. During the pendency of the action and in the absence of adequate provisions in a written agreement between the spouses, the Court shall provide for the support of the spouses and the custody and support of their common children. The Court shall give paramount consideration to the moral and material welfare of said children and their choice of the parent with whom they wish to remain as provided to in Title IX. It shall also provide for appropriate visitation rights of the other parent. (n) Effects of nullity, Arts. 50-54 Art. 50. The effects provided for by paragraphs (2), (3), (4) and (5) of Article 43 and by Article 44 shall also apply in the proper cases to marriages which are declared ab initio or annulled by final judgment under Articles 40 and 45.    6.Presence of prosecutor, Art. 48 Art. 48. In all cases of annulment or declaration of absolute nullity of marriage, the Court shall order the prosecuting attorney or fiscal assigned to it to appear on behalf of the State to take steps to prevent collusion between the parties and to take care that evidence is not fabricated or suppressed. Bar Operations 2012: Ace the Bar, Race the Car! For Private and Personal Use Only 27 The final judgment in such cases shall provide for the liquidation, partition and distribution of the properties of the spouses, the custody and support of the common children, and the delivery of third presumptive legitimes, unless such matters had been adjudicated in previous judicial proceedings. All creditors of the spouses as well as of the absolute community or the conjugal partnership shall be notified of the proceedings for liquidation. In the partition, the conjugal dwelling and the lot on which it is situated shall be adjudicated in accordance with the provisions of Articles 102 and 129. Art. 51. In said partition, the value of the presumptive legitimes of all common children, computed as of the date of the final judgment of the trial court, shall be delivered in cash, property Civil Law Bar Notes University of Cebu College of Law UCLASS Bar Operations: Civil Law Society or sound securities, unless the parties, by mutual agreement judicially approved, had already provided for such matters. The children or their guardian or the trustee of their property may ask for the enforcement of the judgment. The delivery of the presumptive legitimes herein prescribed shall in no way prejudice the ultimate successional rights of the children accruing upon the death of either of both of the parents; but the value of the properties already received under the decree of annulment or absolute nullity shall be considered as advances on their legitime. (n) Art. 52. The judgment of annulment or of absolute nullity of the marriage, the partition and distribution of the properties of the spouses and the delivery of the children's presumptive legitimes shall be recorded in the appropriate civil registry and registries of property; otherwise, the same shall not affect third persons. (n) Art. 53. Either of the former spouses may marry again after compliance with the requirements of the immediately preceding Article; otherwise, the subsequent marriage shall be null and void. Art. 54. Children conceived or born before the judgment of annulment or absolute nullity of the marriage under Article 36 has become final and executory shall be considered legitimate. Children conceived or born of the subsequent marriage under Article 53 shall likewise be legitimate.  II. R.A. 9208 or the Anti-Trafficking in Persons Act of 2003. Action for annulment Art. 47. The action for annulment of marriage must be filed by the following persons and within the periods indicated herein: (1) For causes mentioned in number 1 of Article 45 by the party whose parent or guardian did not give his or her consent, within five years after attaining the age of twenty-one, or by the parent or guardian or person having legal charge of the minor, at any time before such party has reached the age of twenty-one; (2) For causes mentioned in number 2 of Article 45, by the same spouse, who had no knowledge of the other's insanity; or by any relative or guardian or person having legal charge of the insane, at any time before the death of either party, or by the insane spouse during a lucid interval or after regaining sanity; (3) For causes mentioned in number 3 of Article 45, by the injured party, within five years after the discovery of the fraud; (4) For causes mentioned in number 4 of Article 45, by the injured party, within five years from the time the force, intimidation or undue influence disappeared or ceased; (5) For causes mentioned in number 5 and 6 of Article 45, by the injured party, within five years after the marriage. (87a) 7. Pendency of action (Art. 49) 8. Effects of nullity (Arts. 50-54) Exclude:  A.M. No. 02-11-10-SC, Rule on Declaration of Absolute Nullity of Void Marriages and Annulment of Voidable Marriages;  R.A. 6955, entitled “An Act to Declare Unlawful the Practice of Matching Filipino Women for Marriage to Foreign Nationals on a Mail Order Basis and Other Similar Practices…”; Bar Operations 2012: Ace the Bar, Race the Car! For Private and Personal Use Only 28 Art. 48. In all cases of annulment or declaration of absolute nullity of marriage, the Court shall order the prosecuting attorney or fiscal assigned to it to appear on behalf of the State to take steps to prevent collusion between the parties and to take care that evidence is not fabricated or suppressed. In the cases referred to in the preceding paragraph, no judgment shall be based upon a stipulation of facts or confession of judgment. (88a) Civil Law Bar Notes University of Cebu College of Law UCLASS Bar Operations: Civil Law Society All creditors of the spouses as well as of the absolute community or the conjugal partnership shall be notified of the proceedings for liquidation. Tolentino V. Villanueva Facts: Petitioner refused to submit himself for interrogation by the city fiscal which was the reason for the dismissal of the case for annulment of marriage. Issue: WON it was proper? Held: YES, Art. 88 and Art. 101 expresses a prohibition of the aforesaid laws and rules is predicated on the fat that the institutions of marriage and of the family are sacred and therefore are as much the concern of the state as of the spouses; because the state and public have vital interest in the maintenance and the preservation of these social institutions against desecration by collusion between the parties or by fabricating evidence. It stresses the fact that the marriage is more than a mere contract between the parties. Jocson v. Robles The court found indications of collusion between the parties in their attempt to secure the nullification of the said marriage. The court correctly denied the motion for summary judgment based on the first paragraph of Art. 88 and 101 of the Civil code of the Philippines. III. Effects of Annulment Art. 50. The effects provided for by paragraphs (2), (3), (4) and (5) of Article 43 and by Article 44 shall also apply in the proper cases to marriages which are declared ab initio or annulled by final judgment under Articles 40 and 45. The final judgment in such cases shall provide for the liquidation, partition and distribution of the properties of the spouses, the custody and support of the common children, and the delivery of third presumptive legitimes, unless such matters had been adjudicated in previous judicial proceedings. In the partition, the conjugal dwelling and the lot on which it is situated, shall be adjudicated in accordance with the provisions of Articles 102 and 129. Art. 51. In said partition, the value of the presumptive legitimes of all common children, computed as of the date of the final judgment of the trial court, shall be delivered in cash, property or sound securities, unless the parties, by mutual agreement judicially approved, had already provided for such matters. The children or their guardian or the trustee of their property may ask for the enforcement of the judgment. The delivery of the presumptive legitimes herein prescribed shall in no way prejudice the ultimate successional rights of the children accruing upon the death of either of both of the parents; but the value of the properties already received under the decree of annulment or absolute nullity shall be considered as advances on their legitime. (n) Art. 52. The judgment of annulment or of absolute nullity of the marriage, the partition and distribution of the properties of the spouses and the delivery of the children's presumptive legitimes shall be recorded in the appropriate civil registry and registries of property; otherwise, the same shall not affect third persons. (n) Art. 53. Either of the former spouses may marry again after compliance with the requirements of the immediately preceding Article; otherwise, the subsequent marriage shall be null and void. IV.Conflict of Law Rules Art. 26. All marriages solemnized outside the Philippines, in accordance with the laws in force in the country where they were solemnized, and valid there as such, shall also be valid in this country, except those prohibited under Articles 35 (1), (4), (5) and (6), 3637 and 38. Van Dorn V. Romillo Bar Operations 2012: Ace the Bar, Race the Car! For Private and Personal Use Only 29 Civil Law Bar Notes University of Cebu College of Law UCLASS Bar Operations: Civil Law Society Whether or not the divorce obtained in Nevada is valid and binding in the Philippines? Held: Owing to the nationality principle embodied in At. 15 of the Civil Code, only the Philippines nationals covered by the policy against absolute divorces the same being considered contrary to our public policy and morality. Exceptions are aliens who may obtain valid divorce. Pursuant to his national law, private respondent is no longer the husband of the petitioner. He would have no standing to sue in the case below as petitioner’s husband entitles to exercise control over conjugal assets. He is now stopped by his own representation before said court from asserting his right over the alleged conjugal property. LEGAL SEPARATION A. Grounds (Art. 55 and R.A. 9262 or the AntiViolence Against Women and Their Children Act of 2004) B. Defenses (Arts. 56-57) C. Cooling-off period (Art. 58) D. Reconciliation efforts (Art. 59) E. Confession of judgment (Art. 60) F. Effects of filing petition (Art. 61) G. Effects of pendency (Art. 62) H. Effects of legal separation (Arts. 63-64) 1. Legal Separation (Arts. 65-67) * It is the separation of the husband and wife from bed or board without having the marriage bond severed. A. Grounds: 1. Repeated physical violence or grossly abusive conduct directed against the petitioner, a common child or a child of the petitioner; 2. Physical violence or moral pressure to compel the petitioner to change political or religious affiliation; 3. Attempt of respondent to corrupt or induced the petitioner, a common child, or a chills of the petitioner, to engage in prostitution, or connivance in such corruption or inducement; 4. Final judgment sentencing the respondent to imprisonment of more than 6 years, even if pardoned; Bar Operations 2012: Ace the Bar, Race the Car! For Private and Personal Use Only 30 5. 6. 7. 8. 9. Drug addiction or habitual alcoholism; Lesbianism or homosexuality; Contracting a bigamous marriage; Sexual infidelity or perversion; Abandonment without justifiable cause for more than 1 year. 10. RA 9262 (Anti- VAWC) Grounds for Denial of Petition for Legal Separation 1. Condonation by the aggrieved party; 2. Consent to the commission of the offense; 3. Connivance between the parties in the commission of the offense or the act constituting the ground for legal separation; 4. Collusion between the parties to obtain the decree of the legal separation; 5. Mutual guilt; 6. Prescription. Condonation * The act of forgiving the offense after commission * It implies a condition of future good behavior by the offending spouse. Condonation of the violation of the marital duties and obligations being conditional on the future good conduct of the offending spouse, subsequent offense on his or he pat revokes or nullifies the Condonation and revives the original offense. ◘ The failure of the husband to look actively for his adulterous wife after she left the conjugal home does not constitute Condonation or consent of the wife’s adulterous acts. It was not his duty to search for her to bring her home. Hers was the obligation to return (Ocampo vs. Florenciano, 107 Phil 35) ◘ The act of giving money to an erring wife and the fact that no action was taken against her before the courts of justice are sufficient to establish forgiveness amounting to Condonation, for Condonation is the forgiveness of the one of the married parties of an offense which he knows the other has committed against the other and, at any rate, pardon or Condonation does not require sexual intercourse and it may be express or implied (Almacen vs. Baltazar, 103 Phil 1147) Recrimination or Equal Guilt – A counterchange in a suit for divorce or legal Civil Law Bar Notes University of Cebu College of Law UCLASS Bar Operations: Civil Law Society separation that the petitioner is also guilty of an offense constituting a ground for divorce of legal separation. This is based on the maxim that a person must come to court with clean hands. Consent * There is consent when either of agreed to or did not object, knowledge, to the act, giving rise to legal separation, before such act committed. the spouses despite full a ground for was in fact ◘ An agreement between the parties that they will not object to the other’s act of sexual infidelity, adultery or concubinage has been declared as void, but, though void, is nevertheless an expression of their clear consent to the commission of the sexual infidelity. (People vs. Schneckenburger, 73 Phil 413) Prescriptive Period – 5 years from occurrence of cause. Cooling-off Period – 6 months period before trial to enable parties to cool off for possible reconciliation. Effects of Filing a Petition for Legal Separation: 1. Spouses entitled to live separately from each other; 2. No right to have sexual intercourse with other spouse; 3. In the absence of an agreement between the parties, the court shall designate the husband, the wife or a 3rd person, to manage the absolute community or conjugal partnership property. 4. Disqualification of the offending spouse to inherit from the innocent spouse by intestate succession and the provisions in favor of the offending spouse made in the will of the innocent spouse shall be revoked by operation of law. 5. Innocent spouse may revoked the donations made by him/her in favor of the offending spouse, as well as the designation of the latter as beneficiary in any insurance policy, even if the designation be irrevocable. Drug Addiction as a Ground for Legal Separation: 1. There should be no Condonation or consent to the drug addiction; 2. The action must be filed within 5 years from the occurrence of the cause. 3. Drug addiction arises during the marriage and not at the time of marriage. Effects of Reconciliation of the Spouses: A. On their personal relations: * Presumption of cohabitation relations. and B. On the Proceedings for and Decree of Legal Separation: 1. Proceedings will be terminated. 2. If there is a decree of legal separation, it will be set aside by a court order. EXCLUDE: SC Rules on legal separation Effects of the Decree of Legal Separation: 1. Spouses entitled to live separately but the marriage bond shall not be severed. 2. Liquidation of conjugal properties but share of the offending spouse shall have no right to the net profits, such will be forfeited according to Art. 43(2) of the Family Code. (Macadangdang vs. CA, 108 SCRA 314) 3. Custody of the minor children shall be awarded to the innocent spouse subject to the provisions of Art. 213 of the Code. (Tonog vs. Daguimol, GR No. 122906 Feb 7, 2002) Bar Operations 2012: Ace the Bar, Race the Car! For Private and Personal Use Only 31 marital Civil Law Bar Notes University of Cebu College of Law UCLASS Bar Operations: Civil Law Society DISTINCTIONS DISTINCTION BETWEEN VOID & VOIDABLE MARRIAGES AND LEGAL SEPARATION Grounds VOID 1. If parties are below 18, even with the consent of parents/guardians 2. Marriage is solemnized by any person not legally authorized, unless both parties believe in good faith that said officer had authority 3. Solemnized without license, except those that are expressly exempted by the Civil Code 4. Bigamous / polygamous marriages 5. Contracted by mistake as to identity of the other party 6. Subsequent marriages void under Art. 53 7. Psychological incapacity 8. Incestuous relationships 9. Those void by reason of public policy VOIDABLE 1. Parties are 18 or over but below 21, married without consent of parents or guardian. 2. Either party is of unsound mind 3. Consent of either party was obtained by fraud. 4. Consent of either party was obtained by force, intimidation, or undue influence 5. Physical incapability of consummating the marriage 6. Either party is found to be afflicted with sexuallytransmissible disease which is serious and appears incurable * defect in any of the essential requisites makes marriage voidable * absence of any formal or essential requisite makes the marriage void Nature of Marriage Void ab initio; inexistent from time contracted Valid until annulled by competent court Bar Operations 2012: Ace the Bar, Race the Car! For Private and Personal Use Only 32 LEGAL SEPARATION 1. Repeated physical violence or grossly abusive conduct directed at petitioner, a common child, or child of the petitioner 2. Physical violence or moral pressure to compel petitioner to change religious or political affiliation 3. Attempt of respondent to corrupt or induce petitioner, common child or child of petitioner to engage in prostitution 4. Final judgments sentencing respondent to imprisonment of more than 6 years even if pardoned 5. Drug addiction or habitual alcoholism of respondent 6. Lesbianism / homosexuality of respondent 7. Contracting of respondent of subsequent bigamous marriage, whether here or abroad 8. Attempt by respondent on the life of petitioner 9. Abandonment without justifiable cause for more than one year. Subsisting Even with Decree of Legal Separation. Civil Law Bar Notes University of Cebu College of Law UCLASS Bar Operations: Civil Law Society VOID Cannot be ratified Ratification How marriage can be impugned Prescription * Directly or collaterally; for remarriage, a decree is needed * Can still be impugned after the death of either party * Shall not prescribe * In case of marriage celebrated before effectivity of the family code, 10 years after its effectivity (1998) VOIDABLE Can be ratified by free cohabitation or prescription * Directly – there must be a decree * Can no longer be impugned after death of either party LEGAL SEPARATION No ratification, but parties may reconcile a. Lack of parental consent i. By party underage – within 5 years after turning 21 ii. By parent – before child turns 21 Within 5 years from the time of occurrence of cause b. Insanity i. By sane spouse or guardian – before death of either party ii. Insane spouse – during lucid interval, after gaining sanity or before the death of either spouse c. Fraud/force – within 5 years of discovery of fraud or cessation of cause Effect of Filing Pending Decree / d. Impotence/STD – within 5 years after the marriage In absence of or inadequacy in a written agreement by spouses, the court shall provide for support of common children; it shall also provide for appropriate visitation rights Bar Operations 2012: Ace the Bar, Race the Car! For Private and Personal Use Only 33 a. Spouses are entitled to live separately from each other b. The court, in the absence of written agreement between spouses, shall designate either of them or a 3rd party to administer the ACP or CPG c. Court shall provide for support of the spouses & custody & support of common children; it shall provide Civil Law Bar Notes University of Cebu College of Law Effect on Children Effect of Decree on Property Who can file action UCLASS Bar Operations: Civil Law Society Illegitimate, except those children of marriages void under Arts. 36 and 53 Final judgment shall provide for the liquidation and dissolution of properties, as well as for custody and support of children Any of the spouses Legitimate if conceived before annulment decree was given Final judgment shall provide for the liquidation and dissolution of properties, as well as for custody and support of children a. Lacks parental consent – party underaged or parent/guardian for appropriate visitation rights Legitimate * Custody of minor children shall be given to the innocent spouse ACP or CPG shall be dissolved and liquidated but the offending spouse shall have no right to any share of the net profit earned by such properties Aggrieved spouse b. Insanity – sane or insane spouse, guardian of insane spouse (2) Physical violence or moral pressure to compel the petitioner to change religious or political affiliation; Case: Tenchavez v. Escano Held: Marriage was valid because lack of ecclesiastical authorization from the parish priest by Canon Law, is irrelevant to our civil law. Held: The marriage was valid and subsisting notwithstanding the decree of absolute divorce the wife obtained under the state of Nevada. But the wife’s cohabitation with Leo Moran, the man she subsequently marriage after the divorce declaration, is technically intercourse with a person not her husband and entitles petitioner a decree of legal separation under our own law on the basis of adultery. (3) Attempt of respondent to corrupt or induce the petitioner, a common child, or a child of the petitioner, to engage in prostitution, or connivance in such corruption or inducement; (4) Final judgment sentencing the respondent to imprisonment of more than six years, even if pardoned; (5) Drug addiction or habitual alcoholism of the respondent; (6) Lesbianism or homosexuality of the respondent; (7) Contracting by the respondent of a subsequent bigamous marriage, whether in the Philippines or abroad; (8) Sexual infidelity or perversion; I. Grounds Art. 55. A petition for legal separation may be filed on any of the following grounds: (1) Repeated physical violence or grossly abusive conduct directed against the petitioner, a common child, or a child of the petitioner; Bar Operations 2012: Ace the Bar, Race the Car! For Private and Personal Use Only 34 (9) Attempt by the respondent against the life of the petitioner; or (10) Abandonment of petitioner by respondent without justifiable cause for more than one year. Civil Law Bar Notes University of Cebu College of Law UCLASS Bar Operations: Civil Law Society For purposes of this Article, the term "child" shall include a child by nature or by adoption. (9a) Art. 56. The petition for legal separation shall be denied on any of the following grounds: (1) Where the aggrieved party has condoned the offense or act complained of; (2) Where the aggrieved party has consented to the commission of the offense or act complained of; (3) Where there is connivance between the parties in the commission of the offense or act constituting the ground for legal separation; (4) Where both parties have given ground for legal separation; (5) Where there is collusion between the parties to obtain decree of legal separation; or (6) Where the action is barred by prescription. (100a) II. Matubis v. Praxedes The complaint for legal separation was filed outside the period provided under Art. 102 of the NCC. (one year) By the very admission of the plaintiff, she found out of the ground (concubinage) was in January 1955 and filed a complaint only on April 24, 1956. Contreras V. Macaraig Issue: When did knowledge of the ground occur as basis for the prescription period to start tolling? The time the wife heard via hearsay the infidelity or the time when the husband admitted to her that he was living with and would no longer leave his concubine? Held: The latter case. The first time, the wife was hurt but it was merely hearsay. The only time she was cognizant of the infidelity of her husband was in the early part of Dec. 1963 only when defendant informed the wife he could no longer leave Lily Ann and refused to return to the legitimate family. III.Hearing Art. 58. An action for legal separation shall in no case be tried before six months shall have elapsed since the filing of the petition. (103) Limitation of Action Art. 57. An action for legal separation shall be filed within five years from the time of the occurrence of the cause. People V. Sensano The husband showed that he consented to the adulterous relations existing between the accused and therefore is not authorized by law to institute the criminal proceeding. We cannot accept the argument that it was impossible for the husband to take any action against the accused during the whole 7 years. (The husband abandoned his wife and child and during such time she met another man and he took her and her child to live with him.) Bugayong V. Ginez The fact that the husband slept with his wife convinces us that there was reconciliation between them. A single voluntary by the innocent spouse after discovery of the offense is ordinarily sufficient to constitute condonation, especially as against the husband. Bar Operations 2012: Ace the Bar, Race the Car! For Private and Personal Use Only 35 Art. 59. No legal separation may be decreed unless the Court has taken steps toward the reconciliation of the spouses and is fully satisfied, despite such efforts, that reconciliation is highly improbable. (n) Art. 60. No decree of legal separation shall be based upon a stipulation of facts or a confession of judgment. Ramos V. Vamenta The 6 month period stated in Art. 103 of the Civil Code that bars the proceedings for legal separation does not bar the ancillary writ for preliminary injunction. Araneta V. Concepcion Evidence can still be presented and trial be had on the question of support pendente lite and custody for children notwithstanding that 6 months have not yet elapsed since the filing of the case for legal separation. I. Rights and obligations of the parties Civil Law Bar Notes University of Cebu College of Law UCLASS Bar Operations: Civil Law Society Art. 61. After the filing of the petition for legal separation, the spouses shall be entitled to live separately from each other. The court, in the absence of a written agreement between the spouses, shall designate either of them or a third person to administer the absolute community or conjugal partnership property. The administrator appointed by the court shall have the same powers and duties as those of a guardian under the Rules of Court. (104a) Art. 62. During the pendency of the action for legal separation, the provisions of Article 49 shall likewise apply to the support of the spouses and the custody and support of the common children. Reyes V. Ines-Luciano It is true the adultery is defense against support penedente lite but must be established by competent evidence which the petitioner failed to present any evidence. The complaint for legal separation contains allegations showing that at least two occasion the defendant, petitioner, has made attempts to kill private respondent. II. Effect of Death of a spouse Lapuz V. Eufemio Sy-uy Legal separation is purely personal and it follows that the death of one party to the action causes the death of the action relief-actio personalis moritur cum persona. Other rights that are personal: 1) Right to dissolution of the conjugal partnership of gains or of (ACP); 2) Loss of the right of the offending party spouse to share of the profits earned by the partnership or community; 3) Disqualification to inherit by intestacy from the innocent spouse 4) Revocation of testamentary provisions in favor of the offending spouse made by the innocent one. They are vested exclusively in the prsons of the spouses and such claims and disabilities are difficult to concelive as assignable and transmissible. Macadangdang V. CA Bar Operations 2012: Ace the Bar, Race the Car! For Private and Personal Use Only 36 The death of a spouse after a final decree of legal separation has no legal effect on the legal separation. III.Decree of Legal Separation I. Effects Art. 63. The decree of legal separation shall have the following effects: (1) The spouses shall be entitled to live separately from each other, but the marriage bonds shall not be severed; (2) The absolute community or the conjugal partnership shall be dissolved and liquidated but the offending spouse shall have no right to any share of the net profits earned by the absolute community or the conjugal partnership, which shall be forfeited in accordance with the provisions of Article 43(2); (3) The custody of the minor children shall be awarded to the innocent spouse, subject to the provisions of Article 213 of this Code; and (4) The offending spouse shall be disqualified from inheriting from the innocent spouse by intestate succession. Moreover, provisions in favor of the offending spouse made in the will of the innocent spouse shall be revoked by operation of law. (106a) Art. 64. After the finality of the decree of legal separation, the innocent spouse may revoke the donations made by him or by her in favor of the offending spouse, as well as the designation of the latter as beneficiary in any insurance policy, even if such designation be stipulated as irrevocable. The revocation of the donations shall be recorded in the registries of property in the places where the properties are located. Alienations, liens and encumbrances registered in good faith before the recording of the complaint for revocation in the registries of property shall be respected. The revocation of or change in the designation of the insurance beneficiary shall take effect upon written notification thereof to the insured. The action to revoke the donation under this Article must be brought within five years from the time the decree of legal separation become final. (107a) Civil Law Bar Notes University of Cebu College of Law II. UCLASS Bar Operations: Civil Law Society Reconciliation Art. 65. If the spouses should reconcile, a corresponding joint manifestation under oath duly signed by them shall be filed with the court in the same proceeding for legal separation. (n) Art. 66. The reconciliation referred to in the preceding Articles shall have the following consequences: (1) The legal separation proceedings, if still pending, shall thereby be terminated at whatever stage; and (2) The final decree of legal separation shall be set aside, but the separation of property and any forfeiture of the share of the guilty spouse already effected shall subsist, unless the spouses agree to revive their former property regime. The court's order containing the foregoing shall be recorded in the proper civil registries. (108a) Bar Operations 2012: Ace the Bar, Race the Car! For Private and Personal Use Only 37 Art. 67. The agreement to revive the former property regime referred to in the preceding Article shall be executed under oath and shall specify: (1) The properties to be contributed anew to the restored regime; (2) Those to be retained as separated properties of each spouse; and (3) The names of all their known creditors, their addresses and the amounts owing to each. The agreement of revival and the motion for its approval shall be filed with the court in the same proceeding for legal separation, with copies of both furnished to the creditors named therein. After due hearing, the court shall, in its order, take measure to protect the interest of creditors and such order shall be recorded in the proper registries of properties. The recording of the ordering in the registries of property shall not prejudice any creditor not listed or not notified, unless the debtor-spouse has sufficient separate properties to satisfy the creditor's claim. Civil Law Bar Notes University of Cebu College of Law UCLASS Bar Operations: Civil Law Society RIGHTS AND OBLIGATIONS BETWEEN HUSBAND AND WIFE A. Essential obligations (Art. 68) B. Family domicile (Art. 69) C. Support (Art. 70) D. Management of household (Art. 71) E. Effect of neglect of duty (Art. 72) F. Exercise of profession (Art. 73) Exclude: R.A. 7192 or the Women in Development and Nation Building Act; R.A. 8187, or the Paternity Leave Act of 1996; R.A. 9710 or The Magna Carta of Women. Essential Obligations, Art. 68 Art. 68. The husband and wife are obliged to live together, observe mutual love, respect and fidelity, and render mutual help and support.. Family Domicile, Art. 69 Art. 69. The husband and wife shall fix the family domicile. In case of disagreement, the court shall decide. The court may exempt one spouse from living with the other if the latter should live abroad or there are other valid and compelling reasons for the exemption. However, such exemption shall not apply if the same is not compatible with the solidarity of the family. Support, Art. 70 Art. 70. The spouses are jointly responsible for the support of the family. The expenses for such support and other conjugal obligations shall be paid from the community property and, in the absence thereof, from the income or fruits of their separate properties. In case of insufficiency or absence of said income or fruits, such obligations shall be satisfied from the separate properties. Management of household, Art. 71 Art. 71. The management of the household shall be the right and the duty of both spouses. The expenses for such management shall be paid in accordance with the provisions of Article 70. Effect of neglect of duty, Art. 72 Bar Operations 2012: Ace the Bar, Race the Car! For Private and Personal Use Only 38 Civil Law Bar Notes University of Cebu College of Law UCLASS Bar Operations: Civil Law Society Art. 72. When one of the spouses neglects his or her duties to the conjugal union or commits acts which tend to bring danger, dishonor or injury to the other or to the family, the aggrieved party may apply to the court for relief. Exercise of profession, Art. 73 Art. 73. Either spouse may exercise any legitimate profession, occupation, business or activity without the consent of the other. The latter may object only on valid, serious, and moral grounds. In case of disagreement, the court shall decide whether or not: (1) The objection is proper; and (2) Benefit has occurred to the family prior to the objection or thereafter. If the benefit accrued prior to the objection, the resulting obligation shall be enforced against the separate property of the spouse who has not obtained consent. The foregoing provisions shall not prejudice the rights of creditors who acted in good faith. Obligation to live together Arroyo V. Vasquez The wife cannot be compelled to return to matrimonial home and live with her husband. court in this case said the only remedy of husband is to refuse to grant support for unjustifiable abandonment. the The the the Atilano V. Chua Ching Beng The option in Art. 299. Which states, “The person obliged to give support may, at his option, fulfill his obligation either by paying the allowance fixed, or by receiving and maintaining in his house the person who has a right to receive support. The latter alternative cannot be availed of in case there is a moral or legal obstacle thereto.” Clearly provides for only one occasion when the second alternative could be availed of when there is moral or legal obstacle thereto. The moral and legal obstacle in this case were the in-laws which are third persons to the marriage. Hence, the SC gave the husband the option to support his wife at their conjugal dwelling apart from the parents of the husband and if wife should refuse to abide by the terms of this decision, the husband is relieves from the obligation to support his wife. Bar Operations 2012: Ace the Bar, Race the Car! For Private and Personal Use Only 39 II. PROPERTY RELATIONS BETWEEN HUSBAND & WIFE A. Marriage settlements (Arts. 76-81) B. Donations by reason of marriage (Arts. 82-83, 86, 43(3), 50) C. Void donations by the spouses (Art. 87) D. Absolute Community of Property 1. General provisions (Arts. 75-85, 88-90) 2. What constitutes community property (Arts. 91-93) 3. Charges upon and obligations of the community property (Arts. 94-95) 4. Ownership, administration, enjoyment and disposition of the community property (Arts. 96-98) 5. Dissolution of community regime (Arts. 99101) 6. Liquidation of the absolute community assets and liabilities (Arts. 102-104) E. Conjugal Partnership of Gains 1. General provisions (Arts. 105-108) 2. Exclusive property of each spouse (Arts. 109-115) 3. Conjugal partnership property (Arts. 116120) 4. Charges upon and obligations of the Conjugal Partnership of Gains (Arts. 121123) 5. Administration of the Conjugal Partnership of Gains (Arts. 124-125) 6. Dissolution of the regime of Conjugal Partnership of Gains (Arts. 126-128) 7. Liquidation of the conjugal partnership assets and liabilities (Arts. 129-133) F. Separation of property of the spouses and administration of common property by one spouse during the marriage (Arts. 134-142) G. Regime of separation of property (Arts. 143146) H. Property regime of unions without marriage (Arts. 147-148) What governs? 1. Marriage settlement 2. Provisions of the Family Code 3. Local Customs Civil Law Bar Notes University of Cebu College of Law UCLASS Bar Operations: Civil Law Society ◘ MARRIAGE SETTLEMENT * A contract entered into by a man and a woman who intend or plan to get married fixing the property regime that will govern their present and future properties during their marriage * To bind third persons, the marriage settlement and any modification thereof must be registered in the local civil registrar where the marriage contract is recorded and in the proper registries of property. * The bind third persons, the marriage settlement and any modification thereof must be registered in the local civil registrar where the marriage contract is recorded and in the proper registries of property * Pursuant to Article 1403 (2c) of the New Civil Code dealing with the State of Frauds, an Bar Operations 2012: Ace the Bar, Race the Car! For Private and Personal Use Only 40 agreement in consideration of marriage must be in writing; otherwise, it shall be unenforceable. Requisites of Valid Marriage Settlement 1. In writing; 2. Signed by the parties; 3. Executed before the celebration of the marriage; 4. If a party executing the settlement needs parental consent, the parent/guardian whose consent is needed must be made a party to the agreement; 5. If the party executing the settlement is under civil interdiction or any other disability, the guardian appointed by the court must be made a party to the settlement; 6. Registration (to bind third persons) Civil Law Bar Notes University of Cebu College of Law UCLASS Bar Operations: Civil Law Society DONATIONS BY REASON OF MARRIAGE * Donations made in consideration of the marriage in favor of one or both of the future spouses and executed before its celebration. * Donations between common-law spouses are void. (Art. 87, FC) One-fifth Limitation * If there is a marriage settlement providing for a particular regime other than the absolute community of property, such as the conjugal partnership of gains or the separation of property regime, and there is also a donation proper nuptias not included in a marriage settlement but contained in a separate deed, the “not more than one-fifth” limitation will not apply. Instead, the general rules on donations contained in Title III of Book II of the Civil Code shall govern, providing that: The donation may comprehend all the present property of the donor, or part thereof, provided he reserves, in full ownership or in usufruct, sufficient means for the support of himself, and all relatives who, at the time of the acceptance of the donation, are by law entitled to be supported by the donor. Without such reservation, the donations shall be reduced on petition of any person affected (Article 750, NCC). * However the above provision is likewise subject to the provision in the Civil Code that “no person may give or receive, by way or donation, more than he may give or receive by will. The donation shall be inofficious in all that it may exceed this limitation (Article 752, NCC). Grounds for the Revocation of a Donation Propter Nuptias: 1. Marriage is not celebrated or judicially declared void ab initio except donations made in the marriage settlement; 2. Marriage takes place without consent of the parents or guardians as required by law; 3. Marriage is annulled, and the donee being the guilty spouse; Bar Operations 2012: Ace the Bar, Race the Car! For Private and Personal Use Only 41 Civil Law Bar Notes University of Cebu College of Law UCLASS Bar Operations: Civil Law Society Prescriptive Period for Donations Propter Nuptias 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. Donee has committed an act of ingratitude as specified in the provisions of the NCC. Revocation of 1. If marriage is not celebrated (except donations contained in the marriage settlement which are automatically rendered void if the marriage does not take place) – 5 years (Art. 1149) from the time the marriage is not solemnized in the fixed date. DONATIONS BETWEEN SPOUSES 2. If marriage is judicially void, it depends. a. If subsequent marriage is void pursuant to Art. 40 in relation to Arts. 52 and 53, because it was contracted by a spouse before the prior void marriage is judicially declared void – by operation of law if donee-spouse contracted subsequent void marriage in bad faith. b. Judicially declared void on grounds other than Art. 40 in relation to Arts. 52 and 53 – 5 years from finality of judicial declaration of nullity (if action to recover the property). General Rule: Every donation or grant or gratuitous advantage, direct or indirect, between the spouses during the marriage shall be void. Exceptions: 1. Moderate gifts given on occasion of family rejoicing. 2. Donations mortis causa * Note: General rule and exception applies to common law spouses 3. When the marriage takes place without the required parental consent – 5 years. The Following are Donations Void from the Beginning 1. Those made between persons who were guilty of adultery or concubinage at the time of the donation; 2. Those made between persons found guilty of the same criminal offense, in consideration thereof; 3. Those made to a public officer or his wife, descendants and ascendantsm by reason of his office. 4. If resolutory condition is complied with – 5 years from happening of condition. 5. When marriage is annulled and donee is in bad faith – 5 years from finality of decree. 6. If donee commits an act of ingratitude – 1 year from donor’s knowledge of that fact. * In cases of legal separation – 5 years from the time the decree of separation has become final. MARRIAGE SETTLEMENT, DONATION PROPTER NUPTIAS AND ORDINARY DONATIONS NATURE Scope Restrictions and MARRIAGE SETTLEMENT * Should not prejudice 3rd persons. * Will be void if marriage does not take place. * Cannot stipulate that donations between them during marriage will be valid. DONATIONS PROPTER NUPTIAS * May include future property. * May be made by minors. * If regime is not ACP spouses cannot donate more than 1/5 of their present property. * No direct donations. * Must not prejudice legitimes. Bar Operations 2012: Ace the Bar, Race the Car! For Private and Personal Use Only 42 ORDINARY DONATION * Cannot comprehend future property. * Cannot be made by minors. * May comprehend all property of donor must reserve sufficient means to support himself. * Must not prejudice legitimes. Civil Law Bar Notes University of Cebu College of Law Effectivity Who executes Form of Execution Revocation UCLASS Bar Operations: Civil Law Society Before the celebration of the marriage. * Future spouse. * If party is a minor, person whose consent is needed must be a party thereto. * For persons suffering from civil interdiction or other disability, the guardian must be a party thereto. Written, public document, signed by the parties. Judicial separation of property, voluntarily or for cause. Who may Question Validity On the occasion of the marriage. * Spouses to each other. * Parents of the spouses. * Any 3rd person. No form required. * Marriage is not celebrated or judicially declared void ab initio. * Marriage takes place without the needed consent. * Marriage is annulled, donee acted in bad faith. * In case of legal separation and donee is guilty spouse. * Resolutory condition is not complied with. * Donee committed an act of ingratitude Heirs of any person whose rights are prejudiced. Case: Serrano V. Solomon This was not a valid donation propter nuptias because the donation was being made not in favor of Alejandria, the wife, but rather in favor of those who acted as her parents and raised her from girlhood to womanhood in the absence of her father. The suspensive condition here was that the marriage would have to be childless and one of the spouses would have to die before the other so that the donation would operate. Also, the donation did not fulfill the requirements as it was never accepted by the done either in the same instrument or donation or in a separate document as required by law. Bar Operations 2012: Ace the Bar, Race the Car! For Private and Personal Use Only 43 All persons who may contract and dispose of their property. * Movables – oral or written. * Immovable – public document. * Donor, after the donations should have legitimate, illegitimate, legitimated children, even though they are posthumous. * Child of donor, whom the latter believed dead, turns out to be alive. * Donor is subsequently adopts a minor child. * Acts of ingratitude by donee. * Failure to comply with condition attached to donation. Those who have right to legitimate and their heirs. Sumbad V. CA GR: Donation before marriage when they were in a common-law relationship was void as the prohibition extended to common-law relationship but since they were not able to prove the common law relationship then the donation was valid. Matabuena V. Cervantes (Same ruling as Sumbad that the prohibition of donation of the brother to his common-law wife was not valid as Art, 87 extends to common-law relationship) Civil Law Bar Notes University of Cebu College of Law UCLASS Bar Operations: Civil Law Society reached, it is necessary that certain steps should be taken first. Solis V. Barroso Donation proper nuptias here was not valid because it was made in a private instrument. This donation must be governed by the rules on Donation. Real Property may be valid, it must be made in the public instrument. (Formal Validity) The CA should follow Art. 908 to determine the legitime before reducing the donation for being inofficious. A. SYSTEM OF ABSOLUTE COMMUNITY The only exceptions to this rule are onerous and remuneratory donations, insofar as they do not exceed the value of the charge imposed, which are then governed by the rules on contracts, and those which are to take effect upon the donor’s death, which are governed by the rules established for testamentary succession. General Rule: Community property shall consist of all property owned by the spouses at the time of the marriage or acquired thereafter: Exceptions: 1. Property acquired during the marriage by gratuitous title by either spouse, its fruits and income, if any, unless it is expressly otherwise provided by the donor, testator or grantor. 2. For personal and exclusive use, except jewelry; 3. Before the marriage by either spouse who has legitimate descendants by a former marriage including the fruits and income. Marriage in DPN is rather a resolutory condition which presupposes the existence of the obligation which may be resolved or revoked, and it is not a condition necessary for the birth of the obligation. Mateo V. Lagua Before there could be any conclusion about the legal share due to a compulsory heir may be ABSOLUTE COMMUNITY PROPERTY All the properties owned by the spouses at the time of marriage become community property. Upon dissolution and liquidation of the community property what is divided equally between the spouses of their heirs is the net remainder of the properties of the ACP. CONJUGAL PARTNERSHIP OF GAINS Each spouses retains his/her property before the marriage and only the fruits and income of such properties become part of the conjugal properties during the marriage. Upon dissolution of the partnership, the separate property of the spouses are returned and only the net profits of the partnership are divided equally between the spouses of their heirs. Charges Upon and Obligations of Absolute Community Property and Conjugal Property 1. Support for family except children of their spouses; for illegitimate Bar Operations 2012: Ace the Bar, Race the Car! For Private and Personal Use Only 44 2. Debts and obligations, which must have been contracted in any of the following cases: by administrator, spouse, for the benefit of the family; by both spouses; one spouse with the consent of the other; Civil Law Bar Notes University of Cebu College of Law UCLASS Bar Operations: Civil Law Society 3. Debts without marital consent, provided the family was benefited; 4. Value of what is donated or promised by both spouses in favor of their common legitimate children for education or self-improvement; 5. Ante-nuptial debts not falling under number 8 of this enumeration; support of illegitimate children of other spouse; and liabilities incurred by the other spouse by reason of a crime or quasi-delict in case of insolvency of exclusive property of debtor spouse, payment of which shall be advanced by the ACP subject to deduction from the share of the debtor spouse; 6. All taxes and expenses for mere preservation made during the marriage upon separate property of either spouses used by the family. 7. Expenses of litigation between spouses unless found to be groundless; 8. Ante-nuptial debts of either spouse in so far as they have redounded to the benefit of the family; 9. All taxes, liens, charges and expenses, including major or minor repairs upon community or conjugal property; 10. Expenses for education or self-improvement of either spouse. * If CP is insufficient to cover liabilities, spouses shall be solidarily liable for unpaid balance with their separate properties. * Gambler-spouse bears losses, but the winnings shall go to the ACP. Grounds for Dissolution of Absolute Community/Conjugal Partnership 1. 2. 3. 4. 5. Decree of legal separation; Annulment; Declaration of nullity of marriage; Death of either spouse; Judicial Separation of property on the ground of: a) Civil interdiction; b) Declared absentee; c) Loss of parental authority; d) Abandonment and failure to comply with the obligations to the family; e) Abuse of power of administration; f) At the time of the petition, spouses are separated in fact for at least 1 year and the Bar Operations 2012: Ace the Bar, Race the Car! For Private and Personal Use Only 45 possibility for reconciliation is highly improbable. Procedure for Liquidation Community of Property of Absolute 1. Inventory ◘ It is error to determine the amount to be divided by adding up the profits which has been made on each year of the community’s continuance and saying that the result thereof is that amount (De la Rama vs. De la Rama, 7 Phil 754). ◘ In the appraisal of the properties, it is not the purchase price but the market price or, in default, the assessed value at the time of the liquidation that must be taken into account (Prado vs. Natividad, 47 Phil 775) 2. Payment of Debts * After the inventory, all debts for which the absolute community property is liable must be paid. * In case of insufficiency of the absolute community property and/or obligations of the same for which the separate properties were made solidary liable for the unpaid balance with their separate properties. 3. Delivery of Exclusive Properties * After payment of the advances made by the absolute community property and/or the obligations of the same for which the separate properties were made solidary liable, the next step is to deliver whatever remains of the exclusive properties of the spouses to each of them. 4. Partition of Net Assets * The interest of the parties is limited to the net assets or net remainder. * Equal sharing will not apply if there is a different proportion of division agreed upon in the marriage settlement, or unless there has been a voluntary waiver of such share as provided for by the law. ◘ Until a liquidation has been made, it is impossible to say whether or not there will be a net remainder to be divided between the parties (Nable Jose vs. Nable Jose, 41 Phil 713) 5. Delivery of the Presumptive Legitime Civil Law Bar Notes University of Cebu College of Law UCLASS Bar Operations: Civil Law Society * The presumptive legitime is delivered only after the finality of a judicial decree of annulment on grounds provided in Art. 45 or of nullity of a subsequent void marriage under Art. 40 in relation to Arts. 52 and 53. 4. Purchased with exclusive money of either spouse. * Property bought on installments paid partly from exclusive funds of the spouses and partly from conjugal funds: a) Full ownership was vested before the marriage – it shall belong to the buyer spouse. B. CONJUGAL PARTNERSHIP OF GAINS Formed by husband and wife whereby they place in a common fund: 1) The fruits of their separate property, and 2) Income from their work or industry, the same to be divided equally upon dissolution of marriage or partnership. Properties Constituting CPG Those acquired by: 1) Share of either spouse in hidden treasure as finder or owner of property where treasure is found; 2) Onerous title during the marriage at expense of common fund; 3) Through effort and by chance; 4) Fruits, natural, industrial or civil, due or received during marriage from common property as well as net fruits from exclusive property of each spouse; 5) Livestock existing upon dissolution of CPG in excess of number of each kind brought to marriage by either spouse; 6) Through occupation; and 7) Labor, work, profession or industry of either or both spouses. * All the properties acquired during the marriage are presumed to belong to the conjugal partnership, unless it is proved that it pertains exclusively to the husband or to the wife. (Art. 160, NCC [Presumption of Conjugal Property]) Property Excluded from Conjugal Partnership (Exclusive Property of the Spouse): 1. Brought to the marriage as his or her own; 2. Acquired during marriage by gratuitous title; 3. Acquired by right of redemption, by barter or exchange with property belonging to either spouse; Bar Operations 2012: Ace the Bar, Race the Car! For Private and Personal Use Only 46 b) If full ownership was vested during the marriage – it shall belong to the conjugal partnership. (Abalos vs. macatangay, Jr., G.R. 155043, September 9, 2004) CONJUGAL PARTNERSHIP Arises only because of the marriage contract. One must be a male, the other a female. Conjugal owners are always only two. Profits are generally 50-50 unless a contrary stipulation is in a marriage settlement. Death of either husband or wife dissolves the conjugal partnership. Generally, the husband is the administrator. Encouraged by law to provide for better family solidarity. Created by operation of law upon celebration of marriage. It is the law that governs. It does not possess any legal personality distinct from that of the spouses. Commences precisely on the date of the celebration of the CO-OWNERSHIP May arise by an ordinary contract. Sex of the co-owners is immaterial. Co-owners may be two or more. Profits are proportional to respective interests. Death of one does not dissolve the coownership. Generally, all coowners administer. Co-ownership is discouraged by law. Created by will or consent of the parties. The law that governs is the will of the parties. It possess a legal personality. It begins from the moment of the execution of the Civil Law Bar Notes University of Cebu College of Law marriage – no contrary stipulation is allowed. Not formed particularly to profit. Profits are divided equally. There are few grounds for dissolution. There will be no liquidation or giving of profits till after dissolution. UCLASS Bar Operations: Civil Law Society contract but a contrary stipulation is allowed. It is formed for profit. Profits are divided according to previous agreement; if there is no previous agreement, in proportion to the amount contributed. There are many grounds for dissolution. There may be division of profits even without dissolution. Wong vs. Intermediate Appellate Court 200 SCRA 792 Facts: Romarico and Katrina are married. They have three children but they have been living separately from each other most of the time. During the marriage, Romarico acquired a parcel of land. While in Hong Kong, Katrina entered into a contract with Anita Wong, whereby she consigned to her pieces of jewelry. Anita demanded payment where Katrina issued a check that bounced. She was sued criminally and judgment was rendered against her. The lot was levied upon and sold at public auction. Issues: Whether the property is conjugal or not; whether the property is liable for the indebtedness of Katrina. Ruling: Having been acquired during the marriage, the property is presumed to belong to the conjugal partnership even though they have been living separately. The property is not liable for her indebtedness. The conjugal nature of the properties notwithstanding Katrina’s indebtedness may not be paid for with her obligation not having been shown by petitioners to be one of the charges against the conjugal partnership. In addition, to the fact that her rights over the properties are merely inchoate prior to the liquidation of the conjugal partnership, the consent of her husband and her authority to incur such indebtedness had not been alleged in the complaint and proven at trial. It cannot be even said that such loan was necessary for the support of the family. Bar Operations 2012: Ace the Bar, Race the Car! For Private and Personal Use Only 47 ◘ The deceased had no conjugal partnership with petitioner because his having contracted 8 marriages with different Muslim women was in violation of the Civil Code. A conjugal partnership presupposes a valid civil marriage, not a bigamous marriage or a common-law relationship. The presumption that properties acquired during the marriage are conjugal properties is inapplicable because at the time he acquired the properties, he decedent was married to four women. If they were indeed conjugal properties they should have been registered in he names of both petitioner and the decedent. (Malang vs. Moson, 338 SCRA 393) Revival of Conjugal Partnership of Gains 1. Civil interdiction terminates; 2. Spouse who has left conjugal home resumes common life with the other; 3. Absentee spouse reappears; 4. Court satisfied that guilty spouse would not again abuse power of administration; 5. Parental authority judicially restored; 6. Spouses who have separated in fact for at after voluntary dissolution of ACP or CPG, spouses agree to revive former regime. C. REGIME OF SEPARATION OF PROPERTY Spouses retain the ownership, management and control of their properties before the marriage and those acquired after the marriage (includes earnings and fruits) Grounds for Judicial Separation of Property 1. Sentenced with a penalty which carries with it civil interdiction; 2. Loss of parental authority as decreed by the court; 3. Judicially declared an absentee; 4. Abandonment by the petitioner’s spouse and failure to comply with the obligations to the family; 5. Abuse of power of administration granted in marriage settlement; and 6. Separated in fact for at least one year and the possibility for reconciliation is highly improbable. Civil Law Bar Notes University of Cebu College of Law UCLASS Bar Operations: Civil Law Society * D. PROPERTY REGIME OF UNIONS WITHOUT MARRIAGE Unions governed by Article 147 1. When a man and woman capacitated to marry each other live exclusively with each other as husband and wife without the benefit of marriage. 2. A man and woman living together under a void marriage. Share of Parties in Property 1. Wages and salaries are owned in equal shares. 2. De Facto Co-ownership – With respect to property acquired by both through work and industry, rules on co-ownership shall apply. 3. Care and maintenance of the family and household are deemed to be joined and equal. 4. Parties cannot encumber or dispose by acts inter vivos their share in the property acquired during their cohabitation and owned in common, without consent of the other, until after termination of cohabitation. 5. In cases of void marriages, if only one party is in good faith, the share of the spouse who is in bad faith shall be forfeited: a) In favor of their common children; b) In case of default of or waiver by any or all of the common children of their descendants, each vacant share shall belong to the respective surviving descendants. c) In the absence of such descendants, such share belongs to the innocent party. Unions Governed by Art. 148 1. Bigamous marriages 2. Adulterous relationship 3. Relationships in a state of concubinage 4. Relationships where both man and woman are married to other persons. 5. Multiple alliances of the same married man NOTES: * Only properties acquired by the parties through their actual joint contribution of money, Bar Operations 2012: Ace the Bar, Race the Car! For Private and Personal Use Only 48 * property or industry shall be owned in common in proportion to their respective contributions. In the absence of proof to the contrary contributions and the share to the parties to the properties acquired during the cohabitation are presumed equal. If one party is validly married to another: a) His/her share in the co-owned properties will accrue to the ACP/CPG of his/her existing valid marriage. b) If the party who acted in bad faith is not validly married to another, his/her share shall be forfeited in the same manner as that provided in Art. 147. c) The same rules on forfeiture shall apply if both parties are in bad faith. Valdes vs. RTC 260 SCRA 221 Facts: Antonio Valdes and Consuelo Gomez were married. Begotten during the marriage were five children. Valdes sought the declaration of nullity of the marriage pursuant to Art. 36 of the Family Code. The trial court granted the petition. Consuelo sought a clarification of that portion of the decision directing compliance with Arts. 50, 51, and 52 of the Family Code. She alleged that the Family Code contained no provisions on the procedure for the liquidation of the common property in “unions without marriage.” Petitioner moved for a reconsideration of the order. He alleges that Art. 147 does not apply to cases where the parties are psychologically incapacitated. Issue: What article between 147 & 148 shall apply? Ruling: Art. 147 shall apply in this case. Property acquired by both spouses through their work and industry shall be governed by the rules on equal co-ownership. A party who did not participate in the acquisition of the property shall still be considered as having contributed thereto jointly if said party’s efforts consisted in the care and maintenance of the family household.” ART. 147 ART. 148 Applicability 1. Without legal 1. With legal impediment to marry. impediment to marry. 2. Void marriages due 2. Adulterous to absence of formal relationships requisite 3. Bigamous or Civil Law Bar Notes University of Cebu College of Law UCLASS Bar Operations: Civil Law Society polygamous marriages 4. Incestuous void marriages under Art. 37 5. Void marriages by reason of public policy under Art. 38 Salaries and Wages Owned in equal Separately owned by shares the parties Property Acquired Exclusively by either Party Belongs to such party Belongs to such party provided there is proof that he/she acquired it by exclusive funds Property Acquired by Both Parties Governed by the rules Owned by them in of co-ownership common in proportion to their respective contributions. Presumption (prima facie) Presumption of joint No presumption of acquisition and equal joint acquisition. sharing as to property When there is acquired while they evidence of joint live together. acquisition but none as to the extent of actual contribution, there is a presumption of equal sharing. Forfeiture When only one of the If one of the parties is parties is in good validly married to faith, the share of the another, his/her share party in bad faith in in the co-ownership the co-ownership shall shall accrue to the be forfeited: absolute community or conjugal a. In favor of their partnership existing in common children; or such valid marriage. If the party who acted b. In default of or in in bad faith is not case of waiver by any validly married to or all of the common another or if both children or their parties are in bad descendants, in favor faith, such share shall of the innocent party. be forfeited in the manner provided in the last paragraph of Art. 147. Cases: Bar Operations 2012: Ace the Bar, Race the Car! For Private and Personal Use Only 49 Exclusive Properties of Each Spouse (Art 109115 of the FCP) Plata V. Yatco Judgment in eviction suit cannot be held against the wife being not lawful against her as she was not made party defendant to the said suit. The property was paraphernal in origin being that she sold the property and bought it back seven months later. The fact that Begoso signed as co-mortgagor of a subsequent mortgage made by Plata of the propert does not convert the property into conjugal. The property was paraphernal and the creditors and purchasers knew this so the judgment bound the husband alone and not the wife’s possession of her paraphernal property which by law she hold and administers independently, and which she may even encumber without her husband’s knowledge and consent. Property Acquired by right of redemption exchange with exclusive property of spouse or Rosete v. Prob. Sheriff The property is now the exclusive property of the wife by virtue of the right of redemption as successor in interest of her husband. It has ceased to be the property of the judgment debtor. It can no longer therefore be the subject of execution under a judgment exclusively affective the personal liability of the latter. Conjugal Property-Arts. 116-117 Castillo v. Pasco Held: The property was partly conjugal and partly paraphernal. Under Spanish CC, determining ownership of properties acquired by onerous consideration during the marriage depends on source of funds used for acquisition. a. Separate if bought w/exclusive money. (Spanish CC Art. 1396) b. Conjugal if bought w/common funds whether for partnership or for one spouse only. (Spanish CC Art. 1401) Last phrase is immaterial since it’s been proven that prop was sold to both spouses. 2.First payment: according to CA it came from Pasco’s private funds. Petitioners: w/o express proof that debt of Gabriel came from Pasco’s private fund, Civil Law Bar Notes University of Cebu College of Law UCLASS Bar Operations: Civil Law Society they should be presumed conjugal (Art. 1407 Spanish CC). However, Art. 1416 provides that wife can’t bind conjugal partnership w/o husband’s consent. Her private transactions are presumed to be her own. W/o proof that Castillo authorized Pasco to use community funds to lend money to Gabriel, presumption that she used her private funds would lie. 3.2nd & 3rd payments by loans guaranteed by mortgage: since they were made to both spouses as joint borrowers, loan thus became obligations of conjugal partnership & loan money became part of conjugal property. Securing mortgage on wife’s paraphernal prop is mere accessory oblig w/c lenders can waive if they wish to do so w/o affecting principal debt owed by conjugal partnership & w/c creditors can enforce against latter if they so desire. If money borrowed by husband upon credit of wife’s prop became CP & when reinvested in construction of house, such became CP & was liable for husband’s debt (Palanca v. Smith Bell & Co.) then all the more that a loan obtained by both spouses should be conjugal. Court likewise ruled in Lim Queco vs. Cartagena that when wife borrows money guaranteed w/mortgage on her paraphernal prop, money loaned & property acquired w/such will still be her exclusive prop even if husband consented to such. Reason is that she is not the qualified administrator of CP. Creditor can only demand repayment from her & her properties. Palanca ruling applies, thus, property is partly paraphernal by virtue of first payment & partly conjugal by virtue of 2nd & 3rd payments. It belongs to both patrimonies – 1/6 paraphernal + 5/6 CP of Castillo & Pasco. 4.If Pasco paid mortgages with her private funds, her share is not increased. Instead, common funds can repay the amount she has advanced. title during the marriage. The rights accruing from said contract, including those resulting fro breach thereof by the defendant, are presumed to belong to the conjugal partnership of mr and mrs. Zulueta. Jovellanos V. CA Facts: Husband entered into a contract of lease and conditional sale with Philamlife over a house and lot. He was married at that time and when the wife died, he married another woman. During the subsistence of the second marriage, the lease amounts having been paid, Philamlife executed a deed of absolute sale to the husband and the latter donated to herein petitioners all his rights, title and interest over the lot and bungalow before he died. The second wife claimed that the land belonged to the conjugal partnership. Held: The conditional sale agreement in said contract is, therefore, also in the nature of contract to sellm as contradistinguished from contract of sale. The former case, ownership is not transferred upon delivery of the property but upon full payment of the purchase price. The property belonged to the conjugal partnership of the second marriage. But since it pertained to the second wife, she is still liable to pay the corresponding reimbursements to the petitioners who helped pay the amortization of the house and lot. Remember 118 of the FCP on the property bought on installments, whre ownership vested during the marriage, such shall belong to the conjugal partnership. Vitug v. Montemayor Zulueta v. PANAM The settlement entered into by Mrs. Zulueta with the defendant PANAM would not bind the conjugal partnership of the parties herein. In the case at bar the principal part in interest is the husband. Considering that the damages in question have arisen from, inter alia, a breach of plaintiff’s contract of carriage with the defendant, for which plaintiffs paid their fare with funds presumably belonging to the conjugal partnership. We hold that the said damages fall under par. (1) of Art 153 the right thereto having been “acquired by onerous Bar Operations 2012: Ace the Bar, Race the Car! For Private and Personal Use Only 50 Held: The principal issue is to be determined in this appeal is whether the thirty parcels of land involved in this litigation are conjugal, as claimed by the plaintiff, or paraphernal, as claimed by the defendants. If the former the relief prayed for should be granted; if the latter the action should be dismissed. the evidence shows that the funds used in purchasing the thirty parcels of land in question had come from this refundable amount, it logically follows that said properties are conjugal and should have formed part of the estate of the late Clodualdo Vitug. The fact that said properties are now registered in the exclusive name of Donata Civil Law Bar Notes University of Cebu College of Law UCLASS Bar Operations: Civil Law Society Montemayor does not destroy their nature as conjugal because they are acquired during coverture and the presumption of law created in favor of the conjugal partnership has not been overcome by clear proof to the contrary (Guingguing vs. Abuton, 48 Phil. 144) Maramba V. Lozano Issue: WON the property was conjugal; and WON the construction of the house on the exclusive property of one of the spouses at the expense of the common fund makes it automatically conjugal. Held: Both issues, NO. The presumption of conjugality under Art. 160 of the civil code refers to property acquired during the marriage. But in the instant case, there is no showing as to when the property in question was acquired and hence the fact that the tile is in the wife’s name alone is determinative. Furthermore, appellant said that the property was paraphernal. The construction of a house at conjugal expense on the exclusive property of one of the spouses does not automatically make it conjugal. The ownership of the land remains the same until the value thereof is paid, and this payment can only be demanded in the liquidation of the partnership. There is no showing that there was already liquidation and so the property being separate property cannot be made to answer for the liability of the other defendant. Dominado v. Darayunan Held: Par 2 of Art. 1404 of the Civil code provides that building constructed during the marriage, on land belonging to one of the spouses, are conjugal property, but the owner shall be entitled to credit of the value of th land. The exception, however, is limited to buildings and does not apply to crops and other improvements, with respect to which the general rule applies. Expenses incurred in making such crops and improvements are conjugal expenses, for which the conjugal partnership must be reimbursed. Bar Operations 2012: Ace the Bar, Race the Car! For Private and Personal Use Only 51 Caltex V. Felias Held: A lot belonging to the parents and later donated by them to their daughter belonged to the parphernal property and the building constructed thereon before the donation follows the rule accessory follows the principal. The donation transmitted to her the rights of a landowner over the building constructed on it. As such the lot and the building are not answerable for the obligations of her husband. Calimlim-Canullas v. Fortun Facts: Husband abandoned his family and was convicted for concubinage. In 1980 he sold the land he inherited from his deceased father during the marriage to his concubine. The concubine initiated a complaint to quiet title and damages against the legal wife. Held: The alienation of the property without the consent of the legal wife was not valid because the contract of sale was null and void for being contrary to morals and public policy. (Art. 1409 of the NCC) Both the land and the building belong to the conjugal partnership but the conjugal partnership is indebted to the husband for the value of the land and so the husband is entitled for reimbursement at the time of the liquidation of the conjugal partnership. Luzon surety V. De Garcua Conjugal partnership is only liable for such debts and obligations contracted by the husband for the benefit of the conjugal partnership, There is none in this case. This particular codal provision in question rightfully emphasized the responsibility of the husband as administrator. He is supposed o conserve and, if possible, augment the funds for conjugal partnership, not dissipate them. If out of friendship and misplaced generosity on his part the conjugal partnership would be saddled with financial burden, then the family stands to suffer. Cobb-perez v. Lantin In the NCC, Art. 160, the party who invokes this presumption must first prove that the property in controversy was acquired during the marriage. In the case at bar, there is no evidence as to when the shares of stocks were acquired, the fact that Civil Law Bar Notes University of Cebu College of Law UCLASS Bar Operations: Civil Law Society they are registered in the name of the husband alone is an indication that the shares belong exclusively to the said spouse. Ayala V. CA FACTS: Philippine Blooming Mills (PBM) obtained P50,300,000.00 loan from petitioner Ayala Investment and Development Corporation (AIDC). Respondent Alfredo Ching, EVP of PBM, executed security agreements on December 1980 and March 1981 making him jointly and severally answerable with PBM’s indebtedness to AIDC. PBM failed to pay the loan hence filing of complaint against PBM and Ching. The RTC rendered judgment ordering PBM and Ching to jointly and severally pay AIDC the principal amount with interests. Pending the appeal of the judgment, RTC issued writ of execution. Thereafter, Magsajo, appointed deputy sheriff, caused the issuance and service upon respondent spouses of the notice of sheriff sale on 3 of their conjugal properties on May 1982. Respondent spouses filed injunction against petitioners on the ground that subject loan did not redound to the benefit of the said conjugal partnership. CA issued a TRP enjoining lower court from enforcing its order paving way for the scheduled auction sale of respondent spouses conjugal properties. A certificate of sale was issued to AIDC, being the only bidder and was registered on July 1982. ISSUE: Whether or not the debts and obligations contracted by the husband alone is considered “for the benefit of the conjugal partnership” and is it chargeable. HELD: The loan procured from AIDC was for the advancement and benefit of PBM and not for the benefit of the conjugal partnership of Ching. Furthermore, AIDC failed to prove that Ching contracted the debt for the benefit of the conjugal partnership of gains. PBM has a personality distinct and separate from the family of Ching despite the fact that they happened to be stockholders of said corporate entity. Clearly, the debt was a corporate debt and right of recourse to Ching as surety is only to the extent of his corporate stockholdings. Bar Operations 2012: Ace the Bar, Race the Car! For Private and Personal Use Only 52 Based from the foregoing jurisprudential rulings of the court, “if the money or services are given to another person or entity, and the husband acted only as a surety or guarantor, that contract cannot, by itself, alone be categorized as falling within the context of obligations for the benefit of the conjugal partnership”. The contract of loan or services is clearly for the benefit of the principal debtor and not for the surety or his family. Ching only signed as a surety for the loan contracted with AIDC in behalf of PBM. Signing as a surety is certainly not an exercise of an industry or profession, it is not embarking in a business. Hence, the conjugal partnership should not be made liable for the surety agreement which was clearly for the benefit of PBM. The court did not support the contention of the petitioner that a benefit for the family may have resulted when the guarantee was in favor of Ching’s employment (prolonged tenure, appreciation of shares of stocks, prestige enhanced) since the benefits contemplated in Art. 161 of the Civil Code must be one directly resulting from the loan. It must not be a mere by product or a spin off of the loan itself. Charges upon the Conjugal Partnership (ART.122 [2]) Carlos v. Abelardo it must be noted that payment of personal debts contracted by the husband or the wife before or during the marriage shall not be charged to the conjugal partnership except insofar as they redounded to the benefit of the family. The defendants never denied that the check of US$25,000.00 was used to purchase the subject house and lot. They do not deny that the same served as their conjugal home, thus benefiting the family. On the same principle, acknowledgment of the loan made by the defendant-wife binds the conjugal partnership since its proceeds redounded to the benefit of the family. Hence, defendanthusband and defendant-wife are jointly and severally liable in the payment of the loan. The loan is the liability of the conjugal partnership pursuant to Article 121 of the Family Code: Article 121. The conjugal partnership shall be liable for: Civil Law Bar Notes University of Cebu College of Law UCLASS Bar Operations: Civil Law Society xxx (2) All debts and obligations contracted during the marriage by the designated administrator-spouse for the benefit of the conjugal partnership of gains, or by both spouses or by one of them with the consent of the other; (3) Debts and obligations contracted by either spouse without the consent of the other to the extent that the family may have been benefited; If the conjugal partnership is insufficient to cover the foregoing liabilities, the spouses shall be solidarily liable for the unpaid balance with their separate properties. Defendant-husband cannot allege as a defense that the amount of US $25,000.00 was received as his share in the income or profits of the corporation and not as a loan. Firstly, defendanthusband does not appear to be a stockholder nor an employee nor an agent of the corporation, H. L. Carlos Construction, Inc. Since he is not a stockholder, he has no right to participate in the income or profits thereof. In the same manner that as he is not an employee nor an agent of H. L. Carlos Construction, Inc., he has no right to receive any salary or commission therefrom. Secondly, the amount advanced for the purchase of the house and lot came from the personal account of the plaintiff. If, indeed, it was to be construed as defendant-husband’s share in the profits of the corporation, the checks should come from the corporation’s account and not from the plaintiff’s personal account, considering that the corporation has a personality separate and distinct from that of its stockholders and officers. Garcia V. Manzano The Lower court did not err in dismissing the complaint on the ground that the complaint does not warrant for a separation of property. Both the old and new civil code require the separation of property shall not prevail unless expressly stipulated in marriage settlements before the union is solemnized or by formal decree during the existence of the marriage and in the latter case, it may only be ordered by the court for causes specified in Art. 191 of the NCC. Such article must be limitative, in view of the Code’s restrictive policy. The remedy of the aggrieved spouse in case of the maladministration of the other spouse is to revoke Bar Operations 2012: Ace the Bar, Race the Car! For Private and Personal Use Only 53 the power granted the other and resume the administration of the community property and to conduct the affairs of the conjugal partnership. Partosa-Jo vs CA GR 82606, December 18, 1992 FACTS: The petitioner, Prima Partosa-Jo, is the legal wife of Jose Jo, herein private respondent. The latter admitted to have cohabited with 3 women and fathered 15 children. Prima filed a complaint against the husband for judicial separation of conjugal property in addition to an earlier action for support which was consolidated. RTC decision was a definite disposition of the complaint for support but none of that for the judicial separation of conjugal property. Jose elevated the decision to CA which affirmed rulings of the trial court. The complaint on the separation of property was dismissed for lack of cause of action on the ground that separation by agreement was not covered in Art. 178 of the Civil Code. Prima contested that the agreement between her and Jose was for her to temporarily live with her parents during the initial period of her pregnancy and for him to visit and support her. They never agreed to be separated permanently. She even returned to him but the latter refused to accept her. ISSUE: WON there is abandonment on the part of Jose Jo to warrant judicial separation of conjugal property. HELD: SC is in the position that respondent court should have made the necessary modification instead of dismissing the case filed. For abandonment to exist, there must be an absolute cessation of marital relations, duties and rights, with the intention of perpetual separation. The fact that Jo did not accept her demonstrates that he had no intention of resuming their conjugal relationship. From 1968 until 1988, Jose refused to provide financial support to Prima. Hence, the physical separation of the parties, coupled with the refusal by the private respondent to give support to the petitioner, sufficed to constitute abandonment as a ground for the judicial separation of their conjugal property. Wherefore, the petition was granted and in favor of the petitioner and that the court ordered the Civil Law Bar Notes University of Cebu College of Law UCLASS Bar Operations: Civil Law Society conjugal property of the spouses be divided between them, share and share alike. The division will be implemented after the determination of all the properties pertaining to the said conjugal partnership including those that may have been illegally registered in the name of the persons. The Civil Code specifically commands in the second sentence of its article 363 that "No mother shall be separated from her child under seven years of age, unless the court finds compelling reasons for such measure." The rationale of this new provision was explained by the Code Commission thus: Lacson V. Jose-Lacson We hold that the compromise agreement and the judgment of the CFI grounded on the said agreement are valid with respect to the separation of property of the spouses and the dissolution of the conjugal partnership. The law allows separation of property of the spouses and the dissolution of their conjugal partnership provided judicial sanction is secured beforehand. Thus the new Civil Code provides: In the absence of an express declaration in the marriage settlements, the separation of property between spouses during the marriage shall not take place save in virtue of a judicial order. (Art. 190, emphasis supplied) The husband and the wife may agree upon the dissolution of the conjugal partnership during the marriage, subject to judicial approval. All the creditors of the husband and of the wife, as well as of the conjugal partnership, shall be notified of any petition for judicial approval of the voluntary dissolution of the conjugal partnership, so that any such creditors may appear at the hearing to safeguard his interests. Upon approval of the petition for dissolution of the conjugal partnership, the court shall take such measures as may protect the creditors and other third persons. (Art. 191, par. 4, emphasis supplied). In the case at bar, the spouses obtained judicial imprimatur of their separation of property and the dissolution of their conjugal partnership. It does not appeal that they have creditors who will be prejudiced by the said arrangements. However, in so approving the regime of separation of property of the spouses and the dissolution of their conjugal partnership, this Court does not thereby accord recognition to nor legalize the de facto separation of the spouses. however, that the CFI erred in depriving the mother, the respondent spouse, of the custody of the two older children (both then below the age of 7). Bar Operations 2012: Ace the Bar, Race the Car! For Private and Personal Use Only 54 The general rule is recommended in order to avoid many a tragedy where a mother has seen her baby torn away from her. No man can sound the deep sorrows of a mother who is deprived of her child of tender age. The exception allowed by the rule has to be for "compelling reasons" for the good of the child: those cases must indeed be rare, if the mother's heart is not to be unduly hurt. If she has erred, as in cases of adultery, the penalty of imprisonment and the (relative) divorce decree will ordinarily be sufficient punishment for her. Moreover, her moral dereliction will not have any effect upon the baby who is as yet unable to understand the situation." (Report of the Code Commission, p. 12). The use of the word shall2 in article 363 of the Civil Code, coupled with the observations made by the Code Commission in respect to the said legal provision, underscores its mandatory character. It prohibits in no uncertain: terms the separation of a mother and her child below seven years, unless such separation is grounded upon compelling reasons as determined by a court. Yaptinchay v. Torres The common-law husband was already married and the common-law wife alleges that the house in question was common property between them. Held: She did not prove her actual contribution of the house. She must prove her contribution to prove the house was common property. The presumption does not lie in her case. Maxey v. CA (This was a case of Common-law marriage because the military style marriage of the spouses were not recognized. There was no legal impediment for Civil Law Bar Notes University of Cebu College of Law UCLASS Bar Operations: Civil Law Society them to marry. The issue was WON The properties in question were eXCLUSIVE PROPERTIES OF THE LATE MELBOURNE MAXEY, TO THE EXCLUSION OF HIS WIFE REGINA MORALES, BECAUSE THE MENTIONED PROPERTIES WERE ACTUALLY ACQUIRED BY THE JOINT EFFORTS AND INDUSTRY OF BOTH OF THEM AND THEREFORE, THESE PROPERTIES ARE COMMON PROPERTIES) The provisions of the Civil Code are premised on the traditional and existing, the normal and customary gender roles of Filipino men and women. No matter how large the income of a working wife compared to that of her husband, the major, if not the full responsibility of running the household remains with the woman. She is the administrator of the household. The fact that the two involved in this case were not legally married at the time does not change the nature of their respective roles. It is the woman who traditionally holds the family purse even if she does not contribute to filling that purse with funds. As pointed out by Dean Irene R. Cortes of the University of the Philippines, "in the Filipino family, the wife holds the purse, husbands hand over their pay checks and get an allowance in return and the wife manages the affairs of the household. . . . And the famous statement attributed to Governor General Leonard Wood is repeated: In the Philippines, the best man is the woman." (Cortes, "Womens Rights Under the New Constitution". WOMAN AND THE LAW, U.P. Law Center, p. 10.) The "real contribution" to the acquisition of property mentioned in Yaptinchay vs. Torres (28 SCRA 489) must include not only the earnings of a woman from a profession, occupation, or business but also her contribution to the family's material and spiritual goods through caring for the children, administering the household, husbanding scarce resources, freeing her husband from household tasks, and otherwise performing the traditional duties of a housewife. Valdes vs. RTC 260 SCRA 221 FACTS: Antonio Valdez and Consuelo Gomez were married in 1971 and begotten 5 children. Valdez filed a petition in 1992 for a declaration of nullity of their marriage pursuant to Article 36 of the Family Code, which was granted hence, marriage is null and void on the ground of their mutual psychological incapacity. Stella and Joaquin are placed under Bar Operations 2012: Ace the Bar, Race the Car! For Private and Personal Use Only 55 the custody of their mother while the other 3 siblings are free to choose which they prefer. Gomez sought a clarification of that portion in the decision regarding the procedure for the liquidation of common property in “unions without marriage”. During the hearing on the motion, the children filed a joint affidavit expressing desire to stay with their father. ISSUE: Whether or not the property regime should be based on co-ownership. HELD: The Supreme Court ruled that in a void marriage, regardless of the cause thereof, the property relations of the parties are governed by the rules on co-ownership. Any property acquired during the union is prima facie presumed to have been obtained through their joint efforts. A party who did not participate in the acquisition of the property shall be considered as having contributed thereto jointly if said party’s efforts consisted in the care and maintenance of the family. Carino v. Carino In 1969 SPO4 Santiago Carino married Susan Nicdao Carino. He had 2 children with her. In 1992, SPO4 contracted a second marriage, this time with Susan Yee Carino. In 1988, prior to his second marriage, SPO4 is already bedridden and he was under the care of Yee. In 1992, he died 13 days after his marriage with Yee. Thereafter, the spouses went on to claim the benefits of SPO4. Nicdao was able to claim a total of P140,000.00 while Yee was able to collect a total of P21,000.00. In 1993, Yee filed an action for collection of sum of money against Nicdao. She wanted to have half of the P140k. Yee admitted that her marriage with SPO4 was solemnized during the subsistence of the marriage b/n SPO4 and Nicdao but the said marriage between Nicdao and SPO4 is null and void due to the absence of a valid marriage license as certified by the local civil registrar. Yee also claimed that she only found out about the previous marriage on SPO4’s funeral. ISSUE: Whether or not the absolute nullity of marriage may be invoked to claim presumptive legitimes. HELD: The marriage between Nicdao and SPO4 is null and void due the absence of a valid marriage license. The marriage between Yee and SPO4 is likewise null and void for the same has been Civil Law Bar Notes University of Cebu College of Law UCLASS Bar Operations: Civil Law Society solemnized without the judicial declaration of the nullity of the marriage between Nicdao and SPO4. Under Article 40 of the FC, the absolute nullity of a previous marriage may be invoked for purposes of remarriage on the basis solely of a final judgment declaring such previous marriage void. Meaning, where the absolute nullity of a previous marriage is sought to be invoked for purposes of contracting a second marriage, the sole basis acceptable in law, for said projected marriage to be free from legal infirmity, is a final judgment declaring the previous marriage void. However, for purposes other than remarriage, no judicial action is necessary to declare a marriage an absolute nullity. For other purposes, such as but not limited to the determination of heirship, legitimacy or illegitimacy of a child, settlement of estate, dissolution of property regime, or a criminal case for that matter, the court may pass upon the validity of marriage even after the death of the parties thereto, and even in a suit not directly instituted to question the validity of said marriage, so long as it is essential to the determination of the case. In such instances, evidence must be adduced, testimonial or documentary, to prove the existence of grounds rendering such a previous marriage an absolute nullity. These need not be limited solely to an earlier final judgment of a court declaring such previous marriage void. Family Relations Include: The SC ruled that Yee has no right to the benefits earned by SPO4 as a policeman for their marriage is void due to bigamy; she is only entitled to properties, money etc owned by them in common in proportion to their respective contributions. Wages and salaries earned by each party shall belong to him or her exclusively (Art. 148 of FC). Nicdao is entitled to the full benefits earned by SPO4 as a cop even if their marriage is likewise void. This is because the two were capacitated to marry each other for there were no impediments but their marriage was void due to the lack of a marriage license; in their situation, their property relations is governed by Art 147 of the FC which provides that everything they earned during their cohabitation is presumed to have been equally contributed by each party – this includes salaries and wages earned by each party notwithstanding the fact that the other may not have contributed at all. * It is constituted jointly by the husband and wife or by an unmarried head of the family, and is dwelling house where they and their family reside and the land on which it is situated. IV. FAMILY Bar Operations 2012: Ace the Bar, Race the Car! For Private and Personal Use Only 56 1. Between husband and wife; 2. Between parents and children 3. Among ascendants and descendants 4. Among brothers and sisters whether full or halfblood * No suit between members of the same family shall prosper unless it should appear from the verified complaint or petition that earnest efforts toward a compromise have been made, but that the same have failed. If it is shown that no such efforts were in fact made, the same case must be dismissed (Art. 151, FCP.) * This rule shall not apply to cases which may not be the subject of compromise under the Civil Code. ◘ FAMILY HOME General Rule: Exempt from execution and forced sale or attachment. Exceptions: 1. Non-payment of taxes; 2. Debts incurred prior to the constitution; 3. Debt secured by mortgages; 4. Debts due to laborers, mechanics, architects, builders, material men and others who have rendered service or furnished materials for the construction of the building. Beneficiaries of Family Home 1. Husband and wife, or an unmarried person who is the head of the family; 2. Their parents, ascendants, descendants, brothers and sisters, whether relationship be legitimate or not, who are living in the family home and who depend upon the head of the family for legal support. Civil Law Bar Notes University of Cebu College of Law UCLASS Bar Operations: Civil Law Society Requirements for Sale, Donation, Assignment or Encumbrances of the Family Home 1. The person who constituted the same must give his/her written consent. 2. The spouse of the person who constituted the family home must give hi/her written consent. 3. A majority of the beneficiaries of legal age must also give their written consent. 4. In case of conflict, the court shall decide. Requisites for Creditor to Avail Rights under Art. 160 1. He must be a judgment creditor; 2. His claim is not among those excepted under Art. 155; and 3. He has reasonable ground to believe that the family home is worth more than the maximum amount fixed in Art. 157. EXCLUDE: Arts. 157, 161 and 162 Case: MODEQUILLO VS. BREVA FACTS: On July 7, 1988, the sheriff levied on a parcel of residential land located at Poblacion Malalag, Davao del Sur containing an area of 600 square meters with a market value of P34,550.00 and assessed value of P7,570.00 per Tax Declaration No. 87008-01359, registered in the name of Jose Modequillo in the office of the Provincial Assessor of Davao del Sur; and a parcel of agricultural land located at Dalagbong Bulacan, Malalag, Davao del Sur containing an area of 3 hectares with a market value of P24,130.00 and assessed value of P9,650.00 per Tax Declaration No. 87-08-01848 registered in the name of Jose Modequillo in the office of the Provincial Assessor of Davao del Sur. A motion to quash and/or to set aside levy of execution was filed by defendant Jose Modequillo alleging therein that the residential land located at Poblacion Malalag is where the family home is built since 1969 prior to the commencement of this case and as such is exempt from execution, forced sale or attachment under Articles 152 and 153 of the Family Code except for liabilities mentioned in Article 155 thereof, and that Bar Operations 2012: Ace the Bar, Race the Car! For Private and Personal Use Only 57 the judgment debt sought to be enforced against the family home of defendant is not one of those enumerated under Article 155 of the Family Code. As to the agricultural land although it is declared in the name of defendant it is alleged to be still part of the public land and the transfer in his favor by the original possessor and applicant who was a member of a cultural minority was not approved by the proper government agency. An opposition thereto was filed by the plaintiffs. In the present case, the residential house and lot of petitioner was not constituted as a family home whether judicially or extrajudicially under the Civil Code. It became a family home by operation of law only under Article 153 of the Family Code. It is deemed constituted as a family home upon the effectivity of the Family Code on August 3, 1988 not August 4, one year after its publication in the Manila Chronicle on August 4, 1987 (1988 being a leap year). ISSUE: Whether or not the property in dispute is deemed to be a family home. HELD:The contention of petitioner that it should be considered a family home from the time it was occupied by petitioner and his family in 1969 is not well- taken. Under Article 162 of the Family Code, it is provided that "the provisions of this Chapter shall also govern existing family residences insofar as said provisions are applicable." It does not mean that Articles 152 and 153 of said Code have a retroactive effect such that all existing family residences are deemed to have been constituted as family homes at the time of their occupation prior to the effectivity of the Family Code and are exempt from execution for the payment of obligations incurred before the effectivity of the Family Code. Article 162 simply means that all existing family residences at the time of the effectivity of the Family Code, are considered family homes and are prospectively entitled to the benefits accorded to a family home under the Family Code. Article 162 does not state that the provisions of Chapter 2, Title V have a retroactive effect. Is the family home of petitioner exempt from execution of the money judgment aforecited? No. The debt or liability which was the basis of the judgment arose or was incurred at the time of the vehicular accident on March 16, 1976 and the money judgment arising therefrom was rendered by the appellate court on January 29, 1988. Both preceded the effectivity of the Family Code on August 3, 1988. This case does not fall under the exemptions from execution provided in the Family Civil Law Bar Notes University of Cebu College of Law UCLASS Bar Operations: Civil Law Society 4. Conceived or born of subsequent marriage under Art. 53; 5. Of mothers who may have declared against its legitimacy or was sentenced as adulteress 6. Legally adopted; and 7. Legitimated. Code. As to the agricultural land subject of the execution, the trial court correctly ruled that the levy to be made by the sheriff shall be on whatever rights the petitioner may have on the land. Petition is DISMISSED for lack of merit. B. Illegitimate – conceived and born outside a valid marriage. Exceptions: Children who are: 1. Born of marriages which are void ab initio or declared void for being contrary to law; 2. Of voidable marriage born after the decree of annulment. VII. PATERNITY AND FILIATION C. Legitimated – originally illegitimate but later considered legitimate by legal fiction because of subsequent marriage of the parents who at the time of the child’s conception had no legal impediment to marry each other. A. Legitimate children (Arts. 163-171) B. Proof of filiation (Arts. 172-174) C. Illegitimate children (Art. 175 and Art. 176 as amended by R.A. 9255 allowing illegitimate children to use the surname of their father) D. Legitimated children (Arts. 177-182) Proof of Filiation: Exclude: A.M. No. 06-11-5-SC or the Rule on DNA Evidence 1. Primary * Record of birth appearing in civil register or a final judgment; or * Admission of legitimate filiation in a public document or a private handwritten instrument signed by the parent concerned. Paternity – The civil status of the father with regard to the child. 2. Secondary a. Open and continuous possession of the status of a legitimate child; or b. Any other means allowed by the Rules of Court and special laws. Filiation – The civil status of the child with regard to his father. ◘ KINDS OF CHILDREN ◘ Proof of filiation in Civil Code not precluded by the other Rules of Evidence in Civil Law. (Fornier vs. Comelec & FPJ, GR 161434, March 3, 2004) A. Legitimate – conceived or born during a valid marriage or within a lawful wedlock. Exceptions: Children who are: 1. Result of artificial insemination; a. Ratified by both parents; b. In a written instrument; c. Executed and signed by them before the birth of the child. ◘ The due recognition of an illegitimate child in a record of birth, a will, a statement before a court of record, or in any authentic writing is, in itself, a consummated act of acknowledgment of the child, and no further court action is required. (Potenciano vs. Reynoso, GR No. 140707, April 22, 2003) ◘ 2. Born of a viodable marriage before the decree of annulment; 3. Conceived or born before judgment of annulment or absolute nullity under Art. 36 has become executory; Bar Operations 2012: Ace the Bar, Race the Car! For Private and Personal Use Only 58 A father who acknowledges paternity of a child through a written instrument must affix his signature. It is clearly implied in Art. 176 of the Family Code. However, special circumstances exist to hold that the unsigned Autobiography of Dominique substantially satisfies the requirement of law. First, Dominique died about two months Civil Law Bar Notes University of Cebu College of Law UCLASS Bar Operations: Civil Law Society prior to the child’s birth. Second, the relevant matters in the Autobiography, unquestionably handwritten by Dominique. Third, Jenie’s testimony is corroborated by the Affidavit of Acknowledgment of Dominique’s father. These circumstances indicating Dominique’s paternity of the child give life to his statements in his Autobiography. ◘ CHILDREN BY ARTIFICIAL INSEMINATION A child conceived by artificial insemination is considered legitimate. Requisites: 1. The artificial insemination is made on the wife, not on another woman. 2. The artificial insemination on the wife is done with the sperm of the husband or a donor, or both the husband and the donor. 3. The artificial insemination has been authorized or ratified by the spouse on a written instrument executed and signed by them before the birth of the child, and 4. The written instrument is recorded in civil registry together with the birth certificate of the child. ◘ IMPUGNING THE LEGITIMACY OF A CHILD General Rule: Only the husband can impugn the legitimacy of the child. Exception: The heirs of the husband may impugn the child’s filiation in the following cases: 1. If the husband dies before the expiration of period for filing the action; 2. If the husband dies after filing without desisting; 3. If the child was born after death of the husband Grounds for Impugning the Legitimacy of a Child 1. Physically impossibility for the husband to have sexual intercourse with his wife within the first 120 days of 300 days immediately preceding the birth of the child due to: a. Physical incapacity of the husband; b. The spouses are living separately; c. Serious illness of the husband which absolutely prevented intercourse. Bar Operations 2012: Ace the Bar, Race the Car! For Private and Personal Use Only 59 2. Biological or scientific proof that the child could not have been that of the husband; and 3. Written authorization or ratification for artificial insemination was obtained through the mistake, fraud, violence, intimidation, or undue influence. ◘ While it is true that an artificial document such as a Birth Certificate enjoys the presumption of regularity, the specific facts that there were already irregularities regarding the Birth Certificate itself, such as it was not signed by the Local Civil Registrar, and that the alleged mother’s signature therein was different from her other signatures, as well as such other circumstances showing that the latter is not the real mother, sufficiently negate such presumption. (Babiera vs. Catotal 333 SCRA 487) Prescriptive Period 1. One year, from knowledge of borth recording in the civil register, if husband or heirs lives in the same city/municipality. 2. Two years, if residing in the Philippines. 3. Three years, if abroad. Who May Impugn Legitimacy of a Child General Rule: Only the husband may impugn. Exception: The heirs, if the husband dies before the end of the prescription of the action, or if the husband dies after filing the complaint, or child was born after death. ◘ There is not almost universal scientific agreement that the blood grouping tests are conclusive as to non-paternity, that is, the fact that the blood type of the child is a possible product of the mother and the alleged father does not conclusively proved that the child is born by such parents. If the blood type of the child is not the possible blood of the mother and of the alleged father after it had been cross-matched, then the child cannot possibly be that of the alleged father. Accordingly, the court affirms the decision of the CA and hold that the result of the blood grouping test involved in the case at bar are admissible and conclusive on the non-paternity of respondent Jao vis-à-vis Janice. The result of such test is to be accepted, therefore accurately reflecting a scientific fact. (Jao vs. CA, 152 SCRA 359) Civil Law Bar Notes University of Cebu College of Law UCLASS Bar Operations: Civil Law Society lapse of 180 days after the celebration of the 2 nd marriage provided child was born within 300 days after the termination of the 1st marriage. ◘ RULE ON THE STATUS OF CHILDREN BORN AFTER 300 DAYS FOLLOWING TERMINATION OF MARRIAGE 2. To second marriage – if child was born after 180 days following the celebration of the 2 nd marriage whether born within 300 days after the termination of the 1st marriage or afterwards. Requisites: 1. 2. 3. 4. First marriage terminated Mother contracted a subsequent marriage A child was born No evidence as to the status of the child Rules as to Whom the Child Belongs: 1. To first marriage – if child was born before the LEGITIMATE, ILLEGITIMATE, LEGITIMATED CHILDREN NATURE Definition LEGITIMATED a. Conceived or born during a valid marriage of parents or lawful wedlock. ILLEGITIMATED Conceived and born outside a valid marriage or outside lawful wedlock. LEGITIMATED Originally illegitimated but later considered legitimate by legal fiction by subsequent marriage of parents who, at the time of conception, had no legal impediment to marry each other. 1. Use of surname of the mother. 1. Bear surname of father. 2. Support 2. Receive support from parents, ascendants, brothers and sisters. b. Children conceived as a result of artificial insemination on the wife. Rights c. Children born to marriages void under Arts. 36 and 53. 1. Bear surname of father. 2. Receive support from parents, ascendants, brothers and sisters. 3. Entitled to legitimes and other successional rights under the Civil Code 3. Legitimate (half of the legitimate of legitimate children) Bar Operations 2012: Ace the Bar, Race the Car! For Private and Personal Use Only 60 3. Entitled to legitimate and other successional rights under the Civil Code. Civil Law Bar Notes University of Cebu College of Law Proof of Filiation UCLASS Bar Operations: Civil Law Society *Primary 1. Record of birth appearing in the civil register or a final judgment. (Same as for legitimate children) 2. Admission of legitimate filiation in a public document or private handwritten instrument and signed by parent concerned. * Secondary 1. Open and continuous possession of the status of a legitimate child. 2. Any other means allowed by the Rules of Court and special laws. To establish status Ground Impugning for * May be brought by a child during his or her lifetime and should be transmitted to the heirs id the child dies during minority or in a state of insanity. * Heirs shall have 5 years within which to institute the action. 1. Physical impossibility of husband to have sexual intercourse with his wife within first 120 days of the 300 days immediately preceding birth. * In the same way and on the same evidence as a legitimate child. *Acknowledgment not needed: marriage of parents enough. * Same period, except if action is based on Art. 172, par. 2 it must be filed within the lifetime of the alleged parent. * If parents who contract marriage do not accept child as their child must prove filiation by the means provided in Arts. 172, 173, 175. 1. Subsequent marriage of parents void. 2. Biological and scientific reason. 3. For children conceived through artificial insemination, written authorization obtained thru fraud, mistake, violence, intimidation or undue influence. Bar Operations 2012: Ace the Bar, Race the Car! For Private and Personal Use Only 61 2. Child really not a child of the parents. 3. Child legitimated is not a natural child. Civil Law Bar Notes University of Cebu College of Law Who may impugn Periods of Filing UCLASS Bar Operations: Civil Law Society * Husband or heirs * Heirs may impugn only in the ff. cases: 1. Husband dies before expiration of the period for bringing action. 2. Husband dies after filing without desisting therefrom. 3. Child was born after death of husband. * 1 year if husband/heirs reside in the city or municipality where the child was born or birth was recorded. *2 years if husband/heirs do not reside in the same city or municipality. * 3 years if husband is abroad and birth is here or recorded here, or vice versa. Same as for legitimate children. Within 5 years from time their cause accrues. 3. With good moral character; 4. Has not been convicted of any crime involving moral turpitude; 5. Emotionally and psychologically capable of caring children; 6. In a position to support and care for his/her children in keeping with the means of the family; and 7. At least 16 years older than the adoptee. EXCLUDE: SC Rule on DNA Evidence VI. ADOPTION EXCLUDE: Family Code, Arts. 183-188, 191193 A. DOMESTIC ADOPTION ACT OF 1998 REPUBLIC ACT NO. 8552 Who May Adopt? A. Filipino Citizen 1. Of legal age; 2. With full civil capacity or legal rights; Bar Operations 2012: Ace the Bar, Race the Car! For Private and Personal Use Only 62 Those who are prejudiced in their rights. a. b. Except: Adopter is the biological parent of the adoptee; Adopter is the spouse of the adoptee’s parent. Cases: Tayag v. CA Facts : Petitioner argues that assuming arguendo that the action is one to compel recognition, private respondent's cause of action has prescribed for the reason that since filiation is sought to be proved by means of a private handwritten instrument signed by the parent concerned, then under paragraph 2, Article 175 of the Family Code, the action to establish filiation of the illegitimate minor child must be brought during the lifetime of the alleged putative father. In the case at bar, considering that the complaint was filed after the death of the alleged parent, the action has prescribed and this is another ground for the Civil Law Bar Notes University of Cebu College of Law UCLASS Bar Operations: Civil Law Society dismissal of the complaint. Petitioner theorizes that Article 285 of the Civil Code is not applicable to the case at bar and, instead, paragraph 2, Article 175 of the Family Code should be given retroactive effect. The theory is premised on the supposition that the latter provision of law being merely procedural in nature, no vested rights are created, hence it can be made to apply retroactively. Article 285 of the Civil Code provides: Art. 285. The action for the recognition of natural children may be brought only during the lifetime of the presumed parents, except in the following cases: (1) If the father or mother died during the minority of the child, in which case the latter may file the action before the expiration of four years from the attainment of his majority; xxx xxx xxx On the other hand, Article 175 of the Family Code reads: Art. 175. Illegitimate children may establish their illegitimate filiation in the same way and on the same evidence as legitimate children. The action must be brought within the same period specified in Article 173, except when the action is based on the second paragraph of Article 172, in which case the action may be brought during the lifetime of the alleged parent. \Under the circumstances obtaining in the case at bar, we hold that the right of action of the minor child bas been vested by the filing of the complaint in court under the regime of the Civil Code and prior to the effectivity of the Family Code. 14 We herein adopt our ruling in the recent case of Republic of the Philippines vs. Court of Appeals, et al. 15 where we held that the fact of filing of the petition already vested in the petitioner her right to file it and to have the same proceed to final adjudication in accordance with the law in force at the time, and such right can no longer be prejudiced or impaired by the enactment of a new law. Even assuming ex gratia argumenti that the provision of the Family Code in question is procedural in nature, the rule that a statutory Bar Operations 2012: Ace the Bar, Race the Car! For Private and Personal Use Only 63 change in matters of procedure may affect pending actions and proceedings, unless the language of the act excludes them from its operation, is not so pervasive that it may be used to validate or invalidate proceedings taken before it goes into effective, since procedure must be governed by the law regulating it at the time the question of procedure arises especially where vested rights may be prejudiced. Accordingly, Article 175 of the Family Code finds no proper application to the instant case since it will ineluctably affect adversely a right of private respondent and, consequentially, of the mind child she represents, both of which have been vested with the filing of the complaint in court. The trial court is therefore, correct in applying the provisions of Article 285 of the Civil Code and in holding that private respondent's cause of action has not yet prescribed. Benitez v. CA FACTS: Spouses Vicente Benitez and Isabel Chipongian were owners of various properties located in Laguna. Isabel died in 1982 while his husband died in 1989. Vicente’s sister and nephew filed a complaint for the issuance of letters of administration of Vicente’s estate in favor of the nephew, herein private respondent. The petitioner, Marissa Benitez-Badua, was raised and cared by the deceased spouses since childhood, though not related to them by blood, nor legally adopted. The latter to prove that she is the only legitimate child of the spouses submitted documents such as her certificate of live birth where the spouses name were reflected as her parents. She even testified that said spouses continuously treated her as their legitimate daughter. On the other hand, the relatives of Vicente declared that said spouses were unable to physically procreate hence the petitioner cannot be the biological child. Trial court decided in favor of the petitioner as the legitimate daughter and sole heir of the spouses. ISSUE: WON petitioner’s certificate of live birth will suffice to establish her legitimacy. HELD: The Court dismissed the case for lack of merit. The mere registration of a child in his or her birth certificate as the child of the supposed parents is not a valid adoption. It does not confer upon the child the status of an adopted child and her legal rights. Such act amounts to simulation of the Civil Law Bar Notes University of Cebu College of Law UCLASS Bar Operations: Civil Law Society child's birth or falsification of his or her birth certificate, which is a public document. It is worthy to note that Vicente and brother of the deceased wife executed a Deed of Extra-Judicial Settlement of the Estate of the latter. In the notarized document, they stated that they were the sole heirs of the deceased because “she died without descendants and ascendants”. In executing such deed, Vicente effectively repudiated the Certificate of Live Birth of the petitioner where it appeared that the was the petitioner’s father. Rodriguez v. CA A mother cannot impugn the legitimacy of the child. Can a mother testify as to the legitimacy of the child? That depends. Voluntarily, Generally, NO (Expn) Compulsory as to compel the father to recognize the child (Ex. Rape) We find that had the appellate court sanctioned the trial court's disallowance of the testimony of plaintiff's mother, private respondent would have been deprived of a speedy and adequate remedy considering the importance of said testimony and the erroneous resolution of the trial court. On the merits of his petition, petitioner contended that Felicitas Agbulos Haber should not be allowed to reveal the name of the father of private respondent because such revelation was prohibited by Article 280 of the Civil Code of the Philippines. Said Article provided: When the father or the mother makes the recognition separately, he or she shall not reveal he name of the person with whom he or she had the child; neither shall he or she state any circumstance whereby the other party may be identified. On the other hand, private respondent argued that his mother should be allowed to testify on the identity of his father, pursuant to paragraph 4, Article 283 of the Civil Code of the Philippines and Section 30, Rule 130 of the Revised Rules of Court. Article 283 of the Civil Code of the Philippines provided: In any of the following cases, the father is obliged to recognize the child as his natural child: Bar Operations 2012: Ace the Bar, Race the Car! For Private and Personal Use Only 64 (1) In cases of rape, abduction or seduction, when the period of the offense coincides more or less with that of the conception; (2) When the child is in continuous possession of status of a child of the alleged father by the direct acts of the latter or of his family; (3) When the child was conceived during the time when the mother cohabited with the supposed father; (4) When the child has in his favor any evidence or proof that the defendant is his father. Section 30, Rule 130 of the Revised Rules of Court provides: Testimony generally confined to personal knowledge; hearsay excluded. — A witness can testify only to those facts which he knows of his own knowledge, that is, which are derived from his own perception, except as otherwise provided in these rules. Private respondent cannot invoke our decision in Navarro v. Bacalla, 15 SCRA 114 (1965). While we ruled in Navarro that the testimony of the mother of the plaintiff in said case, could be used to establish his paternity, such testimony was admitted during the trial without objection and the defendant accepted the finding of the trial court that he was the father of the plaintiff. In the case at bench, petitioner timely objected to the calling of the mother of private respondent to the witness stand to name petitioner as the father of said respondent. Likewise, in Navarro we clearly stated: We are not ruling whether the mere testimony of the mother, without more, is sufficient to prove the paternity of the child. Neither are we ruling on the scope of Art. 280, New Civil Code which enjoins the mother in making a separate and voluntary recognition of a child from revealing the name of the father, specifically, as to whether the mother's testimony identifying the father is admissible in an action to compel recognition if and when a timely objection to such oral evidence is interposed (at p. 117). Navarro, therefore, is not the end but only the beginning of our quest, which felicitously was reached with our conclusion that the prohibition in Civil Law Bar Notes University of Cebu College of Law UCLASS Bar Operations: Civil Law Society Article 280 against the identification of the father or mother of a child applied only in voluntary and not in compulsory recognition. This conclusion becomes abundantly clear if we consider the relative position of the progenitor of Article 280, which was Article 132 of the Spanish Civil Code of 1889, with the other provisions on the acknowledgement of natural children of the same Code. Article 132 was found in Section I (Acknowledgment of Natural Children), Chapter IV (Illegitimate Children), Title V (Paternity and Filiation), Book First (Persons) of the Spanish Civil Code of 1889. The first article in said Section provided: Art. 129 — A natural child may be acknowledged by the father and mother jointly or by either of them alone. The next article provided: Art. 130 — In case the acknowledgment is made by only one of the parents, it shall be presumed that the child is a natural one if the parent acknowledging it was, at the time of the conception, legally competent to contract marriage. The article immediately preceding Article 132 provided: Art. 131 — The acknowledgment of a natural child must be made in the record of birth, in a will, or in some other public document. Article 132 of the Spanish Civil Code provided: When the acknowledgment is made separately by the father or the mother, the name of the child's other parent shall not be revealed by the parent acknowledging it, nor shall any circumstance be mentioned by which such person might be recognized. No public officer shall authenticate any document drawn in violation of this provision and should he do so notwithstanding this prohibition shall be liable to a fine of from 125 to 500 pesetas, and the words containing such revelation shall be striken out. Article 280 of the Civil Code of the Philippines was found in Section 1 (Recognition of Natural Children), Chapter 4 (Illegitimate Children), Title Bar Operations 2012: Ace the Bar, Race the Car! For Private and Personal Use Only 65 VIII (Paternity and Filiation) of said Code. The whole section was repealed by the Family Code. The first article of this section was Article 276 which was a reproduction of Article 129 of the Spanish Civil Code. The second article was Article 277 which was a reproduction of Article 130 of the Spanish Civil Code. The third article was Article 278 which was a reproduction of Article 131 of the Spanish Civil Code. However, unlike in the Spanish Civil Code, wherein the progenitor of Article 280 followed immediately the progenitor of Article 278, a new provision was inserted to separate Article 280 from Article 278. The new provision, Article 279, provided: A minor who may contract marriage without parental consent cannot acknowledge a natural child, unless the parent or guardian approves the acknowledgment, or unless the recognition is made in the will. If the sequencing of the provisions in the Spanish Civil Code were maintained in the Civil Code of the Philippines, and Article 280 was numbered Article 279, it becomes clear that the prohibition against the identification by the parent acknowledging a child of the latter's other parent refers to the voluntary recognition provided for in Article 278. Under Article 172 of the Family Code, filiation of legitimate children is by any of the following: The filiation of legitimate children established by any of the following: is (1) The record of birth appearing in the civil register or a final judgment; or (2) An admission of legitimate filiation in a public document or a private handwritten instrument and signed by the parent concerned. In the absence of the foregoing evidence, the legitimate filiation shall be proved by: (1) The open and continuous possession of the status of a legitimate child; or (2) Any other means allowed by the Rules of Court and special laws. (265a, 266a, 267a) Of interest is that Article 172 of the Family Code adopts the rule in Article 283 of the Civil Code of the Philippines, that filiation may be proven by "any evidence or proof that the defendant is his father." Civil Law Bar Notes University of Cebu College of Law UCLASS Bar Operations: Civil Law Society 2. Alien whose government the Philippines has no diplomatic relations; and WHEREFORE, the Decision of the Court of Appeals is AFFIRMED. The trial court is DIRECTED to PROCEED with dispatch in the disposition of the action for compulsory recognition. 3. Person who has been previously adopted, unless such adoption has been revoked or rescinded. RULE ON ADOPTION BY SPOUSES RULE ON ADOPTION BY SPOUSES General Rule: The husband and the wife shall jointly adopt. Exceptions: 1. One spouse seeks to adopt the legitimate son/daughter of the other; 2. One spouse seeks to adopt his/her own illegitimate son/daughter; 3. If the spouses are legally separated. 1. All legal ties between the biological parents and the adoptee shall be severed and the same shall be vested in the adopters. Except when biological parent is the spouse of the adopter. 2. Adoptee shall be considered a legitimate child of the adopter for all the intents and purposes; 3. In legal and intestate succession, the adoptee and adopters shall have reciprocal rights of succession without distinction from legal filiation. However, if a will was left, the rules on testamentary succession shall be followed. WHO MAY BE ADOPTED Grounds for Rescission of Adoption 1. Person below 18 years of age who has been administratively/judicially declared available for adoption; 1. Repeated physical/verbal maltreatment by the adopter(s); 2. Attempt on the life of the adoptee; 3. Sexual assault or violence; 4. Abandonment or failure to comply with the parental obligations. 2. Legitimate son/daughter of one of the spouse by other spouse; 3. Illegitimate son/daughter by a qualified adopter to improve his/her status to that of legitimacy; 4. Any person of legal age, if, prior, to the adoption said person has been consistently considered by the adopter(s) as his/her own child since minority; 1. 5. Child whose adoption has been previously rescinded; 2. 6. Child whose biological/adoptive parent(s) has died. Persons Who May Not Be Adopted 3. 1. Person o f legal age, except: a. If adopted is a child by nature of adopter or his spouse; or b.Adopted has been consistently considered and treated by adopter as his or her own child during minority; Bar Operations 2012: Ace the Bar, Race the Car! For Private and Personal Use Only 66 4. Rules for Legal or Intestate Succession to the Estate of the Adopted Legitimate and illegitimate children and descendants and the surviving spouse of the adopted, in accordance with the ordinary rules of legal or intestate succession. When the parents, legitimate or illegitimate, or the legitimate ascendants of the adopted concur with the adopter, they shall divide the entire estate, one-half to be inherited by the parents or ascendants and the other half, by the adopters. When the surviving spouse or the illegitimate children of the adopted concur with the adopters, they shall divide the entire estate equal shares, one-half to be inherited by the spouse or the illegitimate children of the adopted and the other half, by the adopters. When the adopters concur with the illegitimate children and the surviving spouse of the adopted, they shall divide the entire estate in equal shares, one-third to be inherited by the illegitimate children, one-third by the surviving spouse, and Civil Law Bar Notes University of Cebu College of Law 5. 6. UCLASS Bar Operations: Civil Law Society one-third by the surviving spouse and one-third by the adopters. When only the adopters survive, they shall inherit the entire estate. When only collateral blood relatives of the adopted survive, then the ordinary rules. Rights of an adopted child – include FC, Arts. 189 and 190 on successional rights Art. 189. Adoption shall have the following effects: (1) For civil purposes, the adopted shall be deemed to be a legitimate child of the adopters and both shall acquire the reciprocal rights and obligations arising from the relationship of parent and child, including the right of the adopted to use the surname of the adopters; (2) The parental authority of the parents by nature over the adopted shall terminate and be vested in the adopters, except that if the adopter is the spouse of the parent by nature of the adopted, parental authority over the adopted shall be exercised jointly by both spouses; and (3) The adopted shall remain an intestate heir of his parents and other blood relatives. Art. 190. Legal or intestate succession to the estate of the adopted shall be governed by the following rules: (1) Legitimate and illegitimate children and descendants and the surviving spouse of the adopted shall inherit from the adopted, in accordance with the ordinary rules of legal or intestate succession; (2) When the parents, legitimate or illegitimate, or the legitimate ascendants of the adopted concur with the adopter, they shall divide the entire estate, one-half to be inherited by the parents or ascendants and the other half, by the adopters; (3) When the surviving spouse or the illegitimate children of the adopted concur with the adopters, they shall divide the entire estate in equal shares, one-half to be inherited by the spouse or the illegitimate children of the adopted and the other half, by the adopters. (4) When the adopters concur with the illegitimate children and the surviving spouse of the adopted, they shall divide the entire estate in equal shares, one-third to be inherited by the illegitimate children, one-third by the surviving spouse, and one-third by the adopters; Bar Operations 2012: Ace the Bar, Race the Car! For Private and Personal Use Only 67 (5) When only the adopters survive, they shall inherit the entire estate; and (6) When only collateral blood relatives of the adopted survive, then the ordinary rules of legal or intestate succession shall apply. (39(4)a, PD 603) Sec. 18. Succession. — In legal and intestate succession, the adopter(s) and the adoptee shall have reciprocal rights of succession without distinction from legitimate filiation. However, if the adoptee and his/her biological parent(s) had left a will, the law on testamentary succession shall govern. EXCLUDE: AM No. 02-6-02-S.C. (Aug. 22, 2002), RA9523 – requiring certification of the department of DSWD to declare a “child legally available for adoption” B. INTER-COUNTRY ADOPTION (1995) REPUBLIC ACT NO. 8043 Inter-Country Adoption * The socio-legal process of adopting a Filipino child by a foreigner or a Filipino citizen permanently residing abroad where the petition is filed, the supervised trial custody is undertaken, and the decree of adoption is issued outside the Philippines. * The child must first be placed under adoption in the Philippines before he is placed for inter-country adoption. Who May Be Adopted: * Only a “legally-free child” (a child who has been voluntarily committed to the DSWD of the Philippines, in accordance with the Child Youth Welfare Code). An alien qualified to adopt under the Child Youth and Welfare Code, which was in force at the time of the filing of the petition, acquired a vested right, which could not be affected by the subsequent Civil Law Bar Notes University of Cebu College of Law UCLASS Bar Operations: Civil Law Society enactment of a new law disqualifying (Republic vs. Miller, 306 SCRA 183)  him. Spouses Clause cannot adopt under any exceptional cases in the provision because: 1. The adopter is not a Filipino citizen but a natural born citizen of USA; 2. The adopter is neither his relative by consanguinity not the legitimate child of the other spouse; 3. When the adopters jointly filed the petition to adopt, the other spouse is no longer a Filipino citizen. (Republic vs. Toledano, 233 SCRA 9) Who May Adopt: Any alien or Filipino citizen permanently residing abroad may file an application for inter-country adoption of a Filipino child if he/she: 1. Is at least 27 years of age and at least 16 years older than the child to be adopted, at the time of the application unless the adopter is the parent by nature of the child to be adopted or the spouse of such parent. 2. If married, his/her spouse must jointly file for the adoption. 3. Has the capacity to act and assume all rights and responsibilities of parental authority under his national laws, and has undergone the appropriate counseling in his/her country. 4. Has not been convicted of a crime involving moral turpitude. 5. Is eligible to adopt under his/her national law. 6. Is in a position to provide the proper care and support and to give the necessary moral values and example to all his children, including the child to be adopted. 7. Agrees to uphold the basic rights of the child as embodied under Philippine laws, the UN convention on the Rights of the Child, and to abide by the rules and regulations issued to implement the Inter-country Adoption Act 8. Comes from a country with whom the Philippines has diplomatic relations and whose government maintains a similarly authorized and credited agency and that adoption is allowed under his/her national laws. 9. Possesses all the qualifications and none of the disqualifications under the Inter-country adoption act and other applicable Philippine laws Inter-Country Adoption Board * Acts as the central authority in matters relating to inter-country adoption. * The Board shall ensure that all possibilities for the adoption of the child under the Family Code have been exhausted and that inter-country adoption is in the best interest of the child. Trial Custody: ◘ 6 months from the time of placement 1. Starts upon actual physical transfer of the child to the applicant who, as actual custodian, shall exercise substitute parental authority over the person of the child. 2. The adopting parent(s) shall submit to the governmental agency or authorized and accredited agency, which shall in turn transmit a copy of the Board, a progress report of the child’s adjustment. RA 8552 – Domestic Adoption Law July 28, 1998 Date of Effectivity Filipino Citizen a. b. c. d. e. WHO MAY ADOPT Any Filipino citizen with the ff. qualifications: Of legal age a. In possession of full civil capacity b. and legal rights In a position to support and care forc. children in keeping with the means of the family Good moral character Has not been convicted of any crime involving moral turpitude Psychologically and emotionally capable of caring for children Bar Operations 2012: Ace the Bar, Race the Car! For Private and Personal Use Only 68 FAMILY CODE August 3, 1998 Any Filipino citizen with the ff. qualifications: Of legal age In possession of civil capacity and legal rights In a position to support and care for children in keeping with the means of the family Civil Law Bar Notes University of Cebu College of Law Age Gap a. b. Aliens or Foreigners a. b. c. d. a. b. c. d. Husband and Adopting Jointly Wife a. b. c. UCLASS Bar Operations: Civil Law Society At least 16 years older than the adoptee Exceptions: When the adopter is the biological a. parent of the adopted When the adopter is the spouse of b. the biological parent Any Alien: Possessing the same qualifications as above stated for a Filipino His/her country has diplomatic a. relations with the Philippines Residency in the Phil. For at least 3 continuous years prior to the filing of b. the application and maintains such residence until adoption is decreed Certification of legal capacity to c. adopt in own country from diplomatic or consular office Exceptions to last two d. qualifications: Former Filipino citizen who seeks to adopt a relative within the 4th degree of affinity or consanguinity One who seeks to adopt the legitimate son or daughter of his/her Filipino spouse One who is married to a Filipino citizen and seeks to adopt jointly with his/her spouse a relative within the 4th degree of affinity or consanguinity Guardian with respect to the ward after termination of the guardianship Mandatory; shall adopt jointly and exercise parental authority jointly Exceptions: If one spouse seeks to adopt the legitimate son/daughter of the othera. If one spouse seeks to adopt his/her own illegitimate son or daughter, b. provided that the spouse has signified his or her consent Spouses are legally separated from each other WHO MAY NOT ADOPT -no specific provision Bar Operations 2012: Ace the Bar, Race the Car! For Private and Personal Use Only 69 At least 16 years older than the adopted Exceptions: When the adopter is the natural parent of the adopted When the adopter is the spouse of the legitimate parent of the child to be adopted. Generally, aliens may not adopt Exceptions: Former Filipino citizen who seeks to adopt a relative by consanguinity One who seeks to adopt the legitimate son or daughter of his/her Filipino spouse One who is married to a Filipino citizen and seeks to adopt jointly with his/her spouse a relative by consanguinity Adoption in accordance with the rule on inter-country adoption Mandatory; must jointly adopt and exercise joint parental authority Exceptions: When one spouse seeks to adopt the legitimate child of the other When spouse seeks to adopt his own illegitimate child a. The guardian with respect to the ward prior to the approval of the final accounts rendered upon the termination of their guardianship relationship b. Any person who has been convicted of a crime of moral turpitude Civil Law Bar Notes University of Cebu College of Law UCLASS Bar Operations: Civil Law Society a. An alien (subject to exceptions) WHO MAY BE ADOPTED Any person below 18 years of age who has been administratively or judicially declared available for adoption Minor VII. them was an alien. The law was silent when both spouses were of the same nationality. The Family Code has resolved any possible uncertainty. Article 185 thereof now expresses the necessity for joint adoption by the spouses except in only two instances: (1) When one spouse seeks to adopt his own legitimate child; or (2) When one spouse seeks to adopt the legitimate child of the other. It is in the foregoing cases when Article 186 of the Code, on the subject of parental authority, can aptly find governance. Article 186. In case husband and wife jointly adopt or one spouse adopts the legitimate child of the other, joint parental authority shall be exercised by the spouses in accordance with this Code. SUPPORT It comprises everything indispensable in keeping with the financial capacity of the family: Food or Sustenance; Dwelling or Shelter; Clothing; Medical attendance; Education; Transportation. Case on adoption: Republic v. CA and the spouses James and Lenita Hughes Facts: James Hughes, a natural born citizen of the United States of America, married Lenita Mabunay, a Filipino Citizen, who herself was later naturalized as a citizen of that country. The spouses jointly filed a petition with the RTC to adopt the minor niece and nephews of Lenita, who had been living with the couple even prior to the filing of the petition. The minors, as well as their parents, gave consent to the adoption. The RTC rendered a decision granting the petition. Issue: Can the spouses adopt the minors? Held: While James Anthony unquestionably is not permitted to adopt under any of the exceptional cases enumerated in paragraph (3) of the aforequoted article, Lenita, however, can qualify pursuant to paragraph (3)(a). Lenita may not thus adopt alone since Article 185 requires a joint adoption by the husband and the wife, a condition that must be read along together with Article 184.Art 185 provides: Art. 185. Husband and wife must jointly adopt, except in the following cases: (1) When one spouse seeks to adopt his own illegitimate child; or (2) When one spouse seeks to adopt the legitimate child of the other. As amended by Executive Order 91, Presidential Decree No. 603, had thus made it mandatory for both the spouses to jointly adopt when one of Bar Operations 2012: Ace the Bar, Race the Car! For Private and Personal Use Only 70 Only minors may be adopted except in cases when the adoption of a person of majority age is allowed in the Family Code Cases: Luna v. IAC The SC rules that in all questions relating to the care, custody and education and property of the children, the latter’s welfare is paramount. This means that the best interest of the minor can override procedural rules and even the rights of the parents to the custody of their children. The desire and preference of the child to stay with her grandparents instead of her biological parents and who had signified her intention to kill herself and run away from home if she should be separated from her grandparents and forced to live with her biological parents should prevail over procedural rules.  Persons Obliged to Support Each Other: 1. Spouses; The adultery of the wife is a valid defense against an action for support (Quintana vs. Lerma, 24 Phil 285). Civil Law Bar Notes University of Cebu College of Law  UCLASS Bar Operations: Civil Law Society  Once a marriage is annulled, or declared void ab initio, the obligation to give support ceases (Mendoza vs. Parungao, 41 Phil 271).  In a case for support between husband and wife where the validity of the marriage is in issue, the aggrieved party cannot be given support pendente lite by the other spouse immediately without due hearing because prior to the rendition of a final judgment declaring the existence or non-existence of the marriage, nothing exist except the allegation of marriage and a denial thereof (Yangco vs. Rohde, 1 Phil 404). SPOUSES CHILDREN During the Marriage From the community From the property. community property. Pending Litigation From the community From the separate property assets except in property of the Art. 203 applies, that if spouse. the claimant spouse is the guilty spouse, he/she will not be entitled to support. If the spouses are under conjugal partnership of gains, support is considered an advance of such spouses’ share; the rule does not apply if the spouses are under absolute community of property, based on Art. 153. After Litigation No obligation to support except is there is legal separation, in which case the court may require the guilty spouse to give support. 2. Legitimate ascendants and descendants; A husband may validly refuse to support a child who is a fruit of an adulterous relationship (Sanchez vs. Zulueta, 68 Phil 11). 3. Parents and their legitimate children and the legitimate and illegitimate children of the latter; 4. Parents and their illegitimate children and the legitimate and illegitimate children of the latter; * The persons obliged to support each other are limited from the grandparents to the grandchildren only and vice versa.  If in a hearing for support pendente lite, the status of the child is at issue, the alleged child can get support in the meantime while the case is pending from the alleged parent is his status as such has been proven provisionally. (Mangulabnan vs. IAC, 185 SCRA 760) 5. Legitimate brothers and sisters whether of the full or half-blood. * The right to receive support under this Title as well as any money or property obtained as such support shall not be levied upon on attachment or execution. (Art. 205)  Order of Liability if Two or More Are Obliged to Support 1. Spouse 2. Descendants in nearest degree 3. Ascendants in nearest degree 4. Brothers and sisters SOURCES OF SUPPORT Bar Operations 2012: Ace the Bar, Race the Car! For Private and Personal Use Only 71 Where a spouse obtained a sum of money on different occasions from her sister, and where the sister and the husband sued the husband of the said spouse for reimbursement under Art. 206, for one to recover, it must be alleged and proved, first, that support has been furnished a dependent of one bound to give support but who fails to do so; second that the support was given without the knowledge of the person charged with the duty. The negative qualification is when the support is given without the expectation of recovering it. (De Marcaida vs. Redfern, 49 Phil 849) The right to receive support can neither be renounced nor transmitted to a third person. Neither can it be compensated with what the recipient owes the obligator. Further, future support cannot be the subject of compromise. (De Asis vs. CA, 303 SCRA 176) Case: Leouel Santos vs. Court of Appeals and Santos GR No. 112019 / 58 SCAD 17 Januray 4, 1995 Civil Law Bar Notes University of Cebu College of Law UCLASS Bar Operations: Civil Law Society FACTS: Lt. Leouel Santos married private respondent Julia Bedia on Sept. 20, 1986 in Illoilo MTC and later by church wedding. They lived with the latter’s parents and eventually gave birth to Leouel Santos, Jr. on July 18, 1987. The relationship turned sour when they began quarelling over frequent interferrence of Julia’s parents and the issue of liveing independently from the in-laws. On May 18, 1988, Julia left for the United States (US) to work as nurse despite Leouel’s protestations. Seven months thereafter or on January 1, 1989, she called up from the US with the promise of returning home soon, but she never did. Given the chance, Leouel went to the US for a training program sponsored by the Armed Forces of the Philippines (AFP) from April to August 1990. He desperately tried to locate her there but failed. He then filed with the Regional Trial Court (RTC) for the nullification of their marriage under Article 36 of the Family Code, on the ground of psychological incapacity. Summons was served by publication in a newspaper of general circulation in Negros Oriental. In her answer, Julia claimed that it was Leouel who was irresponsible and incompetent. The RTC in November 1991 dismissed the case for lack of merit. On appeal, the Court of Appeals (CA) affirmed the RTC decision. ISSUE: Whether or not the marriage may be declared a nullity prusuant to Artcile 36 of the Family Code. HELD: Article 36 cannot be taken and construed independently, but must stand in conjunction with existing precepts of laws on marriage. Thus correlated, “psychological incapacity” should refer no less than a mental (not physical) incapacity that causes a party to be truly incognitive of the basic marital covenants that concomitantly must be assumed and discharged by the parties to the marriage which, as so expressed by Article 68 of the Family Code, include their mutual obligations to live together, observe love, respect and fidelity and render help and support. There is hardly any doubt that the intendment of the law has been to confine the meaning of psychological incapacity to the most serious cases of personality disorders clearly demonstrative of an utter insensitivity or Bar Operations 2012: Ace the Bar, Race the Car! For Private and Personal Use Only 72 inability to give meaning and significance to the marriage. This psychological condition must exist at the time the marriage is celebrated. The law does not evidently envision an inability of the spouse to have sexual relations with the other. This conclusion is implicit under Article 54 of the Family Code which considers children conceived prior to the judicial declaration of nullity of the void marriage to be legitimate. The well-considered opinions of psychiatrists, psychologists and persons with expertise in psychological disciplines might be helpful or even desirable in establishing the parameters of psychological incapacity. Marriage is not just and adventure but a lifetime commitment. We should continue to be reminded that innate in our society, then enshrined in the Civil Code, and even now still indelible in Section 1 of the Family Code…the Constitution is no less emphatic. The latter’s wealth is not a deciding factor particularly that there is no proof that petitioner is in no position to support the boy. The fact that he was unable to provide financial support for his minor son from birth up to over 3 years when he took the boy fro his in-laws without permission, should not be sufficient reason to strip him of his permanent right to the child’s custody. Support during marriage litigation, Art. 198 Art. 198. During the proceedings for legal separation or for annulment of marriage, and for declaration of nullity of marriage, the spouses and their children shall be supported from the properties of the absolute community or the conjugal partnership. After the final judgment granting the petition, the obligation of mutual support between the spouses ceases. However, in case of legal separation, the court may order that the guilty spouse shall give support to the innocent one, specifying the terms of such order. Amount, Arts. 201-202 Art. 201. The amount of support, in the cases referred to in Articles 195 and 196, shall be in proportion to the resources or means of the giver and to the necessities of the recipient. (296a) Civil Law Bar Notes University of Cebu College of Law UCLASS Bar Operations: Civil Law Society Parental preference rule * The natural parent, who are of good character and who can reasonably provide for the child are ordinarily entitled to custody as against all persons Art. 202. Support in the cases referred to in the preceding article shall be reduced or increased proportionately, according to the reduction or increase of the necessities of the recipient and the resources or means of the person obliged to furnish the same. When Demandable, Art. 203 Art. 203. The obligation to give support shall be demandable from the time the person who has a right to receive the same needs it for maintenance, but it shall not be paid except from the date of judicial or extra-judicial demand. Support pendente lite may be accordance with the Rules of Court. claimed in General Rule: No child under 7 years of age shall be separated from the mother. (Espiritu vs. CA, 242 SCRA 362; Maternal Preference Rule) Exception: When the court finds compelling reason to order otherwise.  What constitutes compelling reason must be clearly shown by positive and clear evidence of the unfitness of the mother and its determination is left to the sound judgment of the courts (Medina vs. Makabali, 27 SCRA 502). Options, Art. 204  Whether the child is under or over 7 years of age, the paramount consideration must always be the child’s interests. The considerations involving the choice made by a child must be ascertained at the time that either parent is given custody over the child. The matter of custody is not permanent and unalterable (Espiritu vs. CA, 242 SCRA 362). Art. 204. The person obliged to give support shall have the option to fulfill the obligation either by paying the allowance fixed, or by receiving and maintaining in the family dwelling the person who has a right to receive support. The latter alternative cannot be availed of in case there is a moral or legal obstacle thereto.  When the welfare of a helpless child is at stake, it is the bounden duty of courts – which they cannot shirk – to respect, enforce, and give meaning and substance to a child’s natural and legal right to live and grow in the proper physical, moral and intellectual environment. (Chua vs. Cabangbang, 27 SCRA 791). Attachment, Art. 205 Art. 205. The right to receive support under this Title as well as any money or property obtained as such support shall not be levied upon on attachment or execution. * Parental authority and responsibility may not be renounced or transferred except in the cases authorized by law (Art. 210, FCP). Payment shall be made within the first five days of each corresponding month or when the recipient dies, his heirs shall not be obliged to return what he has received in advance. VI II. PARENTAL AUTHORITY Rules as to the exercise of PA: 1. The father and the mother shall JOINTLY exercise penalty authority over the persons of their common children. In case of disagreement, the father’s decision shall prevail unless there is a judicial order to the contrary/ 2. If the child is illegitimate, parental authority is with the mother. Bar Operations 2012: Ace the Bar, Race the Car! For Private and Personal Use Only 73  Parental authority, being purely personal, the law allows a waiver of parental authority only in cases of adoption, guardianship and surrender to children’s home or an orphan institution. When a parent entrusts, such as a friend or godfather, even in a private document, what is given is merely temporary custody and it does not constitute a renunciation of parental authority. Even if a definite renunciation is manifest, the law still disallows the same. Only in the case of the parent’s death, absence, or unsuitability may substitute parental authority be exercised by the surviving parents. In the case at bar, there is no proof that the father cannot support the child at the present time. The fact that he failed to financially support the child for three years is not sufficient reason to strip him from custody. His efforts to get the child and take care of him may Civil Law Bar Notes University of Cebu College of Law UCLASS Bar Operations: Civil Law Society be construed as an act to rectify his past misdeeds. The father’s employment of trickery in spiriting away his son from the maternal grandparents though unjustifiable, is not a ground to wrest custody from him. (Santos vs. CA, 242 SCRA 407) Art. 221. Parents and other persons exercising parental authority shall be civilly liable for the injuries and damages caused by the acts or omissions of their unemancipated children living in their company and under their parental authority subject to the appropriate defenses provided by law. (2180(2)a and (4)a ) Substitute Parental Authority * Exercised in case of death, absence or unsuitability of parents. * Exercised in the order indicated: a. Surviving grandparent; b. Oldest brother/sisters over 2 years of age unless unfit/disqualified; c. Child’s actual custodian who is over 21 years of age, unless unfit or disqualified. Effect of Parental Authority Persons of the Children, Arts. 220-224 upon the Art. 220. The parents and those exercising parental authority shall have with the respect to their unemancipated children on wards the following rights and duties: (1) To keep them in their company, to support, educate and instruct them by right precept and good example, and to provide for their upbringing in keeping with their means; (2) To give them love and affection, advice and counsel, companionship and understanding; (3) To provide them with moral and spiritual guidance, inculcate in them honesty, integrity, self-discipline, self-reliance, industry and thrift, stimulate their interest in civic affairs, and inspire in them compliance with the duties of citizenship; (4) To furnish them with good and wholesome educational materials, supervise their activities, recreation and association with others, protect them from bad company, and prevent them from acquiring habits detrimental to their health, studies and morals; (5) To represent them in all matters affecting their interests; (6) To demand from them respect and obedience; (7) To impose discipline on them as may be required under the circumstances; and (8) To perform such other duties as are imposed by law upon parents and guardians. (316a) Bar Operations 2012: Ace the Bar, Race the Car! For Private and Personal Use Only 74 Art. 222. The courts may appoint a guardian of the child's property or a guardian ad litem when the best interests of the child so requires. (317) Art. 223. The parents or, in their absence or incapacity, the individual, entity or institution exercising parental authority, may petition the proper court of the place where the child resides, for an order providing for disciplinary measures over the child. The child shall be entitled to the assistance of counsel, either of his choice or appointed by the court, and a summary hearing shall be conducted wherein the petitioner and the child shall be heard. However, if in the same proceeding the court finds the petitioner at fault, irrespective of the merits of the petition, or when the circumstances so warrant, the court may also order the deprivation or suspension of parental authority or adopt such other measures as it may deem just and proper. (318a) Art. 224. The measures referred to in the preceding article may include the commitment of the child for not more than thirty days in entities or institutions engaged in child care or in children's homes duly accredited by the proper government agency. The parent exercising parental authority shall not interfere with the care of the child whenever committed but shall provide for his support. Upon proper petition or at its own instance, the court may terminate the commitment of the child whenever just and proper. EXCLUDE: Rule on Guardianship of Minors, Rule on Custody of Minors, RA 8972 – Solo Parents Act, RA 8980 – Policy for Childhood Care Civil Law Bar Notes University of Cebu College of Law UCLASS Bar Operations: Civil Law Society Effects of Parental Authority upon Property of the Children, Arts. 225-227 the Art. 225. The father and the mother shall jointly exercise legal guardianship over the property of the unemancipated common child without the necessity of a court appointment. In case of disagreement, the father's decision shall prevail, unless there is a judicial order to the contrary. Where the market value of the property or the annual income of the child exceeds P50,000, the parent concerned shall be required to furnish a bond in such amount as the court may determine, but not less than ten per centum (10%) of the value of the property or annual income, to guarantee the performance of the obligations prescribed for general guardians. A verified petition for approval of the bond shall be filed in the proper court of the place where the child resides, or, if the child resides in a foreign country, in the proper court of the place where the property or any part thereof is situated. The petition shall be docketed as a summary special proceeding in which all incidents and issues regarding the performance of the obligations referred to in the second paragraph of this Article shall be heard and resolved. The ordinary rules on guardianship shall be merely suppletory except when the child is under substitute parental authority, or the guardian is a stranger, or a parent has remarried, in which case the ordinary rules on guardianship shall apply. Art. 226. The property of the unemancipated child earned or acquired with his work or industry or by onerous or gratuitous title shall belong to the child in ownership and shall be devoted exclusively to the latter's support and education, unless the title or transfer provides otherwise. The right of the parents over the fruits and income of the child's property shall be limited primarily to the child's support and secondarily to the collective daily needs of the family. Art. 227. If the parents entrust the management or administration of any of their properties to an unemancipated child, the net proceeds of such property shall belong to the owner. The child shall be given a reasonable monthly allowance in an amount not less than that which the owner would have paid if the administrator were a stranger, Bar Operations 2012: Ace the Bar, Race the Car! For Private and Personal Use Only 75 unless the owner, grants the entire proceeds to the child. In any case, the proceeds thus give in whole or in part shall not be charged to the child's legitime. EXCLUDE: RA 9231 – Child Labor Law (to be covered by Labor Law) Suspension or Termination Authority, Arts. 228-233 of Parental Art. 228. Parental authority terminates permanently: (1) Upon the death of the parents; (2) Upon the death of the child; or (3) Upon emancipation of the child. (327a) Art. 229. Unless subsequently revived by a final judgment, parental authority also terminates: (1) Upon adoption of the child; (2) Upon appointment of a general guardian; (3) Upon judicial declaration of abandonment of the child in a case filed for the purpose; (4) Upon final judgment of a competent court divesting the party concerned of parental authority; or (5) Upon judicial declaration of absence or incapacity of the person exercising parental authority. Grounds for Judicial Suspension of Parental Authority 1. Excessive harshness or cruelty on the child; 2. Gives the child corrupting orders, counsel for example; 3. Compels the child to beg; 4. Subjects the child or allows him/her to be subjected to acts of lasciviousness; 5. Conviction of a crime with the penalty of civil interdiction.  Custody may even be granted to persons who are strangers to the family if such award would best serve the paramount interest of the child. (Balatbat vs. Balatbat, 98 Phil 998)  Where the custody of the child was awarded to the grandparents by the lower court, but was Civil Law Bar Notes University of Cebu College of Law UCLASS Bar Operations: Civil Law Society reversed by the Court of Appeals and was affirmed by the Supreme Court, such decision by the Supreme Court can be set aside when, after the decision the child manifested the she would kill herself if she were delivered to her natural parents instead of letting her stay with her grandparents. The decision of the lower court, as held by the Supreme Court, in a subsequent case, should be maintained. (Luna vs. IAC, 137 SCRA property of the child who shall then be qualified and responsible for all acts of civil life. Cases Where Parental Authority May Be revived 1. Adoption of Child 2. Appointment of general abandonment 3. Judicial declaration of abandonment 4. Final judgment divesting parental authority 5. Judicial declaration of absence or incapacity or person exercising parental authority. Art. 256. This Code shall have retroactive effect insofar as it does not prejudice or impair vested or acquired rights in accordance with the Civil Code or other laws. Summary Judicial Proceedings in the Family Law Final Provisions – Retroactive effect, Art. 256 EXCLUDE: Arts. 254-255, 257 Funeral, NCC Arts. 305-301 EXCLUDE: Care and Education of Children, Arts. 356-363 RA 7610 – Child Abuse Law Emancipation Arts. 234 and 236, as amended by RA 6809 Art. 234. Emancipation takes place by the attainment of majority. Unless otherwise provided, majority commences at the age of twenty-one years. Emancipation also takes place: (1) By the marriage of the minor; or USE OF SURNAME A Married Woman May Use: 1. Her maiden first name and surname and add her husband’s surname; or 2. Her maiden first name and her husband’s surname; or 3. Her husband’s full name, but prefixing a word indicating the she is his wife, such as “Mrs”.  In case of annulment of marriage, and the wife is the guilty party, she shall resume her maiden name and surname. If she is the innocent spouse, she may resume her maiden name and surname. However, she may choose to continue employing her former husband’s surname, unless: (1) The court decrees otherwise, or (2) She or the former husband is married again to another person.  When legal separation has been granted, the wife shall continue using her name and surname employed before the legal separation. (2) By the recording in the Civil Register of an agreement in a public instrument executed by the parent exercising parental authority and the minor at least eighteen years of age. Such emancipation shall be irrevocable. (397a, 398a, 400a, 401a) Art. 235. The provisions governing emancipation by recorded agreement shall also apply to an orphan minor and the person exercising parental authority but the agreement must be approved by the court before it is recorded. (n) Art. 236. Emancipation for any cause shall terminate parental authority over the person and Bar Operations 2012: Ace the Bar, Race the Car! For Private and Personal Use Only 76 Civil Law Bar Notes University of Cebu College of Law UCLASS Bar Operations: Civil Law Society Proper and Reasonable Causes That May Warrant the Grant of a Petition for Change of Name 1. The petitioner’s true and official name is ridiculous. 2. The petitioner’s true and official name is tainted with dishonor. 3. The petitioner’s true and official name is extremely difficult to write or pronounce. 4. When the request for the change is a consequence of a change of status, such as when a natural child is acknowledged or legitimated. 5. When the change is necessary to avoid confusion. consented to the change of name sought. This Court granted the petition and regarded the change of the surname as a mere incident in, rather than the object of, the adoption.  Llanet v. Agrava  Usurpation of a name and surname may be the subject of an action for damages and other relief. The use of pen names or stage names is permitted, provided it is done in good faith and there is no injury to third persons. Pen names and stage names cannot be usurped. Grounds for Change of First Name or Nickname 1. The petitioner finds the first name or nickname to be ridiculous, tainted with dishonor or extremely difficult to write or pronounce 2. The new first name or nickname has been habitually and continuously used by the petitioner and he has been publicly known by that first name or nickname in the community 3. The change will avoid confusion Cases: Republic v. CA and Maximo Wong In the Wong case, therein petitioner Maximo Wong sought the change of his surname which he acquired by virtue of the decree of adoption granted in favor of spouses Hoong Wong and Concepcion Ty Wong. Upon reaching the age of majority, he filed a petition in court to change his surname from Wong to Alcala, which was his surname prior to the adoption. He adduced proof that the use of the surname Wong caused him embarrassment and isolation from friends and relatives in view of a suggested Chinese ancestry when in reality he is a Muslim Filipino residing in a Muslim community, thereby hampering his business and social life, and that his surviving adoptive mother Bar Operations 2012: Ace the Bar, Race the Car! For Private and Personal Use Only 77 It should be noted that in said case the change of surname, not the given name, and the legal consequences thereof in view of the adoption were at issue. That it was sought in a petition duly and precisely filed for that purpose with ample proof of the lawful grounds therefor only serves to reinforce the imperative necessity of seeking relief under and through the legally prescribed procedures. Teresita's mother, one Atanacia Llaneta, was once married toSerafin Ferrer with whom she had but one child named Victoriano Ferrer. In1942 Serafin Ferrer died, and about four years later Atanacia had relationswith another man out of which Teresita was born. Shortly after Teresita'sbirth, Atanacia brought her and Victoriano to Manila where all of them livedwith Atanacia's mother-inlaw, Victoria vda. de Ferrer. Teresita was raisedin the household of the Ferrer's, using the surname of Ferrer in all herdealings and throughout her schooling. When she was about twenty yearsold, she applied for a copy of her birth certificate in Sorsogon, where shewas born, as she was required to present it in connection with ascholarship granted to her by the Catholic Charities. It was then that shediscovered that her registered surname is Llaneta not Ferrer and that sheis the illegitimate child of Atanacia and an unknown father.On the ground that her use thenceforth of the surname Llaneta,instead of Ferrer which she had been using since she acquired reason,would cause untold difficulties and confusion, Teresita petitioned the courtfor change of her name from Teresita Llaneta to Teresita Llaneta Ferrer.Issue:Whether or not petitioner be allowed to change her surname basedon her alleged facts.Ruling: The petition of Teresita Llaneta for change of her name to TeresitaLlaneta Ferrer is hereby granted. The petitioner has established that shehas been using the surname Ferrer for as long as she can remember. Asudden shift at this time by the petitioner to the name Teresita Llaneta inorder to conform to that appearing in her birth certificate would result inconfusion among the persons and entities she deals with and entailendless and Civil Law Bar Notes University of Cebu College of Law UCLASS Bar Operations: Civil Law Society vexatious explanations of the circumstances of her new surname. X. Silva v. Peralta In view of the non-existence of appellee’s marriage with Saturnino Silva, and the latter’s actual marriage to plaintiff Ledesma, it is not proper for Esther to continue representing herself as the wife of Saturnino. Art. 370 of the Civil Code of the Philippines authorizes a married woman to use the surname of her husband; impliedly excludes others from doing otherwise. Calderon v. Republic A petition to change the name of the infant to the surname of her stepfather, as in this case, should be granted where to do so is clearly for the best interest of the child it appearing that such change would promote the personality of the child and remove the stigma of illegitimacy as long as it does not cause prejudice or injury to the interest of the State or of other persons. The stepfather already agreed. Naldoza v. Republic We hold that the trial court did not err in denying the petition for change of name. The reasons adduced for eliminating the father's surname are not substantial enough to justify the petition. To allow the change of surname would cause confusion as to the minors' parentage and might create the impression that the minors are illegitimate since they would carry the maternal surname only. That would be inconsistent with their legitimate status as indicated in their birth records. (Desirous of obliterating any connection between her two minor children and the scrapegrace father is not a good reason. The crime of the father is not ground to change the surname.) ABSENCE Presumption of Death: A. Ordinary Absence 1. 7 years – it being unknown whether or not the absentee still lives, he is presumed dead for all purposes except for those of succession. 2. 10 years – for purposes of opening succession. 3. Disappearance after the age of 75 – an absence of 5 years is sufficient.  A judicial declaration of absence is necessary for interested persons to be able to protect their rights, interests and benefits in connection with the person who has disappeared. (Art. 386) Who May Ask for the Declaration of Absence 1. The spouse present; 2. The heirs instituted in a will, who may present an authentic copy of the same; 3. The relatives who may succeed by the law of intestacy; 4. Those who may have over the property of the absentee some right subordinated to the condition of his death. B. Qualified/Extra-Ordinary Absence: 1. On board vessel lost during a sea voyage or an airplane which is missing; period is counted from the loss of the vessel or airplane; 2. In the armed forces who has taken part in war; 3. In danger of death under other circumstances and his existence has not been known. NCC Art. 43. If there is a doubt, as between two or more persons who are called to succeed each other, as to which of them died first, whoever alleges the death of one prior to the other, shall prove the same; in the absence of proof, it is presumed that they died at the same time and there shall be no transmission of rights from one to the other. FC Art. 41. A marriage contracted by any person during subsistence of a previous Bar Operations 2012: Ace the Bar, Race the Car! For Private and Personal Use Only 78 Civil Law Bar Notes University of Cebu College of Law UCLASS Bar Operations: Civil Law Society marriage shall be null and void, unless before the celebration of the subsequent marriage, the prior spouse had been absent for four consecutive years and the spouse present has a well-founded belief that the absent spouse was already dead. In case of disappearance where there is danger of death under the circumstances set forth in the provisions of Article 391 of the Civil Code, an absence of only two years shall be sufficient. For the purpose of contracting the subsequent marriage under the preceding paragraph the spouse present must institute a summary proceeding as provided in this Code for the declaration of presumptive death of the absentee, without prejudice to the effect of reappearance of the absent spouse. Provisional measures in Case of Absence, Arts. 381-383 Art. 381. When a person disappears from his domicile, his whereabouts being unknown, and without leaving an agent to administer his property, the judge, at the instance of an interested party, a relative, or a friend, may appoint a person to represent him in all that may be necessary. This same rule shall be observed when under similar circumstances the power conferred by the absentee has expired. (181a) If the absentee left no spouse, or if the spouse present is a minor, any competent person may be appointed by the court. Declaration of Absence, Arts. 384-389 Art. 384. Two years having elapsed without any news about the absentee or since the receipt of the last news, and five years in case the absentee has left a person in charge of the administration of his property, his absence may be declared. (184) Art. 385. The following may ask for the declaration of absence: (1) The spouse present; (2) The heirs instituted in a will, who may present an authentic copy of the same; (3) The relatives who may succeed by the law of intestacy; (4) Those who may have over the property of the absentee some right subordinated to the condition of his death. (185) Art. 386. The judicial declaration of absence shall not take effect until six months after its publication in a newspaper of general circulation. Administration of the Absentee, arts. 387-389 Art. 382. The appointment referred to in the preceding article having been made, the judge shall take the necessary measures to safeguard the rights and interests of the absentee and shall specify the powers, obligations and remuneration of his representative, regulating them, according to the circumstances, by the rules concerning guardians. (182) Art. 383. In the appointment of a representative, the spouse present shall be preferred when there is no legal separation. Bar Operations 2012: Ace the Bar, Race the Car! For Private and Personal Use Only 79 Property of the Art. 387. An administrator of the absentee's property shall be appointed in accordance with Article 383. (187a) Art. 388. The wife who is appointed as an administratrix of the husband's property cannot alienate or encumber the husband's property, or that of the conjugal partnership, without judicial authority. (188a) Civil Law Bar Notes University of Cebu College of Law UCLASS Bar Operations: Civil Law Society Art. 389. The administration shall cease in any of the following cases: (1) When the absentee appears personally or by means of an agent; (2) When the death of the absentee is proved and his testate or intestate heirs appear; (3) When a third person appears, showing by a proper document that he has acquired the absentee's property by purchase or other title. In these cases the administrator shall cease in the performance of his office, and the property shall be at the disposal of those who may have a right thereto. EXCLUDE: Arts. 393-396, contingent assets ABSENCE AND ITS REMEDY STAGES OF ABSENCE Provisional Absence WHEN TO FILE WHO MAY FILE No statutory period. Spouse. Declaration of Absence * Without administrator – 2 years from time of disappearance * With administrator – 5 years from time of disappearance. a. The spouse; b. Voluntary heirs; c. Intestate heirs; and d. Those who may have over the property of the absentee some right subordinated to the condition of the absentee’s death. Presumption of Death * Ordinary absence – 7 years  4 years for purposes of remarriage Exception: Succession – 10 years 75 years of age – 5 Spouse a. b. Bar Operations 2012: Ace the Bar, Race the Car! For Private and Personal Use Only 80 REMEDY a. receivership; b. Judicial separation of property; or c. Authority to be sole administrator of the conjugal partnership. Declaration of Absence and Appointment of Administrator (Spouse shall be preferred) but only under the following cases: a. When the absentee has properties which have to be taken care of or administered by a representative appointed by the Court b. When the spouse of the absentee is asking for separation of property c. When the spouse of the absentee is asking the Court that the administration of all classes in the marriage be transferred to her * Action to declare a person presumptively dead is proper only when the spouse of the absentee wants to remarry. Civil Law Bar Notes University of Cebu College of Law UCLASS Bar Operations: Civil Law Society years *Extraordinary absence – 4 years (2 years for purposes of remarriage) Cases: Lukban v. Republic The wife intends to remarry and alleged a well founded belief that her husband is dead (husband left after huge quarrel and was gone for 20 years) The SC held that the petition to declare absence is denied. Back then, there was no law about absentism and so absentism must be based on well grounded belief which was not established in this case. Aboitiz v. Pepito We go deep into the recitals of the notice and claim for compensation. It simply says that while thevessel was navigating, "the herein deceased was lost or reported missing". This claim was filed onJanuary 12, 1962, or barely 42 days after the event took place. At that time, no presumption existed thatDemetrio Pepito was dead. The boat was not lost. This opens up a number of possibilities. Becausenothing is certain. Nobody knows what has happened to him. He could have transferred to another vessel or watercraft. He could even have swam to safety. Or he could have died. Or worse, he couldhave taken his own life. Legal implications such as right to compensation, succession, the legal statusof the wife are so important that courts should not so easily be carried to the conclusion that the man isdead. 2 The result is that death cannot be taken as a fact.Non-controversion in compensation cases, as in the case of pleadings in ordinary civil cases, 3 simplymeans admission of facts, not conclusions of law.As applied to the case before us, the mere failure to controvert the statement that Demetrio Bar Operations 2012: Ace the Bar, Race the Car! For Private and Personal Use Only 81 Pepito isbelieved to be "dead" or "deceased" because he "was lost" or was "reported missing", does not importan admission that the man is actually dead, but that he was just lost or missing. Eastern Shipping v. Lucero Wife claims she can still clain monthly allotments and allowances because 4 years have not yet lapsed to declare absence but there was evidence to show the ship had sunk and that persons aboard had perished with it. Held: Where the facts, known to be knowable, from which a rational conclusion can be made, the presumption of absence does not step in, and the rule of preponderance of evidence controls. Reyes v. Alejandro Considering that neither the petition alleges, nor the evidence shows, that Roberto L. Reyes has any rights, interest or property in the Philippines, there is no point in judicially declaring him an absentee. ... For the purposes of the civil marriage law, it is not necessary to have the former spouse judicially declared an absentee. The declaration of absence made in accordance with the provisions of the Civil Code has for its sole purpose to enable the taking of the necessary precautions for the administration of the estate of the absentee. For the celebration of civil marriage, however, the law only requires that the former spouse has been absent for seven consecutive years at the time of the second marriage, that the spouse present does not know his or her former spouse to he living, that such former spouse is generally reputed to be dead and the spouse present so believes at the time of the celebration of the marriage (section III, paragraph 2, General Orders, No. 68). (On page 183). The need to have a person judicially declared an absentee is when he has properties which have to be taken cared of or administered by a representative appointed by the Court (Article 384, Civil Code); the spouse of the absentee is asking Civil Law Bar Notes University of Cebu College of Law UCLASS Bar Operations: Civil Law Society for separation of property (Article 191, Civil Code) or his wife is asking the Court that the administration of an classes of property in the marriage be transferred to her (Article 196, Civil Code). The petition to declare the husband an Civil Registrar A. Arts. 407-413 Art. 407. Acts, events and judicial decrees concerning the civil status of persons shall be recorded in the civil register. (325a) Art. 408. The following shall be entered in the civil register: (1) Births; (2) marriages; (3) deaths; (4) legal separations; (5) annulments of marriage; (6) judgments declaring marriages void from the beginning; (7) legitimations; (8) adoptions; (9) acknowledgments of natural children; (10) naturalization; (11) loss, or (12) recovery of citizenship; (13) civil interdiction; (14) judicial determination of filiation; (15) voluntary emancipation of a minor; and (16) changes of name. Art. 409. In cases of legal separation, adoption, naturalization and other judicial orders mentioned in the preceding article, it shall be the duty of the clerk of the court which issued the decree to ascertain whether the same has been registered, and if this has not been done, to send a copy of said decree to the civil registry of the city or municipality where the court is functioning. (n) Art. 410. The books making up the civil register and all documents relating thereto shall be considered public documents and shall be prima facie evidence of the facts therein contained. (n) Bar Operations 2012: Ace the Bar, Race the Car! For Private and Personal Use Only 82 absentee and the petition to place management of the conjugal properties in hands of the wife may be combined adjudicated in the same proceedings, Peyer Martinez, 88 Phil. 72, 80). Art. 411. Every civil registrar shall be civilly responsible for any unauthorized alteration made in any civil register, to any person suffering damage thereby. However, the civil registrar may exempt himself from such liability if he proves that he has taken every reasonable precaution to prevent the unlawful alteration. (n) Art. 412. No entry in a civil register shall be changed or corrected, without a judicial order. (n) Art. 413. All other matters pertaining to the registration of civil status shall be governed by special laws. (n) B. RA 9048-clerical errors C. Rule 108, Rules of Court EXCLUDE: Act. No. 375, IRR of RA 9048 Cases: Republic v. Macliing The principal ground relied upon in this appeal is that Rule 108 of the Rules of Court upon whichprivate respondents anchor their Petition is applicable only to changes contemplated in Article 412of the Civil Code, which are clerical or innocuous errors, or to corrections that are notcontroversial and are supported by indubitable evidence. (Tiong v. Republic, 15 SCRA 262[1965]). It is true that the change from Esteban Sy to Sy Piao would necessarily affect the Identity of thefather. (Barillo v. Republic, 3 SCRA 725 [1961]) In that sense, it can be said to be substantial. However, we find indubitable evidence to support the correction prayed for. . . . xxx xxx xxxIn the case of Ty Kong Tin v. Republic, 94 Phil. 321 (1954), as well as subsequent casespredicated thereon, we forbade only the entering of material corrections in the record of birth by virtue of a judgment in a summary action. the the the and vs. Civil Law Bar Notes University of Cebu College of Law UCLASS Bar Operations: Civil Law Society proceedings below, although filed under Rule 108 of the Rules of Court, were not summary. The Petition was published by order of the lower Courtonce a week for three consecutive weeks in a newspaper of general circulation in accordance withlaw. The Solicitor General was served with copy of the Petition as well as with notices of hearings.He filed his Opposition to the Petition. The Local Civil Registrar of the City of Baguio was likewiseduly served with copy of the Petition. A Fiscal was always in attendance at the hearings inrepresentation of the Solicitor General. He participated actively in the proceedings, particularly, inthe crossexamination of witnesses. And, notwithstanding that all interested persons were cited toappear to show cause why the petition should not be granted, no one appeared to oppose exceptthe State through the Solicitor General. But neither did the State present evidence in support of its Opposition.To follow the petitioner's argument that Rule 108 is not an appropriate proceeding without in anyway intimating what is the correct proceeding or if such a proceeding exists at all, would result in manifest injustice. ted to appear to show cause why the petit ion should not be granted, no one appeared to oppose except the State through the Solicitor General But neither did the State present evidence in support of its opposition" FACTS: In this case, the father wanted to correct the birthcertificates of is sons In one bi r th certificate, the father's name is being corrected f rom 'Esteban Sy" to "Sy Piao" whi le in another bi r th certificate. the son's name is being cor rected from "Noe" to "Joe" Where SC held that even substantial errors in a civil registry may be corrected and the true facts established under Rule 108 provided the parties aggrieved by the error avail themselves of the appropriate adversary proceeding. An appropriate adversary suit or proceeding is one where the trial court has conducted proceedings where all relevant facts have been fully and properly developed, where opposing counsel have been given opportunity to demolish the opposite party’s case, and where the evidence has been thoroughly weighed and considered. RULING: ' In the case of Ty Kong Tin vs• Republic, 94 Phil 321 (7954), as well as subsequent cases predicated thereon, we forbade only the entering of material corrections in the record of birth by virtue of a judgment in a summary action The proceedings below, although filed under Rule 108 of the Rules of Court, were not summary The Petition was published by order of the lower court once a week for three consecutive weeks in a newspaper of general circulation in accordance with law. The Solicitor General was served wi th the copy of the Petition as well as the notices of hearings He filed his opposition to the Petition. The Local Civil Registrar of the City of Baguio was likewise duly served a copy of the Petition. A Fiscal was always in at tendance at the hearings in representat ion of the Solicitor General. He part icipated actively in the proceedings, particularly. In the cross examination of witnesses And, not withstanding that all interested persons were ci Bar Operations 2012: Ace the Bar, Race the Car! For Private and Personal Use Only 83 Republic V. Valencia FACTS: In this case, the pet i t ioner wish to correct the following in her children's birth certificates: citizenship from Chinese to Filipino; status from legitimate to illegitimate; and mother's status f rom married to single. It is undoubtedly t rue that if the subject mat ter of a petition is not for correction of clerical error of a harmless and innocuous nature but one involving nationality or citizenship, which is indisputably substantial as well as controverted, affirmative relief cannot be granted in a proceedings summary in nature. However, it is also true that a f ight in law may be enforced and a wrong maybe remedied as long as the appropr iate remedy is used. Kumala v. Abubakar FACTS: The correction sought here was to change the ent ry of the sex f rom' M" to 'F" in the bi r th certificate of the minor female RULING: "'Nor would it be the first time that a procedure, of this character did suf f ice for the correction of an error in the records of Civil Registrar In Malicden vs. Republic [1964], this Court ruled that test imonial evidence may override an erroneous entry Thereafter, in Alioso vs. Lastimoso [1965), this court ruled that an unauthorized false entry may be Civil Law Bar Notes University of Cebu College of Law UCLASS Bar Operations: Civil Law Society cancelled by the Court through an act ion of this nature Matias vs. Republic [1969], the opinion being penned by then Acting Chief Justice JBL Reyes. is even more in point." Thus: "Granting that the supplying of a name that was left in blank in the original recording of the birth does not constitute, as contended by the Solicitor General a rectification of a mere clerical error. It is well to observe that the doct r ine of the case of Ty King Tin vs. Republic 94 Phil 321, and subsequent adjudications predicated thereon forbade only the entering of material corrections or amendments in the record of bi r th by virtue of a judgment in a summary action against the Civil Registrar In the case of the petitioner herein. However, the proceedings were not summary, considerIng the publication of the pet i t ion made by order of the court in order to give not ice to any person that might be interested, including direct service on the Solicitor General himself " Leonor v. CA Facts: Husband gave grounds for cancellation of the registration of the marriage because it was a nullity due to the non-observance of the legal requirements of a valid marriage. (Registration of the marriage license was not a formal nor essential requisite for marriage) Held: The only errors that can be cancelled or corrected under Rule 108 of the Rules of Court are typographical or clerical errors, not material or substantial ones like the validity or nullity of a marriage. “A clerical error is one which is visible to the eyes or obvious to the understanding; error made by a clerk or a transcriber; a mistake in copying or writing (Black vs. Republic, L-10869, Nov. 28, 1958); or some harmless and innocuous change such as a correction of name that is clearly misspelled or of a mis-statement of the occupation of the parent. Where the effect of a correction in a civil registry will change the civil status of petitioner and her children from legitimate to illegitimate, the same cannot be granted except only in an adversarial proceeding. The summary procedure under Rule 108, and for that matter under Art. 412 of the Civil Code, cannot be used by Mauricio to change his and Virginia’s civil status from married to Bar Operations 2012: Ace the Bar, Race the Car! For Private and Personal Use Only 84 single and of their three children from legitimate to illegitimate. Neither does the trial court, under said Rule, have any jurisdiction to declare their marriage null and void and as a result thereof, to order the local civil registrar to cancel the marriage entry in the civil registry. Further, the respondent trial judge gravely and seriously abused his discretion in unceremoniously expanding his very limited jurisdiction under such rule to hear evidence on such a controversial matter as nullity of a marriage under the Civil Code and/or Family Code, a process that is proper only in ordinary adversarial proceedings under the Rules. PROPERTY, OWNERSHIP, & ITS MODIFICATIONS PROPERTY is that branch of civil law which classifies and defines the different kinds appropriable objects, provides for their acquisition and loss, and in general, treats of the nature and consequences of real rights. I. CHARACTERISTICS OF PROPERTY a. utility for the satisfaction of moral or economic b. susceptibility of appropriation c. individuality or substantivity II. Classification (Arts. 415-418) A. Hidden treasure (Arts. 438-439) B. Right of accession (Art. 440) 1. Fruits (Arts. 441-444) 2. With respect to immovable property a) Builder, planter, sower on land of another in the concept of owner (i) Builder, planter, sower in good faith (Arts. 448-456) (ii) Builder, planter, sower in bad faith (Arts. 449-450) b) Usufructuary (Art. 579) 3. Lands adjoining river banks a) Alluvion (Art. 457) Civil Law Bar Notes University of Cebu College of Law UCLASS Bar Operations: Civil Law Society b) Change of course of river (Arts. 461462 and P.D. 1067 or the Water Code) c) Avulsion (Arts. 459-463) 4. Islands (Arts. 464-465) C. By object 1. Real or immovable 2. Personal or movable D. By owner 1. Of public dominion 2. Of private ownership a) Patrimonial property (i) Distinction between private property of individual persons and of state entities E. By nature 1. Consumable/non-consumable vs. Fungible/non-fungible CLASSIFICATIONS OF PROPERTY KINDS OF IMMOVABLES 1. Mobility or non-mobility: movable/personal or immovable/real 2. Ownership: public or private dominion 3. Alienability: within the commerce of man or outside the commerce of man 4. Materiality: tangible/corporeal or intangible /incorporeal 5. Capability of substitution: fungible or nonfungible A. IMMOVABLE PROPERTY (Art. 415) 1. Land, buildings, roads and constructions of all kinds adhered to the soil; 2. Trees, plants, and growing fruits, while attached to the land or form an integral part of an immovable; 3. Everything attached to an immovable in a fixed manner (it cannot be separated therefrom without breaking the material or deterioration of the object; 4. Statues, relief, paintings or other objects for use or ornamentation, places in buildings or on lands by the owner of the immovable (intent is to attach them permanently to the tenements); 5. Machinery, receptacles, instruments or implements intended by the owner of the tenement for an industry or works which Bar Operations 2012: Ace the Bar, Race the Car! For Private and Personal Use Only 85 may be carried on in a building or on a piece of land, and which tend directly to meet the needs of the industry or works; Requisites: 5.1. Placing must be made by the owner, his agent, or duly authorized legal representative; 5.2. Industry or work must be carried on in a building or on the land; 5.3. Machines must tend directly to meet the needs of said industry or works; 5.4. Machines must be essential and principal and not merely incidental.  A house built on a rental land can the object of real mortgage. It may even the subject of a chattel mortgage provided; consent of the parties are obtained; 2) innocent third person will be prejudiced. be be 1) no 6. Animal houses, pigeon-houses, beehives, fishponds or breeding places of similar nature, in case their owner has placed them or preserves them with the intention to have them permanently attached to the land, and forming a permanent part of it; the animals in these places are included; 7. Fertilizer actually used on a piece of land; 8. Mines, quarries, and slag dumps, while the matter thereof forms part of the bed, and waters either running or stagnant; 9. Docks and structures which, though floating, are intended by their nature and object to remain at a fixed place on a river, lake or coast; 10. Contracts for public works, and servitudes and other real rights over immovable property. ◘ The mere fact that the parties decided to deal with the building, as personal property not change its character as real property. Thus, neither the original registry in the chattel mortgage registry, nor the annotation in said registry of the sale of the mortgaged property had any effect on the building. However, since Civil Law Bar Notes University of Cebu College of Law UCLASS Bar Operations: Civil Law Society the land and the building had first been purchased by defendant ahead of petitioner, and this fact was known to the latter, it follows that he was not a purchasee in good faith and should not be entitled to the property. Defendant, thus, has a better right to the property. (Leung Yee vs. Strong Machinery Co., 37 Phil 644). ◘ As a rule, the machinery should be considered as personal, since it was not placed on the land by the owner of said land. Immobilization by destination or purpose can not generally be made by a person whose possession of the property is only temporary. Otherwise, we will be forces to presume that he intended to give the property permanently away in favor of the owner of the premises (Davao Sawmill Co. vs. Castillo, 61 Phil 709). ACADEMIC PROPERTY CLASSIFICATION OF REAL a. Real property by nature (trees and plants) b. Real property by incorporation (buildings) c. Real property by destination or purpose d. Real property by analogy Cases: NAVARRO V. PINEDA 9 SCRA 631 FACTS: Pineda and his mother executed real estate and chattel mortgages in favor of Navarro, to secure a loan they got from the latter. The REM covered a parcel of land owned by the mother while the chattel mortgage covered a residential house. Due to the failure to pay the loan, they asked for extensions to pay for the loan. On the second extension, Pineda executed a PROMISE wherein in case of default in payment, he wouldn’t ask for any additional extension and there would be no need for any formal demand. In spite of this, they still failed to pay. Navarro then filed for the foreclosure of the mortgages. The court decided in his favor. HELD: Where a house stands on a rented land belonging to another person, it may be the subject matter of a chattel mortgage as Bar Operations 2012: Ace the Bar, Race the Car! For Private and Personal Use Only 86 personal property if so stipulated in the document of mortgage, and in an action by the mortgagee for the foreclosure, the validity of the chattel mortgage cannot be assailed by one of the parties to the contract of mortgage. Furthermore, although in some instances, a house of mixed materials has been considered as a chattel between the parties and that the validity of the contract between them, has been recognized, it has been a constant criterion that with respect to third persons, who are not parties to the contract, and specially in execution proceedings, the house is considered as immovable property. BICERRA V. TENEZA FACTS: The Bicerras are supposedly the owners of the house (PhP 20,000) built on a lot owned by them in Lagangilang, Abra; which the Tenezas forcibly demolished in January 1957, claiming to be the owners thereof. The materials of the house were placed in the custody of the barrio lieutenant. The Bicerras filed a complaint claiming actual damages of P200, moral and consequential damages amounting to P600, and the costs. The CFI Abra dismissed the complaint claiming that the action was within the exclusive (original) jurisdiction of the Justice of the Peace Court of Lagangilang, Abra. The Supreme Court affirmed the order appealed. Having been admitted in forma pauperis, no costs were adjudged. ISSUE: Whether or not the house is immovable property even if it is on the land of another RULING: Yes. House is immovable property even if situated on land belonging to a different owner; Exception, when demolished. Civil Law Bar Notes University of Cebu College of Law UCLASS Bar Operations: Civil Law Society A house is classified as immovable property by reason of its adherence to the soil on which it is built (Article 415, paragraph 1, Civil Code). This classification holds true regardless of the fact that the house may be situated on land belonging to a different owner. But once the house is demolished, as in this case, it ceases to exist as such and hence its character as an immovable likewise ceases. FACTS: Petitioner is engaged in a public utility business, solely engaged in transporting passengers and cargoes by motor trucks, over its authorized lines in Mindanao. It owns a main office and branch offices. To be found in their offices are machineries and equipment, which were assessed by the City Assessor as real properties. DAVAO SAW MILL CO. VS. CASTILLO 61 SCRA 709 HELD: Movable equipments to be immobilized in contemplation of law must first be essential 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. We may here distinguish those movables, which are essential and principal elements of an industry, from those which may not be so considered immobilized by destination because they are merely incidental, not essential and principal. In the case at bar, the tools and equipments in question are by their nature not essential and principal elements of petitioner’s business of transporting passengers and cargoes by motor trucks. They are merely incidentals. FACTS: Petitioner is the holder of a lumber concession. It operated a sawmill on a land, which it doesn’t own. Part of the lease agreement was a stipulation in which after the lease agreement, all buildings and improvements would pass to the ownership of the lessor, which would not include machineries and accessories. In connection to this, petitioner had in its sawmill machineries and other equipment wherein some were bolted in foundations of cement. HELD: The machinery must be classified as personal property. The lessee placed the machinery in the building erected on land belonging to another, with the understanding that the machinery was not included in the improvements which would pass to the lessor on the expiration of the lease agreement. The lessee also treated the machinery as personal property in executing chattel mortgages in favor of third persons. The machinery was levied upon by the sheriff as personalty pursuant to a writ of execution obtained without any protest being registered. Furthermore, machinery only becomes immobilized when placed in a plant by the owner of the property or plant, but not when so placed by a tenant, usufructuary, or any person having temporary right, unless such person acted as the agent of the owner. MINDANAO BUS COMPANY ASSESSOR AND TREASURER 6 SCRA 197 V. B. MOVABLE PROPERTY (Art. 416 & 417) 1. Real property which by any provision of law is considered as personality; 2. Obligations and actions which have for their object movables or demandable sums; 3. In general, all things which can be transported from place to place without impairment of the real property to which they are fixed; 4. Those movables susceptible of appropriation which are not included in the enumeration of immovable; 5. Forces of nature, which is brought under control by science; 6. Shares of stock of agricultural, commercial and industrial entities, although they may have real estate.  CITY Bar Operations 2012: Ace the Bar, Race the Car! For Private and Personal Use Only 87 A share in the partnership is considered a personal property, as a matter of fact, all shares in all juridical persons should be considered personal property for there is no reason to discriminate between shares in a Civil Law Bar Notes University of Cebu College of Law corporation persons. and shares in other UCLASS Bar Operations: Civil Law Society juridical TESTS TO DETERMINE WHETHER PROPERTY IS MOVABLE a. By exclusion: movables are everything not included in Art. 415 b. By description: an object is movable if it possesses 1. capable of being carried from place to place 2. change in location can be made without injuring the real property to which it is attached Cases: RICARDO PRESBITERO vs, FERNANDEZ (Immovable – Calinisan) Facts: 1) ESPERIDION Presbitero failed to furnish Nava the value of the properties under litigation. 2) Presbitero was ordered by the lower court to pay Nava to settle his debts. 3) Nava's counsel still tried to settle this case with Presbitero, out of court. But to no avail. 4) Thereafter, the sheriff levied upon and garnished the sugar quotas allotted to the plantation and adhered to the Ma-ao Mill District and registered in the name of Presbitero as the original plantation owner. 5) The sheriff was not able to present for registration thererof to the Registry of Deeds. 6) The court then ordered Presbitero to segregate the portion of Lot 608 pertaining to Nava from the mass of properties belonging to the defendant within a period to expire on August 1960. 7) Bottomline, Presbitero did not meet his obligations, and the auction sale was scheduled. 8) Presbitero died after. 9) RICARDO Presbitero, the estate administrator, then petitioned that the sheriff desist in holding the auction sale on the ground that the levy on the sugar quotas was invalid because the notice thereof was not registered with the Registry of Deeds. Issue: W/N the sugar quotas (immovable) or personal properties. are real Held: 1) They are real properties. 2) Legal bases: a) The Sugar Limitation Law xxx attaching to the land xxx (p 631) b) RA 1825 xxx to be an improvement attaching to the land xxx (p 631) c) EO # 873 "plantation" xxx Bar Operations 2012: Ace the Bar, Race the Car! For Private and Personal Use Only 88 to which is attached an allotment of centrifugal sugar. 3) Under the express provisions of law, the sugar quota allocations are accessories to the land, and cannot have independent existence away from a plantation. 4) Since the levy is invalid for non-compliance with law, xxx the levy amount to no levy at all BOARD OF ASSESSMENT APPEALS MANILA ELECTRIC COMPANY 10 SCRA 68 V. FACTS: City Assessor of QC declared the steel towers for real property tax under Tax Declarations. After denying the respondent’s petition to cancel these declarations, an appeal was taken with the CTA which held that the steel towers come under the exception of “poles” under the franchise given to MERALCO; the steel towers are personal properties; and the City Treasurer is liable for the refund of the amount paid. HELD: The steel towers of an electric company don’t constitute real property for the purposes of real property tax. IMPORTANT DOCTRINES/PRINCIPLES ON IMMOVABLE AND MOVABLE PROPERTIES: a) A Building is an immovable even if not erected by the owner of the land. The only criterion is union or incorporation with the soil. (Ladera vs. Hodges, 48 O.G. 4374). b) Parties to a contract may by agreement treat as personal properties that which by nature would be real property; and it is a familiar phenomenon to see things classes as real property for purposes of taxation which on general principle might be considered personal property (Standard Oil Co. vs. Jaranillo, 44 Phil 631). c) For purposes of attachment and execution and for purposes of the Chattel Mortgage Law, ungathered products have the nature of personal property. (Sibal vs. Valdez, 50 Phil, 512). d) The human body, whether alive or dead, is neither real nor personal property, for it is not even property at all, in that it generally cannot be appropriated. Under certain Civil Law Bar Notes University of Cebu College of Law UCLASS Bar Operations: Civil Law Society conditions, the body of a person or parts thereof may be subject matter of a transaction. (See RA No. 349, RA No. 7170, RA No. 7719). e) What is the effect of temporary separation of movables from the immovables to which they have been attached? 2 Views: They continue to be regarded as immovables. 2) Fact of separation determines the condition of the objects thus recovering their condition as movables. * the latter view is supported by Paras and Tolentino who maintains that the failure of the codifiers to reproduce the provision of the partidas on the matter is an indication that they did not intend the rule to continue. 2. 3. 4. 1) f) A building that is to be sold or mortgaged and which would be immediately demolished may be considered personal property and the sale or mortgage thereof would be a sale of chattel, or a chattel mortgage respectively, for the true object of the contract would be the materials. PROPERTY OF PUBLIC DOMINION Definition: Properties owned by the State in the sense that the State has control and administration; in another sense, it is owned by the public in general. Kinds(3): 1. For Public Use 2. Not for public use, but intended for some Public Service 3. For the Development of the National Wealth Characteristics: 1. Outside the commerce of man Therefore cannot be leased, sold, donated, or be the object of any contract. (Mun. of Cavite vs Rojas, 30 Phil 602) Bar Operations 2012: Ace the Bar, Race the Car! For Private and Personal Use Only 89 Cannot be acquired by prescription (Art 1113) Even a city or municipality cannot acquire them by prescription as against the State. (City of Manila vs Insular Gov’t, 10 Phil 327) Not subject to attachment or execution Cannot be registered under the Land Registration Law & be the subject of a Torrens title (Palanca vs Commonwealth, 69 Phil 449) Public Lands: Those that have not yet been subjected to private right or devoted to public use. Public Lands can be classified as: Timber, Mineral and Public Agricultural Land. Patrimonial Property of the State: Property not devoted to public use, public service, or the development of the national wealth (Art 421), or no longer intended for public use or service (Art 422). It is owned by the State in its private capacity. Properties of LGU: (Art 424) 1. Property for Public Use – consists of roads, streets, squares, fountains, public waters, promenades and public works for public service paid for by the LGU. 2. Patrimonial Property – all other property of the LGU without prejudice to provisions of special laws. Cases: 1. Salas vs Jarencio, L-29788 Facts: The City of Manila had a Torrens Title over a parcel of land. The Municipal Board of Manila requested the President of the Phils to have the lot declared as patrimonial property of the City so that it could be sold by the City to the actual occupants of the lot. In 1964, Congress passed RA 4118 whereby the lot was made disposable & alienable land of the State (not of the City), and its disposal was given to a national gov’t entity, the Land Tenure Administration. Issue: Can this be lawfully done by the National Government? Civil Law Bar Notes University of Cebu College of Law UCLASS Bar Operations: Civil Law Society Held: Yes. There being no proof that the lot had been acquired by the City with its own funds, the presumption is that it was given to it by the State in trust for the benefit of the inhabitants. Residual control remained in the State and therefore the State can lawfully dispose of the lot. (Note: Thus, it can be said that properties of the LGU may also be classified into: 1. Those acquired with their own funds – here, the LGU has ownership & control. 2. Those which do not fall under (1) – these are subject to the control & supervision of the State. These are only held by the LGU in trust for the State for the benefit of the inhabitants.) Definition: Ownership is the independent and general right of a person to enjoy, dispose and recover a thing without limitations except those imposed by the State or private persons, without prejudice to the provisions of the law. It may be exercised over things or rights. (Art 427) 2. Mun. of Cavite vs Rojas, 30 Phil 602 Facts: The Municipal Council of Cavite in 1907 withdrew and excluded from public use a part of its plaza in order to lease to Rojas. Possessory Information: When duly recorded in the Registry of Property is prima facie evidence that the registered possessor is also the owner of the land involved. Issue: Was the lease valid? Case: 1. Phil Suburban Development Corp vs The Auditor-General, L-19545 Facts: Petitioner sold to the Government a parcel of land to be used by the latter in connection with the relocation of squatters. The Government occupied the land at once, although it had only paid the down payment, the balance to be paid after the seller have caused the registration of the property in its name. Issue: In the meantime, is the seller(who has not been completely paid, but already delivered the land) required to pay the real estate taxes? Held: No, the seller is not required to pay the real estate taxes on the land sold because it has already delivered the land to the Government. Ownership has therefore been transferred by virtue of the said delivery. Held: The lease is null & void, because streets & plazas are outside the commerce of man since they are properties for public use. PROPERTY OF PRIVATE OWNERSHIP Definition: Patrimonial property of the State and LGU, and those that belong to private persons either individually or collectively. Muebles/Furniture: When used alone, it shall not be deemed to include other things which do not have as their principal object the furnishing or ornamenting of a building, EXCEPT where from the context of the law, or the individual declaration, the contrary appears. (Art 426) OWNERSHIP Kinds of Ownership: 1. Full Ownership – includes all the rights of an owner. 2. Naked Ownership – where the right to the use and fruits has been denied. 3. Sole Ownership – vested in only one person. 4. Co-ownership – (or Tenancy in Common) vested in two or more persons. Article 428. The owner has the right to enjoy and dispose of a thing, without other limitations than those established by law. The owner has also a right of action against the holder and possessor of the thing in order to recover it. SEVEN RIGHTS OF OWNERSHIP: Bar Operations 2012: Ace the Bar, Race the Car! For Private and Personal Use Only 90 Civil Law Bar Notes University of Cebu College of Law 1. 2. 3. 4. 5. 6. 7. UCLASS Bar Operations: Civil Law Society Jus possidendi – the right to possess Jus utendi – the right to use Jus fruendi – the right to the fruits Jus abutendi – right to consume, transform or abuse Jus disponendi – the right to dispose Jus vindicandi – the right to recover and the right to exclude others from possession of the thing Jus accesiones – the right to the accessories ACTIONS TO RECOVER RECOVERY OF PERSONAL PROPERTY 1. Replevin Governed by Rule 60, Rule of Court (ROC) An action or provisional remedy where the complainant prays for the recovery of the possession of real property. MACHINERY AND ENGINEERING SUPPLIES, INC. V. CA, 96 PHIL 70 Machinery and equipment used for an industry and indispensable for the carrying on of such industry, cannot be the subject of replevin, because under the premises, they are real, and not personal property. CALUB V. CA, 331 SCRA 55 (2000) A property that is validly deposited in custodial legis cannot be the subject of a replevin suit. RECOVERY OF REAL PROPERTY 1. Accion interdictal a. Forcible Entry a summary action to recover material or physical possession of real property when a person originally in possession was Bar Operations 2012: Ace the Bar, Race the Car! For Private and Personal Use Only 91 - deprived thereof by force, intimidation, strategy, threat, or stealth (FISTS) The action must be brought within one (1) year from dispossession or unlawful deprivation, or from discovery, in case of stealth or stategy b. Unlawful Detainer An action brought when possession by a landlord, vendor or vendee or other person of any land or building is being unlawfully withheld after the termination or expiration of the right to hold possession, by virture of a contract, express or implied. The action must be brought within one (1) year from the time the possession became unlawful – receipt of last demand or letter of demand 2. Accion publiciana It is a plenary action in an ordinary civil proceeding before the RTC intended for the recovery of the better right to possess. The action must be brought within a period of ten (10) years The issue is possession de jure. There are two kinds of accion publiciana: a. That were the entry was not obtained thru FISTS (this can be brought as soon as the dispossession takes place, without waiting for the lapse of one year); and b. That were the one (1) – year period for bringing forcible entry or unlawful detainer has already expired 3. Accion reivindicatoria (reivindicatory action) An action to recover ownership over real property and must be brought in the RTC where the real estate is situated. It must be brought within 10 years or 30 years as the case may be Civil Law Bar Notes University of Cebu College of Law UCLASS Bar Operations: Civil Law Society (depending on whether the other party seeks to obtain ownership by ordinary or extraordinary prescription). SARMIENTO V. CA 250 SCRA 108 (1995) Where the facts averred in the complaint reveals that the action is neither one of forcible entry nor unlawful detainer but essentially involves a boundary dispute, the same must be resolved in an accion reivindicatoria. REPLEVIN Definition An action or provisional remedy where the complainant prays for the recovery of the possession of real property. FORCIBLE ENTRY A summary action to recover material or physical possession of real property when a person originally in possession was deprived thereof by force, intimidation, strategy, threat, or stealth (FISTS). UNLAWFUL DETAINER Action brought when possession by a landlord, vendor or vendee or other person of any land or building is being unlawfully withheld after the termination or expiration of the right to hold possession, by virture of a contract, express or implied.D5 ACCION PUB It is a plenary ordinary civil p before the RTC for the recove better right to There are two accion publicia a. That were t was not obtain E2FISTS (this brought as soo dispossession without waitin lapse of one y b. That were t year period fo forcible entry detainer has a expired. Issue involved Recovery of possession of personal property Where to file MTC or RTC depending on the amount of money involved Material or mere physical possession of real property (possession de facto) Material or mere physical possession of real property (possession de facto) MTC MTC Bar Operations 2012: Ace the Bar, Race the Car! For Private and Personal Use Only 92 Better right of of real propert (possession de RTC Civil Law Bar Notes University of Cebu College of Law UCLASS Bar Operations: Civil Law Society Prescription Type of Action Others one (1) year dispossession (FIT - from dispossession, SS - from discovery) one (1) year from the time the possession became unlawful - receipt of last demand or letter of demand in personam quasi in rem quasi in rem Steps: 1) complaint is filed at commencement or at any time before answer of other party 2) complaint should allege OWTA (owner, wrongfully taken, taken against the law) 3) pay bond double the amount of property 4) sheriff takes property 5) doors broken if necessary Defendant's remedy: a) File a bond double the amount; and b) Give copy to plaintiff Stranger's remedy - File a third party claim May be brought against the owner in some cases, such as lease. Complaint must state FISTS or else it would just be an accion publiciana which should be filed with the RTC If there's a fixed period of - one (1) year from the expiration of the lease. If the reason is nonpayment of rent or nonfulfillment of the conditions of the lease one (1) year from the receipt of last demand or letter of demand to vacate. Complaint filed 5 days after demand (buildings) or 15 days (land). Refers to any kind of land. It should be alleged that the right to possess had been terminated and that the continued possession was unlawful. Not the remedy if what is sought is specific performance. Necessity of demand necessary: if there is a breach not necessary - if the fixef period just expires Bar Operations 2012: Ace the Bar, Race the Car! For Private and Personal Use Only 93 10 ye quasi in ◘ HIDDEN TREASURE By treasure is understood, for legal purposes, any hidden and unknown deposit of money, jewelry, or other precious objects, the lawful ownership of which the doer not appear. (Art. 439, NCC) If the ownership of the treasure is known, but the owner is already dead, same will not be considered “hidden treasure” and must therefore go to the owner’s rightful heirs. interference is necessary to avert an imminent danger and the threatened damage, compared to the damage arising to the owner from the interference, is much greater. The owner may demand from the person benefited indemnity for the damage to him. (Art. 432) TWO (2) REQUIREMENT DISPUTABLE PRESUMPTION OF OWNERSHIP: 1. actual possession; and 2. claim of ownership. REQUISITES IN ACTION TO RECOVER 1. Identity of the property General Rule: Belongs to the owner of the land, buildings or other property on which it is found. Exceptions: Finder is entitled to ½ of the treasure if: 1. Made in the property of another or the state or any of its subdivision; 2. Made by chance; and 3. The finder is not a trespasser/agent of the landowner. REAL RIGHT – autonomous power to derive directly from an appropriate thing certain economic advantages, independently of whoever should be the possessor of the thing. PERSONAL RIGHT – power to demand of another as definite passive subject the fulfillment of a prestation to give, to do or not to do. DOCTRINE OF SELF-HELP The owner or lawful possessor of a thing has the right to exclude any person from the enjoyment and disposal thereof. For this purpose, he may use such force as may be reasonably necessary to repel or prevent an actual or threatened unlawful physical invasion or usurpation of his property. (Art. 429) Ex: I have a car; I see a thief about to get it. I can use force in driving the thief away, provided that the means I resort to are reasonable. As a matter of fact, I can even chase him immediately and recover the car from him by force. If, however, I lose sight of him, and I see him only tow or three days later, I will not be justified in taking the law into my own hands. I will have to resort to the courts of justice. STATE OF NECESSITY The owner of a thing has no right to prohibit the interference of another with the same, if the 2. Strength of plaintiff's title (e.g. Torrens certificate, Titles granted by the Spanish Government, long and actual possession, occupation of a building for a long time without rentals therefor, testimony of adverse and exclusive possession of ownership corroborated by tax declaration of properties) EMINENT DOMAIN The superior right of the State to own certain properties under certain conditions, is a limitation on the right of ownership, and may be exercised even over private properties of cities and municipalities, and even over lands registered with a Torrens title. EMINENT DOMAIN vs. EXPROPRIATION While eminent domain refers to the right, expropriation usually refers to the procedure, thru which the right is exercised. ESSENTIAL REQUISITES OF EMINENT DOMAIN 1. taking by competent authority 2. observance of due process of law 3. taking for public use 4. payment of just compensation. TWO (2) STAGES OF EXPROPRIATION 1. First step concerned with the determination of the authority of the plaintiff to exercise the power of eminent domain and the propriety of its existence in the context of the facts involved in the suit. It ends with an order, if not of dismissal of the action. Of condemnation declaring that the plaintiff has a lawful RIGHTS OF ACCESSION right to take the property sought to be condemned, for public use, or purpose described in the complaint. 2. Second step – concerned with the determination by the court of the just compensation by the property sought to be taken. JUST COMPENSATION FORMULA JC = Market Value + Consequential Damages – Consequential Benefits Note: Incidental or consequential benefits may be set off only against the consequential damages, and NOT against the basic value of the property taken. Ex: If the market value is P1,000,000, the consequential damages amount to P500,000 and the consequential benefits are valued at P1,500,000, how much should be the just compensation? Answer: JC = P1,000,000 + (P500,000 – P500,000) (MV) (CD) (CB) = P1,000,000 is the just compensation EXAMPLE OF INCIDENTAL OR CONSEQUENTIAL DAMAGES: 1. Injuries to adjoining portions of the land 2. Demolition or destruction of buildings or houses on the land 3. Depreciation property. caused to the remaining Arts. 440-475 ACCESSION  The right of a property owner to everything which is produced thereby or incorporated or attached thereto, either naturally or artificially. CLASSIFICATION OF ACCESSION: 1) Accession Discreta - It is the right pertaining to the owner of a thing over everything produced thereby a. Natural fruits * Spontaneous products of the soil, and the young and other product of animals. * Pratus sequitor ventrem (offspring follows the mother). b) Industrial fruits * Produced by lands of any kind through cultivation of labor c) Civil fruits * The rents of buildings, the price of leases of lands and other property and the amount of perpetual or life annuities or other similar income. 2. Accession Continua a) With reference to real property i. Artificial accession [B.P.S.] a. Building b. Planting c. Sowing ii. Natural accession [C.A.F.A.] a. Alluvium b.Avulsion (change of course of rivers) c. Formation of island b) With respect to personal property i. Adjunction or conjunction [WAPEW] a. Weaving b. Attachment c. Painting d. Engraftment e. Writing ii. Mixture a. Confusion b. Commixtion iii. Specification 3. Leased or pledged; 4. In possession of an antichretic creditor Reason behind Accession: 1. for accession discreta- justice, pure and simple, for one who owns a thing should also enjoy its fruits 2. For accession continuaeconomic convenience; it’s better to have one owner than RIGHTS OF ACCESSION WITH RESPECT TO WHAT IS PRODUCED BY PROPERTY ACCESSION DISCRETA RIGHT TO THE FRUITS Arts. 442-444 NATURAL FRUITS TWO KINDS OF NATURAL FRUITS 1. General Rule: To the owner belong to the natural, industrial and civil fruits. Exceptions: If the thing is: 1. In possession of a possessor in good faith; 2. The spontaneous products of the soil [no human intervention] the young and other products of animals INDUSTRIAL FRUITS - those produced by lands of any kind done thru cultivation or human labor 2. Subject to usufruct; CIVIL FRUITS Consists of: a. b. c. rent of buildings price of leases of lands and other property amount of perpetual or life annuities or other similar income RIGHTS OF ACCESSION WITH RESPECT TO IMMOVABLE PROPERTY ACCESSION CONTINUA NOTE: Bonus granted as a reward or as compensation to a person who mortgaged and thus risks his land to secure another’s indebtedness is not considered as Civil Fruits NOTE: A Mortgagee is not entitled to the fruits if the mortgaged land/ TO WHOM DO THE FRUITS BELONG? General Rule: To the owner belong to the natural, industrial and civil fruits. (Art. 441, NCC) Exceptions: If the thing is: 1. In possession of a possessor in good faith; 2. Subject to usufruct; 3. Leased or pledged; 4. In possession of an antichretic creditor (Accession Industrial) Arts. 445-465 Accession Continua - It is the right pertaining to the owner of a thing over everything incorporated or attached thereto either naturally or artificially; by external forces. a) With reference to real property i. Artificial accession [B.P.S.] a. Building b. Planting c. Sowing ii. Natural accession [C.A.F.A.] a. Alluvium b. Avulsion (change of course of rivers) c. Formation of island Note: In case of uprooted trees, the owner retains ownership if he makes a claim within 6 months. This does not include trees which remain planted on a known portion on land carried by the force of the waters . In the latter case , the trees are regarded as accessions of the land through gradual changes in the course of adjoining stream. (Payatas v. Tuazon, No. 30067, March 23,1929 b) With respect to personal property i. Adjunction or conjunction [WAPEW] a. Weaving b. Attachment c. Painting d. Engraftment e. Writing ii. Mixture a. Confusion b. Commixtion iii. Specification Basic Principles of Accession Continua: BADONG-E 1. He who is in Bad faith is liable for damages. 2. Accessory follows the principal 3. Union or incorporation must generally be effected in such a manner that to separate the principal from the accessory would result in substantial Damage to either or diminish its value. 4. To the Owner of the thing belongs the extension or increases to such thing. 5. Bad faith of one party Neutralizes the bad faith of the other so that they shall be considered in good faith. 6. He who is in Good faith may be held responsible but not penalized. 7. No one shall unjustly Enrich himself at the expense of another Reason behind Accession: 1. for accession discreta- justice, pure and simple, for one who owns a thing should also enjoy its fruits 2. For accession continue- economic convenience; it’s better to have one owner than two owners ◘ Good faith consists of the belief of the builder that the land he is building on is his and of his ignorance of any defect or flaw in his title. Kee believed that the said lot was what he bought from petitioner. He was not aware that it was not Lot 8, Kee is then is in good faith. The rest of the controversy can be traced directly to the errors committed by CTTEI, when it pointed to the wrong property CTTEI is liable for damages due to negligence. (Pleasantville Development Corp. vs. CA 253 SCRA 10). ◘ As landowner, defendant may either sell the lot or appropriate the improvements for himself with reimbursement to the builder, sower, planter who was in good faith. (Corporation vs. CA, 208 SCRA LAND OWNER AND BUILDER, PLANTER, SOWER Good Faith * Acquire the bldg., etc. after paying indemnity for the value of materials. Bad Faith * Acquire after paying the value and indemnity for damages but subject to the right of owner of materials to remove. Good Faith * Acquire w/o paying indemnity. Bad Faith 1. LANDOWNER IS THE IMPROVER OWNER OF MATERIALS Good Faith 1. Remove them w/o injury to work constructed or w/o plantings or constructions being destroyed. 2. Receive indemnity for value of materials. Good Faith 1. Remove the materials in any event; 2. Be indemnified for damages. Bad Faith * Lose materials w/o right to be indemnified. Bad Faith * Same as though both acted in good faith (in pari delicto). 2. LANDOWNER IS NOT THE IMPROVER LANDOWNER Good Faith Landowner has the option to: 1. Sell the land to builder/planter (BP) or collect rent from sower (S); unless the value of the land is considerably greater than the building, etc., in which case, BP may rent under the terms fixed by the parties. IMPROVER, BUILDER, PLANTER, SOWER, OWNER OF MATERIALS Bad Faith * In case landowner exercises (2), builder has the right to retain until indemnity is paid and cannot be required to pay rent. 2. Acquire improvement after paying indemnity w/c could either be: a. Original cost of improvements; or b. Increase in the value of the whole. Good Faith Bad Faith 1. Option to: 1. Lose them w/o right to be indemnified. a. Acquire improvements w/o paying indemnity and collect damages. 2. Recover necessary expenses for preservation of b. Sell the land to BP, rent land to S and collect land. damages in both cases. c. Order demolition of work or restoration to 3. Pay damages to landowner. former condition and collect damages in both cases. 2. Pay necessary expenses for preservation. Bad Faith Good Faith 1. Landowner must indemnify BPS for 1. Remove them in any event; and/or improvements and pay damages. 2. Be indemnified for damages. 2. Cannot compel BPS to buy land. Bad Faith Bad Faith * Same as though both acted in good faith (in pari delicto) PERSONS: 3. LANDOWNERS, IMPROVERS AND MATERIAL OWNERS ARE DIFFERENT LANDOWNER (LO) BUILDER, PLANTER, SOWER (BPS) Good Faith Good Faith 1. Acquire the improvements and 1. Right to relation for necessary pay indemnity to BPS and be and useful expenses. subsidiarily liable for materials to OM. 2. a. Sell the land to BP except if value of the land is 2. Pay value of materials to OM. considerably more; b. Rent to S. OWNER OF MATERIALS (OM) Good Faith 1. Collect value of materials primarily from BPS or subsidiarily from LO if BPS is insolvent. 2. Remove without perjury. Good Faith 1. Option to: a. Acquire improvements b. Sell to BP except: value of land is considerably more, then forced lease. c. Rent to S. 2. Without subsidiary liability for cost of materials. Good Faith 1. Option to: a. Acquire improvement w/o paying indemnity and collect damages; b. Demolition/restoration plus damages; c. Sell to BP or collect rent from s plus damages. Good Faith 1. Right of retention for necessary and useful expenses. Bad Faith 1. Lose materials w/o right to indemnity. 2. Keep building, etc., w/o indemnity to OM and collect damages from him. 2. Pay damages. Bad Faith 1. Recover necessary expenses for land preservation. 2. Loses improvement w/o right to indemnity from LO unless LO sells the land. Bad Faith 1. Recover value from BPS (in pari delicto). 2. If BPS, acquired improvement, remove materials if possible (w/o injury) 3. No action against LO and may be liable to LO for damages. 2. Pay necessary expenses to BPS. Bad Faith Bad Faith * Same as though all acted in good faith. ART 443 He who receives the fruits has the obligation to pay the expenses made by a third person in their production, gathering, and preservation. NOTE: This article applies only when the fruits are already gathered and only when the planter acted in bad faith Duties of the recipient of the fruits to pay the expenses: 1. necessary for the production of the fruits 2. necessary for the gathering of the fruits 3. necessary for the preservation of the land TWO KINDS OF CROPS: 1. Annual Crops - are deemed manifest the moment their seedlings appear from the ground 2. Perennial Crops - are deemed to exist only when they actually appear on the trees Art 446 raise two disputable presumptions: 1. The works, sowing and planting were made by the owner 2. They were made at the expense of the owner Bad Faith Cases: FILIPINAS COLLEGES , plaintiff-appellee, vs. TIMBANG, defendants. G.R. No. L-12812 TIMBANG, plaintiff-appellant vs. BLAS, defendant-appellee. September 29, 1959 This is an appeal taken from an order of the CFI of Manila (a) declaring the Sheriff's certificate of sale covering a school building sold at public auction null and void unless within 15 days from notice of said order the successful bidders, defendantsappellants spouses Maria Garcia Timbang and Marcelino Timbang, shall pay to, appellee Maria Gervacio Blas the sum of P5,750.00 that the spouses Timbang had bid for the building at the Sheriff's sale; (b) declaring the other appellee Filipinas Colleges, Inc. owner of 24,500/3,285,934 undivided interest in Lot No. 2-a covered by certificate of tile No 45970, on which the building sold in the auction sale is situated; and (c) ordering the sale in public auction of the said undivided interest of the Filipinas Colleges, Inc., in lot No. 2-a aforementioned to satisfy the unpaid portion of the judgment in favor of appellee Blas and against Filipinas Colleges, Inc. in the amount of P8,200.00 minus the sum of P5,750.00 mentioned in (a) above. In the judgment of the Court of Appeals, the respective rights of the litigants have been adjudicated as follows: (1) Filipinas Colleges, Inc. was declared to have acquired the rights of the spouses Timbang in and to lot No. 2-a mentioned above and in consideration thereof, Filipinas Colleges, Inc., was ordered to pay the spouses Timbang the amount of P15,807.90 plus such other amounts which said spouses might have paid or had to pay after February, 1953, to Hoskins and Co. Inc., agent of the Urban Estates, Inc., original vendor of the lot. Filipinas Colleges, Inc. original vendor of the total amount with the court within 90 days after the decision shall have become final. (2) Maria Gervacio Blas was declared to be a builder in good faith of the school building constructed on the lot in question and entitled to be paid the amount of P19,000.00 for the same. Filipinas Colleges, Inc., purchaser of the said building was ordered to deliver to Blas stock certificate (Exh. C) for 108 shares of Filipinas Colleges, Inc. with a par value of P10,800.00 and to pay Blas the sum of P8,200.00 of the house. (3) In case Filipinas Colleges, Inc. failed to deposit the value of the land, which after liquidation was fixed at P32,859.34, within the 90-day period set by the court, Filipinas Colleges would lose all its rights to the land and the spouses Timbang would then become the owners thereof. In that eventuality, the Timbangs would make known to the court their option under Art. 448 of the Civil Code whether they would appropriate the building in question, in which even they would have to pay Filipinas Colleges, Inc. the sum of P19,000.00, or would compel the latter to acquire the land and pay the price thereof. Appellant contended that because the builder in good faith has failed to pay the price of the land after the owners thereof exercised their option under Article 448 of the Civil Code, the builder lost his right of retention provided in Article 546 and by operation of Article 445, the appellants as owners of the land automatically became the owners ipso facto, the execution sale of the house in their favor was superfluous. Consequently, they are not bound to make good their bid of P5,750.00 as that would be to make goods to pay for their own property. By the same token, Blas claim for preference on account of the unpaid balance of the purchase price of the house does not apply because preference applies only with respect to the property of the debtor, and the Timbangs, owners of the house, are not the debtors of Blas. ISSUES/RULING: (1) Suppose that the owner of the land should avail himself of the 2nd remedy provided for in Art 448compelling the builder in good faith to pay the value of the land- but such builder fails to pay, does he become automatically the owner of the building? Under Arts 448 and 546, the owner of the land has the right to choose between appropriating the building by reimbursing the builder of the value thereof or compelling the builder in good faith to pay for his land. Even this second right cannot be exercised if the value of the land is considerably more than that of the building. In addition to the right of the builder to be paid the value of his improvement, Article 546 gives him the corollary right of retention of the property until he is indemnified by the owner of the land. There is nothing in the language of these two article, 448 and 546, which would justify the conclusion of appellants that, upon the failure of the builder zo pay the value of the land, when such is demanded by the land-owner, the latter becomes automatically the owner of the improvement under Article 445. (2) What then is the remedy left to the owner of the land if the builder fails to pay? Where the builder in good faith fails to pay the value of the land when such is demanded by the landowner, the parties may resort to: (a) Parties may decide to leave things as they are and assume the relation of lessor and lessee, and should they disagree as to the amount of rental then they can go to the court to fix that amount. (b) Should the parties not agree to leave things as they are and to assume the relation of lessor and lessee, the owner of the land in entitled to have the improvement removed when after having chosen to sell his land to the other party, i.e., the builder in good faith fails to pay for the same. (c) The land and the improvement may be sold at public auction applying the proceeds thereof first to the payment of the value of the land and the excess, if any, to be delivered to the owner of the house in payment thereof. (3) The appellants , owners o the land, instead of electing any of the alternative above indicated chose to seek recovery of the value of their land by asking for a writ of execution; levying on the house of the builder; and selling the same in public auction with the owner as highest bidder, what is the effect upon the rights of the parties? When there is a claim by a third-party, to the proceeds of the sale superior to his judgment credit, the execution creditor, as successful bidder, must pay in cash the amount of his bid as a condition precedent to the issuance to him of the certificate of sale. In the instant case, the Court of Appeals has already adjudged that appellee Blas is entitled to the payment of the unpaid balance of the purchase price of the school building. Blas is actually a lien on the school building are concerned. The order of the lower court directing the Timbang spouses, as successful bidders, to pay in cash the amount of their bid in the sum of P5,750.00 is therefore correct. With respect to the order of the court declaring appellee Filipinas Colleges, Inc. part owner of the land to the extent of the value of its personal properties sold at public auction in favor of the Timbang, this Court Likewise finds the same as justified, for such amount represents, in effect, a partial payment of the value of the land. If this resulted in the continuation of the so-called involuntary partnership questioned by the difference between P8,200.00 — the unpaid balance of the purchase price of the building and the sum of P5,750.00 — amount to be paid by the Timbangs, the order of the court directing the sale of such undivided interest of the Filipinas Colleges, Inc. is likewise justified to satisfy the claim of the appellee Blas. The first part of the dispositive portion of the order appealed from is modified in the sense that upon failure of the Timbang spouses to pay to the Sheriff or to Manila Gervacio Blas said sum of P5,750.00 within fifteen (15) days from notice of the final judgment, an order of execution shall issue in favor of Maria Gervasio Blas to be levied upon all properties of the Timbang spouses not exempt from execution for the satisfaction of the said amoun In all other respects, the appealed order of the court a quo is hereby affirmed, with costs against the appellants. 1. Sarmiento vs. Agana- “The landowner on which a building has been constructed in good faith by another has the option to buy the building or sell his land to the builder, he cannot refuse to exercise their option and compel the builder to remove or demolish the improvement. An order by a court compelling a builder in good faith to remove his building from a land belonging to another who chooses neither to pay for such building nor sell the land is null and void for being offensive to Art. 448” 2. Depra vs. Dumlao- “Owner of the land on which an improvement was built by another in good faith is entitled to removal of the improvement only after the landowner has opted to sell the land and the builder refused to pay for the same. Where the land’s value is considerably more than the improvement, the landowner cannot compel the builder to buy the land. In such event, a forced lease is created and the court shall fix the terms thereof in case the parties disagree thereon.” 3. Ballatan vs. CA- “The right to choose between appropriating the improvement or selling the land is given to the owner of the land and not the court.” 4. Pleasantville Development Corporation vs. CA- “A lot buyer who constructs improvements on the wrong property erroneously delivered by the owner’s agent, honestly believing that the said lot was what he brought from the seller, is NOT guilty of negligence and his violation of the contract of sale or instalment may not be the basis to negate the presumption of good faith as such violation has no bearing on his state of mid at the time he built the improvements.” 5. Pecson vs. CA- “Parties may agree that Art. 448 and 546 are applicable and indemnity for the improvements may be paid although they differ as to the basis of the indemnity.” 6. Manila Railroad Co. vs. Paredes“When Manila Railroad Co. built its track on a land without any opposition from the owner who merely stood by, the owner was deemed to have waived his right to recover possession of his property and the construction thereon. His only remedy would be to recover damages for the value of the property taken considering that the corporation merely exercised its power of eminent domain as authorized by law.” 7. Nuguid vs. CA- “Offsetting necessary and useful expenses with the fruits received by the builder-possessor in good faith is not allowed.” 8. Manotok Realty, Inc. vs. Tecson“Where the improvements have been destroyed by a fortuitous event without the fault of the landowner, the basis for the builder’s right to retain the premises is extinguished; hence there is no other recourse for him but to vacate the premises and deliver the same to the landowner.” 9. Calapan Lumber Co. vs. Community Sawmill Co.- “The right of retention of a builder in good faith until payment of the proper indemnity does not apply to property of public domain. The builder may however be entitled to the cost of construction with interest upon securing authorization of proper authorities or designate such road a toll road to raise the funds necessary to reimburse the company.” 10. Mendoza vs. Deguzman- “Once the owner elects to appropriate the improvements, the BPS cannot exactly be considered a possessor in good faith. Hence, whatever fruits he receives during the pendency of retention must be deducted from whatever indemnity is due to him; and in case it exceeds the value of the indemnity, the excess shall be returned to the owner of the land.” 11. Sps. Del Ocampo vs. Obesia- “A coowner is not a 3rd Person with respect to the land owned in common for it cannot be said that it exclusively belongs to another but of which he is a co-owner. However, if the co-ownership is terminated by partition and it appears that the house of the defendant (a former co-owner) overlaps or occupies a portion of the land pertaining to the plaintiff (another former coowner) which the defendant build in good faith, then Art. 448 should apply even when there was a co-ownership.” IGNAO V. IAC When co-ownership is terminated by division of land, Art 448 applies to parties in good faith. The party whose land is encroached upon has the sole right to choose whether to sell his land encroached or to appropriate that which encroaches his land. FACTS: The case involves Petitioner Florencio Ignao and his Uncles Juan and Isidro Ignao as Respondents. Both Petitioner and Respondents co-owned land with 534 sqm (about the size of an Olympic swimming pool.) in Cavite. The parties had a falling out (maybe the uncles had bad breath) and so attempted to partition the land, with 133 going to the uncles and 266 going to Petitioner. The attempt failed. Later, Petitioner discovered that the two houses of Respondent uncles encroached his land. Juan ate 42 sqm and Isidro ate 59 sqm… for the grand total of 101 sqm. He complained. The RTC said that uncles built in good faith therefore that exempts them from damages. Art 448 therefore applies But things didn’t go to well for the Petitioner. The RTC said that if Petitioner opted to appropriate the sections of the encroaching houses, the Uncles will be left with worthless hovels. Hence, RTC ordered Petitioner to just sell his land which was encroached. “No Good!” cried Petitioner and he appealed to the IAC. He lost again. Petitioner trooped to the SC for vindication ISSUE: 1. Whether or not Petitioner has the right to choose whether to appropriate the house encroaching his land or to sell his land. 2. Whether or not the courts and respondents can rob Petitioner of the options provided for under Art 448. HELD: Petitioner has the right whether to appropriate the houses or to sell his land! The ruling of the RTC and IAC contravened the explicit provisions of Art 448 which granted him the explicit right to choose. The law is clear when it bestows choice upon the aggrieved land owner and not upon the builders or the courts. PECSON V. CA 244 SCRA 407 FACTS: Petitioner was the owner of a parcel of land wherein he built an apartment complex. Due to his failure to pay for realty taxes, his land was sold in a public auction and was sold to spouses Nuguid. He moved for the setting aside of the auction but was denied. HELD: ◘ Article 448 doesn't apply to a case where the owner of the land is the builder who then later loses ownership of the land by sale or auction. ◘ Nevertheless, the provision therein on indemnity may be applied by analogy considering that the primary intent of this provision is to avoid a state of forced ownership. ◘ The current market value of the improvements which should be made the basis of reimbursement to the builder in good faith ◘ The right to retain the improvements while the corresponding indemnity is not paid implies the tenancy or possession in fact of the land on which it is built, planted or sown and retention of ownership of the improvements, and necessarily, the income therefrom. Reasons Why Alluvium is Granted the Riparian Owner 1. To compensate him for the loss he may suffer due to erosion or the destructive force of the water and danger from floods. 2. To compensate him because the property is subject to encumbrances and legal easements. 3. The interests of agriculture require that the soil be given to the person who is in the best position to cultivate the same. 4. Since after all, it cannot be said with certainty from whom the soil came, it may just as well be logically given to him can best utilize the property. Requisites of Alluvium: 1. Deposit of soil or sediment be gradual and imperceptible. 2. It be the result of the action of the waters of the river; and 3. The land where the accretion takes place is adjacent to the banks of rivers. REASONS WHY ALLUVIUM IS GRANTED THE RIPARIAN OWNER a. to compensate him for the loss he may suffer due to ersion or the destructive force of the water and danger from floods b. to compensate him because the property is subject to encumbrances and legal easements c. the interest of agriculture require that the soil be given to the person who is in the best position to cultivate the same since after all, it cannot be said with certainty from whom the soil came Vda. De Nazareno vs. CA 257 SCRA 589 Facts: The subject land is located in Cagayan de Oro. Said land was formed as a result of sawdust dumped into the dried up Balancanas Creek and along the banks of Cagatan River. In 1979, private respondent Salasalan and Rabaya leased the said lots on which their houses stood from Antonio, petitioner’s predecessor in interest. In 1982, private respondent stopped paying rentals. Antonio and petitioner filed an ejectment suit and they were ejected. Before Antonio died, he caused the approval by the Bureau of Lands the survey plan to perfect his title over the accretion area claimed by him. Private respondent however protested. The District Land officer ordered the cancellation of the survey plan form Antonio and directed private respondent to file public land applications. Issue: Whether the subject land is public land or private land being an accretion to petitioner’s titled property applying Article 457 of the New Civil Code. Ruling: Since the accretion was for med by the dumping of boulders, soil, sawdust and other filing materials, it cannot be claimed that the accumulation of such was gradual and imperceptible. The deposit was not also due to the effect of current water. The article excludes all deposits caused by human intervention. Alluvium must be the exclusive work of nature. The accretion in this case is man-made hence part of the public domain. REPUBLIC V. CA 131 SCRA 532 FACTS: Subject land was 20 meters away from the shores of Laguna de Bay. It was owned by Benedicto del Rio. After his death, it was acquired by Santos del Rio. Private oppositors sought permission and obtained the same to construct duck houses. They violated agreement by consructing residential houses. Santos then sought to register the land which was opposed. The oppositors was able to obtain sales application on the land. The director of Lands alleged that since a portion of the land is submerged in water 4 to 5 months, then it forms part of the public domain. HELD: According to the Law of Waters, the natural bed or basin of lakes, ponds, or pools is the covered by their waters when at their highest ordinary depth—regular, common, natural, which occurs almost or most of the time during the year. Laguna de Bay is a lake and that part around it which becomes covered with water 4 to 5 months a year, not due to tidal action, but due to rains cannot be considered as part of the bed or basin of Laguna de Bay nor as a foreshore land. Property not being so, the land is registrable. IGNACIO V. VALERIANO 108 SCRA 335 DIRECTOR OF LANDS AND FACTS Faustino Ignacio filed an application to register a parcel of land (mangrove) which he alleged he acquired by right of accretion since it adjoins a parcel of land owned by the Ignacio. His application is opposed by the Director of Lands, Laureano Valeriano, contending that said land forms part of the public domain. The Trial Court dismissed the application holding that said land formed part of the public domain. Thus the case at bar. ISSUE: Whether or not the land forms part of the public domain HELD: YES 1. The law on accretion cited by Ignacio in inapplicable in the present case because it refers to accretion or deposits on the banks of rivers while this refers to action in the Manila Bay, which is held to be part of the sea 2. Although it is provided for by the Law of Waters that lands added to shores by accretions caused by actions of the sea form part of the pubic domain when they are no longer necessary for purposes of public utility, only the executive and the legislative departments have the authority and the power to make the declaration that any said land is no longer necessary for public use. Until such declaration is made by said departments, the lot in question forms part of the public domain, not available for private appropriation or ownership. 4. Increase must be comparatively little. B. Avulsion – process whereby the current of a river, creek, and torrent segregates from an estate on its bank a known portion of land and transfer it to another state. ALLUVIUM The deposit of the soil here is gradual. Soil cannot be identified. Belongs to the owner of the property to which it is attached. AVULSION Deposit is sudden or abrupt; may be seen. Soil is identifiable or verifiable. Belongs to the owner from whose property it was detached. River- a natural stream of water, of greater volume than a creek or rivulet flowing, in a more or less permanent bed or channel, between defined banks or walls, with a current which may either be continuous in one direction or affected by the ebb and flow of the tide. Creek- a small stream less than a river Torrent- a violent, rushing, or turbulent stream RULE ON UPROOTED TREES ◘ ARTIFICIAL ACCESSION A. Alluvium – soil deposited to the lands adjoining the banks of rivers and gradually received as an effect of the current of waters. It is owned by the riparian owners. Requisites: 1. Deposit should be gradual. 2. It is caused by the current of the river. 3. River must continue to exist -Trees uprooted and carried away by the current of the waters belong to the owner of the land upon which they may be cast, if the owners do not claim them within six (6) months. -If owners claim them, they shall pay the expenses incurred in gathering or putting them in a safe place. -If transplanted by the owner of the land where they have been cast, ownership still pertains to the person who lost the trees provided claim was made properly HOW TO RECOVER LANDS AND TREE IN AVULSION: 1. Known portion of land; 2. It was detached by the current of the river; 3. Recover land within two years. General Rule: River bends abandoned through natural change in the course of the water ipso facto belongs to owners whose lands are occupied by the new course in Proportion to Areas Lost. Exception: Owners of land adjoining old bed shall have right to acquire same by paying value thereof, which shall not exceed the value of area occupied by the new bed. REPUBLIC V. CA 132 SCRA 514 FACTS: Respondents sought the registration of land adjacent to their fishpond. They are the registered owners of parcel of lot bordering on the Bocaue and Meycauyan rivers. The lower and appellate court allowed registration but this was opposed by the government. HELD: There is no accretion if by man-made causes. inapplicable as long as the identification is possible. But if because of some force, say continuous rain, the two have so mixed with each other that identification cannot take place, the article should not apply. In this case, the principles of commixion or confusion should apply. Case: In Hilario v. City of Manila, this Court held that the word “current” indicates the participation of the body of water in the ebb and flow of waters due to high and low tide. Petitioners’ submission not having met the first and second requirements of the rules on alluvion, they cannot claim the rights of a riparian owner. Petitioners are estopped from denying the public character of the subject land, as well as the jurisdiction of the Bureau of Lands when the late Antonio Nazareno filed his Miscellaneous Sales Application MSA (G-6) 571. The mere filing of said Application constituted an admission that the land being applied for was public land, having been the subject of Survey Plan MSI-10-06-000571-D which was conducted as a consequence of Antonio Nazareno’s Miscellaneous Sales Application wherein said land was described as an orchard. Said description by Antonio Nazareno was controverted by the findings of the ocular inspection that said land actually covers a dry portion of Balacanas Creek and a swampy portion of Cagayan River. Rule if New River Bed is on Private Estate C. Change of River Beds Requisites: 1. Definite abandonment of government and no step was taken to revive old bed; 2. Change must be sudden; 3. Changing of the course must be more or less permanent and not temporary; 4. River must continue to exist; and 5. Change must be natural.   In the absence of evidence that the change in the course of river was sudden or that it occurred through avulsion, the presumption is that the change was gradual and was caused by alluvium and erosion. In avulsion, it is essential that the detached portion be known or identifiable. Therefore mere placing on top will not nor make the article -It becomes the property of public dominion. Rule if River Divides Itself into Branches -the owner of the land retains his ownership and he also retains it if a portion of land is separated from the estate by the current. -this applies whether the river is navigable or not D. Formation of Islands Rules of Ownership: 1. If formed on the sea: a. Within territorial waters – State b. Outside territorial waters – First country to occupy. 2. If formed on lakes, navigable / floatable rivers – State 3. If formed on non-navigable / floatable rivers: a. If nearer in margin to one bank – owner of nearer margin is the sole owner. b. If equidistant – island shall be divided longitudinally in halves. Navigable or floatable river- if useful for floatage and commerce, whether the tides affect the water or not A. Adjunction – process by virtue of which two movable things belonging to different owners are united in such a way that they form a single object and each of the things untied preserves its own nature. What are its characteristics? Case: JAGUALING V. CA 194 SCRA 607 FACTS: Eduave owned a parcel of land which later was eroded due to a typhoon and through the movement of land deposit. Eduave granted defendants to plant corn and bananas. She also hired a surveyor to put monuments. She also paid taxes. Here comes petitioner who opposes the claim of ownership claiming the typhoon caused the formation of island, the same they occupied for 15 years now. HELD: The island formed belongs to the the land with the nearest margin. owner of If the riparian owner fails to assert his claim, it could be open to adverse possession. RIGHTS OF ACCESSION WITH RESPECT TO MOVABLE PROPERTY Ans: That there are: 2BUS 1. 2. 3. 4. 2 movables; Belonging to different owners; United forming a single object; Separation would impair their nature or result in substantial injury to either thing. What are the classes of adjunction or conjunction? A: PEWWS 1. Painting (pintura) 2. Engraftment ‐ like setting a precious stone on a golden ring) 3. Writing (escritura) 4. Weaving 5. Soldering a. ajoining a piece of metal to another metal) b. Ferruminacion ‐ principal and accessory are of the same metal c. Plumbatura – different metals (Art. 468, NCC) Arts. 466-475 Kinds of accession movables: AMS continua 1. Adjunction or conjunction 2. Mixture 3. Specification as regard Bad Faith in the Adjunction 1. Owner of the accessory is in bad faith - lose the thing incorporated and shall have the obligation to indemnify the owner of the principal thing for the damages he may have suffered 2. Owner of the Principal is in Bad Faith - the owner of the accessory thing shall have a right to choose between the paying him its value or that the thing belonging to him be separated, even though, for this purpose it be necessary to destroy the principal thing; -indemnity for damages 3. Bad Faith on the Part of Both Note: Art. 466 states that “Whenever two movable things belonging to different owners are, without bad faith, united in such a way that they form a single object, the owner of the principal thing acquires the accessory, indemnifying the former owner thereof for its value. - both should be considered in good faith Consent of owner had not been obtained - right to indemnity either by a. delivery of a thing equal in kind and value (quantity, quality) b. payment of price as appraised by experts.  Sentimental value must be considered When is separation of things allowed? A: WAB Test to determine which is the principal and which is the accessory: The principal is (order of preference) a. That to which the other has been united as an ornament, or for its use, or perfection TEST OF INTENTION- accessory has been united as an ornament, etc. b. That of greater value c. That of greater volume d. That which has greater merits (combined consideration of utility and volume) -with reference to a motor vehicle, the engine may be considered as the principal, all the other parts of the vehicle being regarded as mere accessories. Painting, sculpture, writings, printed matter, engraving, lithographs, the board, metal, stone, canvas, paper or parchment- deemed the accessory thing How is ownership determined if the adjunction involves three or more things? - The court should first distinguish the principal and apply Art. 466 in an equitable manner such that the principal acquires the accessory, indemnifying the former owner thereof for its value. How about if the adjunction involves three or more things? - : The principal should first be distinguished, after, Art. 466 will be applied in an equitable manner, such that the principal acquires the accessory, indemnifying the former owner thereof for its value. 1. 2. 3. Separation Without injury Accessory is more precious than the principal Owner of the principal acted in Bad faith. (Art. 469, NCC) Rule when there can be separation without injury on things -the respective owners may demand their separation Rule if Accessory is more precious than the principal -Separation is allowed, although with injury (not destruction), if the thing united for the use, embellishment, or perfection of the other is much more precious than the principal. B. Mixture – combination or union of materials where with respective identities of the component elements are lost. Two Kinds of Mixture : ComCon a. COMMIXTION- solids are mixed b. CONFUSION- liquids are mixed Rules for Mixture a. If the mixture is caused by one owner in good faith, or by the will of both owners, or by chance (accident), or by a common agent -CO-OWNERSHIP results, each owner acquiring an interest or right proportional to the value of his material b. If the mixture is made by one owner in BAD FAITH then1. He loses his material (in favor of the other) 2. And is liable for damages (to penalize his bad faith) c. Mutual Bad Faith- both must be considered in good faith What are the rules as regards rights of owners over the thing in adjunction? OWNER OF THE PRINCIPLE Good Faith OWNER OF THE ACCESSORY Good Faith 1. Acquire accessory and pay owner of the accessory for its value; OR 2. Demand separation provided the thing suffers no injury. 1. Receive payment for value of accessory; OR 2. GR: Demand separation provided the thing suffers no injury XPN: If accessory is more precious than principal, he may demand separation w/ or w/o injury to the thing. How is the indemnity made? 1. Delivery of a thing equal in kind and value; or 2. Payment of its price including the sentimental value. (Article 471, NCC) Good Faith Acquire accessory w/o paying the owner of accessory and entitled to damages. Bad Faith Bad Faith Lose accessory and pay damages. 1. Pay value of accessory and pay damages; OR 2. Have the things separated, even though there is injury to the principal and pay damages. 1. Receive payment and damages; OR Good Faith 1. Have accessory separated w/ or w/o injury to principal and receive damages Bad Faith Bad Faith Same as though both acted in good faith If parts mixed are of same kind, quantity and quality- divide the mixture into two equal parts If caused by negligence of one of the parties -the party negligent is liable for his culpa acquiliana and should indemnify for damages things Accessory follows the principle Thing adjoined retain their nature things Co-ownership results Things mixed or confused may either retain or lose their respective natures Accessory follows the principle The new object retains or preserves the nature of the original object. C. Specification – giving of a new form to another’s material through the application of labor (labor is the principal) Rules in Specification a. If the worker (principal) is in good faith1. He appropriates the new thing 2. But he must indemnify for the materials Exception: If the materials (accessory) is more precious than the new thing or is more valuable, the owner of the material has an option1. To get the new thing but he must pays for the work; 2. Or to demand indemnity for the material b. If the WORKER is in Bad Faith, the owner of the material has an option; he1. Can appropriate the work without paying for the labor; 2. Or he can demand indemnity for the material plus damages Exception: The option of appropriation is not available if the value of the resultant work is more valuable for artistic and scientific reasons In all instances, sentimental value shall be duly appreciated. Sentimental Value- worth to its owner much more than its actual value Distinction between Adjunction, Micture & Specification: Adjunction Involves at least two Mixture Involves at least two Specification May involve only one thing QUIETING OF TITLE Arts 476-481 It is a common-law remedy for the removal of any cloud upon or doubt or uncertainty with respect to title to real property. (Vda.de Aviles v. CA) -To remove a cloud from the title to real estate, it shall be brought in the province where the land is situated Kinds of Actions referred to a. Remedial- action to remove the cloud or to quite title b. Preventive- action to prevent a future cloud or doubt Requisites of the action to quiet title: 1. Legal or equitable title to, or interest in real property 2. There must be cloud on such title; 3. Plaintiff must return to the defendant all benefits he may have received from the latter, or reimburse him for expenses that may have redounded to his benefit. Prescriptive Period: 1. If the plaintiff is in possession of property – action does not prescribe. 2. If the plaintiff is not in possession of property – action may prescribe (10 or 30 years). ACTION TO QUIET TITLE To put an end to vexatious litigation in respect to the property concerned. Plaintiff asserts own claim and declares that the claim of the defendant is unfounded and calls on the defendant to justify his claim on the property that the same may be determined by the court. ACTION TO REMOVE CLOUD To procure the cancellation, release of an instrument, encumbrance, or claim in the plaintiff’s title – which affect the title or enjoyment of the property. Plaintiff declares his own claim and title, and at the same time indicates the source and nature of the defendant’s claim, pointing its defects and prays for the declaration of its invalidity. Existence of the “CLOUD” The “cloud” (or doubt) on title exists because: a. Of an instrument (deed, or contract) or record or claim or encumbrance or proceeding b. Which is APPARENTLY valid or effective c. BUT is, in truth and in fact, invalid, ineffective, voidable, or unenforceable, or extinguished (terminated) or barred by extinctive prescription. d. AND may be prejudicial to title - when the instrument is not valid on its face, the remedy does not apply - If the plaintiff is in possession of the property, the action does not prescribe (Uberas v. CFI of Negros Occidental L-48268, Oct. 30, 1978) - If the plaintiff is not in possession of the property, the action may prescribe. Nature of Action -“In Personam”- enforceable only against the defeated party, or privies. -But technically, quasi in rem- an action in personam concerning real property Examples of Existence of Cloud over the Title: a. An agent with the written authority of his principal to sell the latter’s property, sold the same AFTER the death of the principal but antedated the contract of sale. b. If the contract is forged c. Contract by an incapacitated person d. Mortgage valid on its face and will cause prejudice although in reality invalid. Requisite Needed to bring an Action to Prevent a Cloud (Action or Bill QUIA TIMET) -It must be made clear that there is a fixed determination on the part of the defendant to create a cloud and it is not sufficient that the danger is merely speculative. Necessity for title of the Plaintiff The plaintiff must either have the legal (registered) ownership or the equitable (beneficial) ownership. Otherwise the action will not prosper. He need not be in possession of said property. Two Instances where the action to quiet title or remove a cloud may be Used: a. b. When the contract, instrument, or other obligation has been extinguished or terminated When the action is barred by extinctive prescription Duty of Plaintiff Reimbursement - to make Certain The plaintiff must return to the defendant all benefits he may have received from the defendant, or reimburse him for expenses that may have redounded to the plaintiff’s benefit. If Plaintiff is in Possession If Plaintiff is out of Possession a.Period does not prescribe b.Only right is to remove or prevent cloud a. Period prescribes b. The right to remove cloud, he may also bring the ordinary actions of ejectment, publiciana or reivindicatoria within the proper prescriptive periods. -principles of the general law on the quieting of title are hereby adopted insofar as they are not in conflict with Civil Code Defenses: The defendant can win if he can prove: a. b. c. d. e. The plaintiff does not have legal or equitable title The defendant has acquired the ownership by, for example, adverse possession The case has already been previously decided between the parties on the same issue-res judicata The defendant became the owner after the action had been filed, but before he filed his answer (succession, donation, etc.) The action has prescribed, the plaintiff being outside of possession Regarding the reliefs given: 1. 2. 3. Unauthorized mortgages may be cancelled In ordinary case, the defendant may in his counter-claim ask for quieting of title as against the plaintiff. Injunction may be availed of such as prohibition to destroy certain properties. When the action to quiet title will not prosper 1. It is merely an action to settle dispute concerning boundaries 2. It involves the proper interpretation and meaning of a contract or document 3. The plaintiff has no title, either legal or equitable 4. The action has prescribed and the plaintiff is not in possession of the property 5. The contract, instrument, etc. is void on its face 6. It is a mere claim or assertion CASES: Gallar vs. Hussain L-20954, May 24, 1967 Facts: Hussain sold a retro in a private instrument, a parcel of land protected by a Torrens Title to Chichirita, but the right to purchase was never exercised. The buyer sold the land to another who in turn sold and delivered the property in 1919 to Gallar. These subsequent sales were in private instruments. Gallar who had been in possession since 1919 sued in 1960 the heirs of Hussain to compel them to execute a fomal deed of conveyance so that Gallar could obtain a TCT. The heirs interposed the defense of prescription. Issues: a. Is the suit one for specific performance or quieting of title? b. Has the action prescribed? c. If the heirs of Hussain had been the possessors of the property would the answer be the same? Ruling: a. Gallar’s suit should be considered an action to quiet title because Gallar was the owner and the sale had been consummated, despite the fact that the transactions had all been merely in private instruments. b. Gallar’s suit should be considered an action to quiet title because Gallat was the owner and the sale had been consummated, despite the fact that the transaction had all been merely in private instruments. b. Gallar’s suit had not prescribed. In an action to quiet title, if the plaintiff is in possession, the suit does not prescribe. c. If the heirs of Hussain’s had been in possession, Gallar’s suit would have prescribed for then the action would not be one to quiet title, but one to recover real property. Sps. Felix & Nicanora Bucton vs. Sps. Zosimo & Josefina Gabar G.R. No. L-36359 January 31, 1974 Facts: Nicanora Bucton & Josefina Gabar are sisters-inlaw. Josefina bought a land from Villarin on installment basis. Josefina then entered into a verbal agreement with Nicanora that the latter would pay one-half of the price and would then own one-half of the land. Nicanora agreed. She paid the initial amount evidenced by a receipt. Sps Bucton then took possession of the land and made thereon improvements. When a deed of sale was executed in favor of Sps Gabar for the land, Sps Bucton sought to obtain a separate title but was refused. Sps Bucton filed a case for specific performance which was granted by the trial court. CA reversed, ruling that the action for specific performance was based on the receipt of the initial payment which was executed 22 years ago, thus had already prescribed (10 years prescription for an action based on a written agreement –Art. 1444). Sps Bucton argues that as owners in actual, continuous and physical possession of the land since its purchase, their right of action did not prescribe. Issue; WON Sps Bucton’s right of action to compel Sps Gabar to execute a formal deed of conveyance in their favor, has prescribed. Held: No. The real and ultimate basis of petitioners’ action is their ownership of one-half of the lot coupled with their possession thereof (not the receipt), which entitles them to a conveyance of the property. By the delivery of the possession of the land, the sale was consummated and title was transferred to Sps Bucton, that the action is actually not for specific performance, since all it seeks is to quiet title, to remove the cloud cast upon Bucton’s ownership as a result of Gabar’s refusal to recognize the sale made and that as Sps Bucton are in possession of the land, the action is imprescriptible. GARCIA V. CA, 95 SCRA 380 > A Transfer Certificate of Title cannot be nullified by the issuance 43 years later of another Transfer Certificate of Title over the same lot to another person due to failure of the Register of Deeds to cancel the Original Certificate of Title preceding the title previously issued > The earlier Transfer Certificate of Title prevails > In case of involuntary registration, entry in the day book is sufficient notice > In voluntary registration, the buyer becomes the registered owner the moment the deed is entered in the day book and he surrenders the owner’s duplicate certificate of title and pays the fees Jalandoni v. PNB The employees of the bank were negligent. They did not require the sheriff to sell Jalandoni's land at public auction. The bank is bound by its employees' negligence. This case should teach the responsible officers of the bank to be more vigilant in exercising its rights and in supervising its employees. The law helps the diligent and vigilant, not those who sleep on their rights. For laches and neglect on the part of those, who, under the law are entitled to require of others the fulfillment of their obligations, the statute of limitations has been enacted, which provides that such rights prescribe after a certain period of time, in order that it may serve alike as a punishment for those who do not know how to look after their own interests, and as a source of reassurance to those who may have rested in the belief that their creditors had waived their rights, and also to insure economic stability and the certainty of rights. (Villareal, J., in Lutero vs. Siuliong & Co., 54 Phil. 272, 280.) We find that the "notice of embargo" annotated in 1964 on Jalandoni's title is no longer enforceable and has become a cloud upon his title. Following the rule in the Ansaldo case, he and his heirs have a good cause of action under article 476 of the Civil Code for the removal of that state encumbrance. Moreover, article 478 of the Civil Code provides that "there may also be an action to quiet title or remove a cloud therefrom when the contract, instrument or other obligation has been extinguished or has terminated, or has been barred by extinctive prescription". (See sec. 112 of Act No. 496.) A court of equity will remove a cloud cast upon title to property by a lien, interest, or title which has become barred by reason of laches or the running of the statute of limitations. ... Liens which were acquired by virtue of judgments or levies of execution, and which have become barred by limitations or by delay in enforcing them, and sales based on such hens, have been held to be removable as clouds. (65 Am Jur 2nd 163-164). RUINOUS BUILDINGS AND TREES IN DANGER OF FALLING Juliana Caragay-Layno vs Court of Appeals, 26 December 1984, 133 scra 718 Judgment Confirms Title – Only claimed portion/property can be adjudged Mariano De Vera died in 1951. His widow administered his property until her death in 1966. De Vera’s nephew (Salvador Estrada) took over as administrator of De Vera’s estate. Prior to the widow’s death, she made an inventory showing that De Vera’s property (located in Calasiao, Pangasinan) measures 5417 sq. m (more or less). Estrada however noticed that the Torrens title under De Vera indicated that his property measures 8752 sq. m. He learned that the discrepancy is the 3732 sq. m. being occupied by Juliana. Estrada sued to evict Juliana. Juliana averred that she and her father have been in open, continuous, exclusive and notorious possession and in the concept of an owner of the land since 1921; that they’ve been paying taxes; that the title held by Estrada was registered in 1947 but it only took them to initiate an action in 1967 therefore laches has set in. ISSUE: Whether or not the disputed portion should be adjudged in favor of De Vera’s estate. HELD: No. The inclusion of Juliana’s land in De Vera’s title was erroneously done. It was shown that Juliana, an unlettered woman, agreed to have Mariano de Vera borrow her title for the purposes of Mariano obtaining a loan during de Vera’s lifetime; that when de Vera registered his portion of land adjoined to that of Juliana, the latter’s land was erroneously included. The error is highlighted by the fact that de Vera’s widow, in her inventory before she died, attested that de Vera’s portion of land is only 5417 sq. m. more or less. The discrepancy approximates the portion of land actually being occupied by Juliana. By that, the only portion that can be adjudged in favor of de Vera’s estate is that which was being claimed by the widow (in her inventory). A recalculation must however be made to specify the exact measure of land belonging to each: 3732 sq m should be retained by Juliana (portion which she actually occupies) and 5020 sq. m. should go to de Vera’s estate. Arts. 482-483 Rule in Case of Building, Etc. in danger of Falling The owner of the building, wall, column, or any other construction shall be obliged to demolish it or execute the necessary work in order to prevent it from falling. - If the proprietor does not comply, the administrative authorities may order the demolition of the structure at the expense of the owner, or take measures to insure public safety. Rule with Respect to Large Trees about to Fall Whenever a large tree threatens to fall in such a way as to cause damage to the land or tenement of another or to travelers over a public or private road, the OWNER of the tree shall be obliged to: 1. Remove it and 2. Should he not do so, it shall be done at his expense by order of the administrative authorities CO-OWNERSHIP Arts. 484-501 Co-ownership - that state where an undivided thing or right belongs to two or more persons - not a juridical person, nor is it granted any form of juridical personality - The share of the co-owners in the benefits and charges arising from the co-ownership shall be in proportion to their respective interest, any stipulation to the controversy shall be void.  Co-owner can only alienate his pro indiviso share in the co-owned property. (Nufable v. Nufable, 108 SCAD 204, 1999)  A co-owner can validly lease his undivided interest to a third party (Sanchez v. Court of Appeals, 404 SCRA 540, 2003) Requisites of Co-ownership: 1. Plurality of subjects- many owners 2. One physical whole divided into IDEAL 3. Each IDEAL share is definite in amount, but is not physically segregated from the rest 4. Each co-owner must respect each other in the common use, enjoyment, or preservation of the physical whole 5. Each co-owner holds almost absolute control over the same IDEAL SHARE. 6. Not a juridical person 7. A co-owner is in a sense a trustee for the other co-owners. What Governs Co-ownership? a. Contracts b. Special legal provisions c. Provisions of the Title on Co-ownership Sources of Co-ownership 1. Law 2. Contract 3. Chance 4. Occupation 5. Succession or will The share in the benefits and charges is proportional to the interest of each. Any stipulation in a contract to the contrary is void. G.R: Each co-owner shares proportionately in the accretion or alluvium of the property. Exception: Unless the contrary is proved Right to Use Property owned in common Right to use the property for the purpose intended (purpose), BUT A. the interest of the co-ownership must not be injured or prejudiced B. and the other co-owners must not be prevented from using it -Any one of the co-owners may bring an action in ejectment. Ejectment covers the following actions: 1. Forcible entry 2. Unlawful detainer 3. Accion publiciana 4. Accion reivindicatoria 5. Quieting of title 6. Replevin In ejectment cases, the only issue for resolution is physical or material possession of the property involved, independent of any claim of ownership set forth by any party litigants. (Gachon v. Devera, Jr. 84 SCAD 12, 1997) CO-OWNERSHIP Each co-owner owns only his deal share in the whole property. Each co-owner may dispose of his deal share without the consent of the others. In case of death, the share of a co-owner descends to his estate. Prescription runs against all coowners, even if one of them happens to be a minor. CO-OWNERSHIP Created by law, contract, succession, fortuitous event or occupancy. For common enjoyment of the thing or right owned in common. No juridical personality. Share is proportionate to the respective interests of the coowners. Co-owners may dispose of his share without the consent of the others – JOINT OWNERSHIP Each joint-tenant and all of them own the whole property. Each joint tenant cannot dispose of his own share without the consent of all the others. In case of death, the share of joint-tenant goes to other jointtenant. Prescription does not run against all join-tenants if one of them is a minor or is under legal disability. ORDINARY PARTNERSHIP Contract. To obtain profits. Has a juridical personality. Shares or profits may be subject to stipulation. A partner cannot dispose of his share and substitute the except when personal rights are involved. Agreement to exist in co-ownership for not more than 10 years is valid. CO-OWNERSHIP Generally, there is no mutual representation. Exception: when a coowner files a case for ejectment, the rest are represented. Death or incapacity of a co-owner does not dissolve the coownership. The deceased will be represented by his estate of heirs in the co-ownership. CO-OWNERSHIP May arise by an ordinary contract. Sex of the co-owners is immaterial. Co-owners may be two or more. Profits are proportional to respective interests. Death of one does not dissolve the coownership. Generally, all co-owners administer. Co-ownership is discouraged by law. buyer/assignee in his place without the consent of the others. Law fixes no limit. 2. Merger of all interest 3. Prescription 4. Partition or division. Rules in Co-ownership ORDINARY PARTNERSHIP Generally, there is mutual representation , unless otherwise stipulated. Death dissolves the partnership. 1. Co-owner has the right to use the property for the purpose intended. Limitations: a. Interest of the co-ownership must not be injured or prejudiced. b. Other co-owners must not be prevented from using it. 2. Each co-owner has full ownership of his part, and his share of the fruits and benefits, thus he may: a. Alienate, mortgage or assign such; b. Substitute another to its enjoyment except when personal rights are involved; c. Exempt himself from necessary expenses and taxes by renouncing part of his interest in the co-ownership. 3. No co-owner shall be obliged to remain in the co-ownership, thus, he may demand partition of the thing owned in common in so far as his share is concerned. CONJUGAL PARTNERSHIP Arises only because of the marriage contract. One must be a male and other a female. Conjugal owners are always only two. Profits are generally 50-50 unless a contrary stipulation is in a marriage settlement. Death of either husband or wife dissolves the conjugal partnership. Generally, the husband is the administrator. Encouraged by law to provide for better family solidarity. Extinction of Co-ownership 1. Total destruction of the thing 4. No co-owner may acquire ownership of the property co-owned by prescription, except when he: a. Repudiates the rights of the others; b. Repudiation is brought to the knowledge of the other co-owners; c. Evidence thereon is clear and conclusive; d. Lapse of the period fixed by law. When Co-owner May not Demand Partition: 1. By agreement (not exceeding 10 years), partition is prohibited. 2. Partition prohibited by donor or testator (not exceeding 20 years). 3. Partition prohibited by law. 4. Physical partition would render property unserviceable. 5. Legal nature of common property does not allow partition. Partition of Co-owned Property – The division between 2 or more persons of real or personal property which they own in common so that each may enjoy and possess his sole estate to the exclusion of and without interference from others. ◘ Prescription of an action for partition does not lie, except when the co-owners is properly repudiated by the co-owner. (Mariategui vs. CA, 205 SCRA 337) Right of the Co-owner to Undertake 1. Acts of preservation – may be made at the will of one of the co-owners, but he must first notify others of the necessity of such repairs. 2. Acts of administration – can be performed only with the concurrence of the majority. 3. Acts of alteration – can be performed only with the consent of the other co-owners. ◘ A person who occupies the land of another at the latter’s tolerance permission, without any contract between them, is necessarily bound by an implied promise that he will vacate the same upon demand, failing which, a summary action for ejectment is the proper remedy. (Refugia vs. CA, 258 SCRA 347) ◘ In actions for partition, the court cannot properly issue an order to divide the property, unless it first makes a determination as to existence of co-ownership. It must initially settle the issue of ownership, the first stage in an action of partition. An action for partition will not lie if the claimant has no rightful interest over the subject property. The possession contemplated as foundation for prescriptive right must be one under claim of title adverse to or in concept of owner. Possession by tolerance, as in the case of petitioner, is not the kind of possession that may lead to title by prescription. It is the respondents’ open, continuous, adverse and interrupted possession far beyond the 30-year extraordinary period for acquisitive prescription, coupled with the tax declarations of their predecessors-in-interest, that continues a superior weight of evidence that clinched their claim. (Catapusan vs. CA, 264 SCRA 534). CONDOMINIUM ACT (RA NO. 4726) Concept of Condominium – may include, in addition, a separate interest in other portions of such real property. Title to common areas, including the land, or the appurtenant interests in such areas, may be held by the corporation specially formed for the purpose (known as the “condominium corporation” in which the holders of separate interest shall automatically be members, to the exclusion of others, in proportion to the appurtenant interest of their respective units in the common areas. Condominium - an interest in real property consisting of; 1. a separate interest in a unit in residential, industrial or commercial building; and 2. an undivided interest in common directly or indirectly, in the land on which it is located and in other common areas of the building. What is a Unit? It is a part of the condominium project intended for an type of independent use or ownership, including one or more rooms or spaces located in one or more floors in a buildings and such accessories as may be appended thereto. What are Common Areas? -it is the entire project excepting separately granted or held or reserved. all units What is a Project – entire parcel of real property divided or to be divided in condominiums, including all structures thereon. What is the governing law on condominiums? It is REPUBLIC ACT NO. 4726, June 18, 1966, otherwise known as AN ACT TO DEFINE CONDOMINIUM, ESTABLISH REQUIREMENTS FOR ITS CREATION, AND GOVERN ITS INCIDENTS, or simply “The Condominium Act”, as amended by RA 7899 (1995). What is a condominium? Per Sec. 2 of the law, a condominium is an interest in real property consisting of separate interest in a unit in a residential, industrial or commercial building and an undivided interest in common, directly or indirectly, in the land on which it is located and in other common areas of the building. A condominium may include, in addition, a separate interest in other portions of such real property. In whose name would the title of common areas be made? Title to the common areas, including the land, or the appurtenant interests in such areas, may be held by a corporation specially formed for the purpose (hereinafter known as the “condominium corporation”) in which the holders of separate interest shall automatically be members or shareholders, to the exclusion of others, in proportion to the appurtenant interest of their respective units in the common areas. What are the contents of the enabling or master deed of the condominium? An enabling or master deed which shall contain, among others, the following: (a) Description of the land on which the building or buildings and improvements are or are to be located; (b) Description of the building or buildings, stating the number of stories and basements, the number of units and their accessories, if any; (c) Description of the common areas and facilities; (d) A statement of the exact nature of the interest acquired or to be acquired by the purchaser in the separate units and in the common areas of the condominium project. Where title to or the appurtenant interests in the common areas is or is to be held by a condominium corporation, a statement to this effect shall be included; (e) Statement of the purposes for which the building or buildings and each of the units are intended or restricted as to use; (f) A certificate of the registered owner of the property, if he is other than those executing the master deed, as well as of all registered holders of any lien or encumbrance on the property, that they consent to the registration of the deed; (g) The following plans shall be appended to the deed as integral parts thereof: (1) A survey plan of the land included in the project, unless a survey plan of the same property had previously bee filed in said office; (2) A diagrammatic floor plan of the building or buildings in the project, in sufficient detail to identify each unit, its relative location and approximate dimensions; (h) Any reasonable restriction not contrary to law, morals or public policy regarding the right of any condominium owner to alienate or dispose of his condominium. May the master deed be amended or revoked? By whom? Per Sec. 4 of the law, the enabling or master deed may be amended or revoked upon registration of an instrument executed by a simple majority of the registered owners of the property: Provided, That in a condominium project exclusively for either residential or commercial use, simple majority shall be on per unit of ownership basis and that in the case of mixed use, simple majority shall be on floor area of ownership basis: Provided further, That prior notifications to all registered owners are done, and Provided, finally, That any amendment or revocation already decided by a simple majority of all registered owners shall be submitted to the Housing and Land Use Regulatory Board and the city/municipal engineer for approval before it can be registered. Until registration of a revocation, the provision of the Act shall continue to apply to such property." (Amended by RA 7899 (1995)) In case a unit is transferred, what is/are deemed included? Per Sec. 5 of the law, any transfer or conveyance of a unit or an apartment, office or store or other space therein, shall include the transfer or conveyance of the undivided interests in the common areas or, in a proper case, the membership or shareholdings in the condominium corporation: Provided, however, That where the common areas in the condominium project are owned by the owners of separate units as co-owners thereof, no condominium unit therein shall be conveyed or transferred to persons other than Filipino citizens, or corporations at least sixty percent of the capital stock of which belong to Filipino citizens, except in cases of hereditary succession. Where the common areas in a condominium project are held by a corporation, no transfer or conveyance of a unit shall be valid if the concomitant transfer of the appurtenant membership or stockholding in the corporation will cause the alien interest in such corporation to exceed the limits imposed by existing laws. What are the incidents of a condominium grant? Under Sec. 6 of the law, unless otherwise expressly provided in the enabling or master deed or the declaration of restrictions, the incidents of a condominium grant are as follows: (a) The boundary of the unit granted are the interior surfaces of the perimeter walls, floors, ceilings, windows and doors thereof. The following are not part of the unit bearing walls, columns, floors, roofs, foundations and other common structural elements of the building; lobbies, stairways, hallways, and other areas of common use, elevator equipment and shafts, central heating, central refrigeration and central air-conditioning equipment, reservoirs, tanks, pumps and other central services and facilities, pipes, ducts, flues, chutes, conduits, wires and other utility installations, wherever located, except the outlets thereof when located within the unit. (b) There shall pass with the unit, as an appurtenance thereof, an exclusive easement for the use of the air space encompassed by the boundaries of the unit as it exists at any particular time and as the unit may lawfully be altered or reconstructed from time to time. Such easement shall be automatically terminated in any air space upon destruction of the unit as to render it untenantable. (c) Unless otherwise, provided, the common areas are held in common by the holders of units, in equal shares, one for each unit. (d) A non-exclusive easement for ingress, egress and support through the common areas is appurtenant to each unit and the common areas are subject to such easements. (e) Each condominium owner shall have the exclusive right to paint, repaint, tile, wax, paper or otherwise refinish and decorate the inner surfaces of the walls, ceilings, floors, windows and doors bounding his own unit. (f) Each condominium owner shall have the exclusive right to mortgage, pledge or encumber his condominium and to have the same appraised independently of the other condominiums but any obligation incurred by such condominium owner is personal to him. (g) Each condominium owner has also the absolute right to sell or dispose of his condominium unless the master deed contains a requirement that the property be first offered to the condominium owners within a reasonable period of time before the same is offered to outside parties; Can the common areas be partitioned? Under Sec. 7 of the law, except as provided in Sec. 8 of the law, the common areas shall remain undivided, and there shall be no judicial partition thereof. When is judicial partition allowed of the common areas? Per Sec. 8 of the law, where several persons own condominiums in a condominium project, an action may be brought by one or more such persons for partition thereof by sale of the entire project, as if the owners of all of the condominiums in such project were co-owners of the entire project in the same proportion as their interests in the common areas: Provided, however, That a partition shall be made only upon a showing: (a) That three years after damage or destruction to the project which renders material part thereof unit for its use prior thereto, the project has not been rebuilt or repaired substantially to its state prior to its damage or destruction, or (b) That damage or destruction to the project has rendered one-half or more of the units therein untenantable and that condominium owners holding in aggregate more than thirty percent interest in the common areas are opposed to repair or restoration of the project; or (c) That the project has been in existence in excess of fifty years, that it is obsolete and uneconomic, and that condominium owners holding in aggregate more than fifty percent interest in the common areas are opposed to repair or restoration or remodeling or modernizing of the project; or (d) That the project or a material part thereof has been condemned or expropriated and that the project is no longer viable, or that the condominium owners holding in aggregate more than seventy percent interest in the common areas are opposed to continuation of the condominium regime after expropriation or condemnation of a material portion thereof; or (e) That the conditions for such partition by sale set forth in the declaration of restrictions, duly registered in accordance with the terms of the Act, have been met. When is the Declaration of Restrictions binding? What is its effect? Under Sec. 9 of the law, the owner of a condominium project shall, prior to the conveyance of any condominium therein, register a declaration of restrictions relating to such project, which restrictions shall constitute a lien upon each condominium in the project, and shall insure to and bind all condominium owners in the project. Such liens, unless otherwise provided, may be enforced by any condominium owner in the project or by the management body of such project. The Register of Deeds shall enter and annotate the declaration of restrictions upon the certificate of title covering the land included within the project, if the land is patented or registered under the Land Registration or Cadastral Acts. What does the Declaration of Restrictions provide? The declaration of restrictions shall provide for the management of the project by anyone of the following management bodies: a condominium corporation, an association of the condominium owners, a board of governors elected by condominium owners, or a management agent elected by the owners or by the board named in the declaration. It shall also provide for voting majorities quorums, notices, meeting date, and other rules governing such body or bodies. Such declaration of restrictions, among other things, may also provide: (a) As to any such management body; (1) For the powers thereof, including power to enforce the provisions of the declarations of restrictions; (2) For maintenance of insurance policies, insuring condominium owners against loss by fire, casualty, liability, workmen’s compensation and other insurable risks, and for bonding of the members of any management body; (3) Provisions for maintenance, utility, gardening and other services benefiting the common areas, for the employment of personnel necessary for the operation of the building, and legal, accounting and other professional and technical services; (4) For purchase of materials, supplies and the like needed by the common areas; (5) For payment of taxes and special assessments which would be a lien upon the entire project or common areas, and for discharge of any lien or encumbrance levied against the entire project or the common areas; (6) For reconstruction of any portion or portions of any damage to or destruction of the project; (7) The manner for delegation of its powers; (8) For entry by its officers and agents into any unit when necessary in connection with the maintenance or construction for which such body is responsible; (9) For a power of attorney to the management body to sell the entire project for the benefit of all of the owners thereof when partition of the project may be authorized under Section 8 of this Act, which said power shall be binding upon all of the condominium owners regardless of whether they assume the obligations of the restrictions or not. (b) The manner and procedure for amending such restrictions: Provided, That the vote of not less than a majority in interest of the owners is obtained. (c) For independent audit of the accounts of the management body; (d) For reasonable assessments to meet authorized expenditures, each condominium unit to be assessed separately for its share of such expenses in proportion (unless otherwise provided) to its owners fractional interest in any common areas; (e) For the subordination of the liens securing such assessments to other liens either generally or specifically described; (f) For conditions, other than those provided for in Sections eight and thirteen of this Act, upon which partition of the project and dissolution of the condominium corporation may be made. Such right to partition or dissolution may be conditioned upon failure of the condominium owners to rebuild within a certain period or upon specified inadequacy of insurance proceeds, or upon specified percentage of damage to the building, or upon a decision of an arbitrator, or upon any other reasonable condition. What is the effect if the common areas in a condominium project are held by a condominium corporation? Under Sec. 10 of the law, whenever the common areas in a condominium project are held by a condominium corporation, such corporation shall constitute the management body of the project. The corporate purposes of such a corporation shall be limited to the holding of the common areas, either in ownership or any other interest in real property recognized by law, to the management of the project, and to such other purposes as may be necessary, incidental or convenient to the accomplishment of said purposes. The articles of incorporation or bylaws of the corporation shall not contain any provision contrary to or inconsistent with the provisions of the Act, the enabling or master deed, or the declaration of restrictions of the project. Is membership in a condominium project transferrable? Membership in a condominium corporation, regardless of whether it is a stock or non-stock corporation, shall not be transferable separately from the condominium unit of which it is an appurtenance. When a member or stockholder ceases to own a unit in the project in which the condominium corporation owns or holds the common areas, he shall automatically cease to be a member or stockholder of the condominium corporation. What is the term of the condominium corporation? Per Sec. 11 of the law, the term of a condominium corporation shall be co-terminus with the duration of the condominium project, the provisions of the Corporation Law to the contrary notwithstanding. What happens to the common areas in the event of an involuntary dissolution? Per Sec. 12 of the law, in case of involuntary dissolution of a condominium corporation for any of the causes provided by law, the common areas owned or held by the corporation shall, by way of liquidation, be transferred pro-indiviso and in proportion to their interest in the corporation to the members or stockholders thereof, subject to the superior rights of the corporation creditors. Such transfer or conveyance shall be deemed to be a full liquidation of the interest of such members or stockholders in the corporation. After such transfer or conveyance, the provisions of the Act governing undivided coownership of, or undivided interest in, the common areas in condominium projects shall fully apply. While the enabling or master deed is not yet revoked, can the condominium corporation be voluntarily dissolved? Under Sec. 13 of the law, until the enabling or the master deed of the project, in which the condominium corporation owns or holds the common area, is revoked, the corporation shall not be voluntarily dissolved through an action for dissolution under Rule 104 of the Rules of Court except upon a showing: (a) That three years after damage or destruction to the project in which the corporation owns or holds the common areas, which damage or destruction renders a material part thereof unfit for its use prior thereto, the project has not been rebuilt or repaired substantially to its state prior to its damage or destruction; or (b) That damage or destruction to the project has rendered one-half or more of the units therein untenantable and that more than thirty percent of the members of the corporation, if nonstock, or the shareholders representing more than thirty percent of the capital stock entitled to vote, if a stock corporation, are opposed to the repair or reconstruction of the project, or (c) That the project has been in existence in excess of fifty years, that it is obsolete and uneconomical, and that more than fifty percent of the members of the corporation, if nonstock, or the stockholders representing more than fifty percent of the capital stock entitled to vote, if a stock corporation, are opposed to the repair or restoration or remodeling or modernizing of the project; or (d) That the project or a material part thereof has been condemned or expropriated and that the project is no longer viable, or that the members holding in aggregate more than seventy percent interest in the corporation, if non-stock, or the stockholders representing more than seventy percent of the capital stock entitled to vote, if a stock corporation, are opposed to the continuation of the condominium regime after expropriation or condemnation of a material portion thereof; or (e) That the conditions for such a dissolution set forth in the declaration of restrictions of the project in which the corporation owns of holds the common areas, have been met. Under what other circumstance may a condominium corporation be dissolved? Under Sec. 14 of the law, the condominium corporation may also be dissolved by the affirmative vote of all the stockholders or members thereof at a general or special meeting duly called for the purpose: Provided, That all the requirements of Section 62 of the Corporation Law are complied with. May the condominium corporation sell or dispose of the members’ separate interests? Under Sec. 15 of the law, unless otherwise provided for in the declaration of restrictions upon voluntary dissolution of a condominium corporation in accordance with the provisions of Sections thirteen and fourteen of the Act, the corporation shall be deemed to hold a power of attorney from all the members or stockholders to sell and dispose of their separate interests in the project and liquidation of the corporation shall be effected by a sale of the entire project as if the corporation owned the whole thereof, subject to the rights of the corporate and of individual condominium creditors. Can a condominium corporation dispose the common areas? Under Sec. 16 of the law, a condominium corporation shall not, during its existence, sell, exchange, lease or otherwise dispose of the common areas owned or held by it in the condominium project unless authorized by the affirmative vote of a simple majority of the registered owners: Provided, That prior notifications to all registered owners are done: and, Provided, further, That the condominium corporation may expand or integrate the project with another upon the affirmative vote of a simple majority of the registered owners, subject only to the final approval of the Housing and Land Use Regulatory Board. (amended by RA 7899, (1955))  Any transfer or conveyance of a unit or an apartment, office or store or other space therein, shall include transfer or conveyance of the undivided interest in the common areas or, in proper case, the membership or share holdings in the condominium corporation; Provided, however, that where the common areas in the common project are held by the owners of separate units as co-owners thereof, no condominium unit therein shall be conveyed or transferred to persons other than Filipino citizens or corporations at least 60% of which belong to Filipino citizens, except in cases of hereditary succession. ◘ The buyer of a unit in a condominium acquires ownership over the unit only after he has paid in full its purchase price. The ownership of a condominium unit is the “separate interest” of the owner which makes him automatically a shareholder in the condominium. (Condominium Corp. vs. Campos, Jr., 104 SCRA 295). ◘ The act of a subdivision developer of mortgaging the subdivision without notifying an installment buyer is voilative of PD 957. Said case falls under the exclusive jurisdiction of the HLURB (Union Bank vs. HLURB, 210 SCRA 558) ◘ A co-owner is an owner of the whole and over the whole, he exercises the right of dominion, but he is, at the same time, the owner of a portion which is truly abstract. (De Guia vs. CA GR 120864, October 8, 2003) ◘ In co-ownership, sale by one of the co-owners pertains to his share only. (Coronel vs. CA GR 121069, February 7, 2003) SOME SPECIAL PROPERTIES 1. WATERS Use of Public Waters Is acquired by : A. Administrative concession - Governed by Irrigation Law as amended by Act 3523. The application is made to the Secretary of Public Works and Communications thru the Director of Public Works. B. Prescription for 10 years - The manner and form of using the waters Term of the Condominium Corporation – coterminous with the duration of the subdivision projects, the provision of the corporation law to the contrary notwithstanding. ORDER OF OBTAINING CONCESSION A. The FIRST TO APPROPRIATE is given a better right to ask for concession. B. When the claimants appropriated AT THE SAME TIME, then preference is in accordance w/ the USE INTENDED, in this order: - Domestic use (drinking, cooking) Agricultural use or power development for agricultural purposes Industrial uses Fishponds Mining uses or milling connected w/ milling purposes EXTINGUISHMENT OF THE RIGHT TO MAKE USE OF PUBLIC WATERS A. Non user for 5 years B. Lapse of the concession Art. 507 Use of waters of private ownership Classes of Subterranean waters: A. Flowing water - more or less permanent; definite course B. Percolating water – no definite course or channel; ex. Rain water seeping thru the soil. P.D 1067 A decree instituting a water code, thereby revising and consolidating the laws governing the ownership, appropriation, exploitation, development, conservation and protection of water resources. OWNERSHIP OF WATERS (P.D 1067) RIPARIAN RIGHTS A. Right to the natural flow of the waters B. Right of access to and use of the waters C. Right of accretion What belongs to the state a. b. c. d. Rivers and their natural beds Continuous or intermittent waters of springs and brooks Natural lakes and lagoons All other categories of surface waters, such as: GOVERNING LAWS A. Spanish law of waters of Aug. 3, 1866 B. Irrigation law (amended by Act 3523) C. Civil code SUBTERRANEAN WATERS - e. f. g. Water flowing over lands Water from rainfall either artificial or natural Water from agricultural runoff, seepage and drainage Atmospheric water Subterranean or ground water Seawater Trademark – name or symbol of goods made or manufactured. Ex. Mc Gregor Waters found on PRIVATE belongs to the State LANDS which Trade name – name or symbol of store, business or occupation. Ex. Calvein Klein a. b. c. d. e. Continuous or intermittent waters rising on such lands Lakes and lagoons naturally occurring on such lands Rain water falling on such lands Subterranean or ground waters Waters in swamps and marshes Service mark – name or symbol of service rendered. Ex. Metropolitan Express Company, Inc. Duration of Marks - 2. MINERALS - Inortanic elements or substances found in nature whether in gaseous, liquid or solidified stage. EXCLUDED are the SOIL, ORDINARY EARTH, SAND, STONE and GRAVEL A certificate of registration shall remain in force for 10 YEARS. REMEDIES IN CASE OF INFRINGEMENT A. Injunction B. Seizure and destruction of all necessary paraphernalia C. Damages, which consist of (i) Reasonable profit the complainant would have made (ii) Actual profit which inringer made 3. TRADEMARKS AND TRADE NAMES GROUNDS FOR CANCELLATION OF THE REGISTRATION A. Abandonment B. Registration is fraudulent or illegal C. Registered name is used to MISREPRESENT the source of the goods D. The name has become GENERIC or common descriptive name GOODWILL (Art. 521 – 522) - Is the advantage acquired by any product or firm because of general encouragement and patronage of the public. ELEMENTS OF GOODWILL A. Place B. Name C. Reputation WHAT GOVERNS THE TRADEMARKS AND TRADENAMES? - It is governed by Special Laws known as Intellectual Property Code of the Philippines (R.A. 8293)  POSSESSION The holding of a thing or the enjoyment of a right (Art. 523) either by material occupation or by the fact of subjecting the thing or right to the action of our will. ESSENTIAL REQUISITES OF POSSESSION (1) Holding or control of a thing or right (corpus) consists of either: (a) the material or physical possession (b) subject action of our will - exercise of a right (c) constructive possession DOCTRINE OF CONSTRUCTIVE POSSESSION - applies when the possession is under title calling for the whole, i.e., possession of a part is possession of the whole. -Constructive possession a) tradicion brevi manu (one who possess a thing short of title of owner – lease ); b) tradicion constitutum possesorium (owner alienates thing but continues to possess – depositary, pledgee, tenant) (2) Intention to possess (animus possidendi) - it is a state of mind whereby the possessor intends to exercise and 3. In the name of Another – held by the possessor for another; agent, subject to authority and ratification; if not authorized, negotiorum gestio does exercise a right of possession, whether or not such right is legal -intention may be inferred from the fact that the thing in question is under the power and control of the possessor - may be rebutted by contrary Evidence 4. Legal – by virtue of law; e.g. possession in behalf of incapacitated 5. In the Concept of an owner – possessor, by his actions, is believed by others as the owner, whether he is in good or bad faith (3) Possession must be by virtue of one’s own right. 6. In the concept of a Holder – possessor holds it merely to keep or enjoy it, the ownership pertaining to another; ex. usufructuary Note: None of these holders may assert a claim of ownership for himself over the thing but they may be considered as possessors in the concept of an owner, or under a claim of ownership, with respect to the right they respectively exercise over the thing. DEGREES OF POSSESSION 1. Possession with No right or title‐ possessor knows that his possession is wrongful, e.g. Possession of a thief or a usurper of land. 2. With Juridical title ‐ possession peaceably acquired and will not ripen into full ownership as long as there is no repudiation of the concept under which property is held. e,g. Possession of a tenant, depositary, agent. 3. With Just title or title sufficient to transfer ownership, but not from the true owner ‐ ripens to full ownership by the lapse of time. e,g. Possession of a buyer of a piece of land from one who pretends to be the owner thereof. 4.With a title in fee Simple ‐ springs ownership; highest degree of possession. 8. Possession in Bad faith 9. Constructive possession ‐ does not mean that a man has to have his feet on every square meter of ground. Possession vs. Occupation POSSESSION Applies to properties with or without an owner Possession does not confer ownership There can be possession without ownership OCCUPATION Applies only to property without an owner Occupation confers ownership There can be no occupation without ownership from CLASSES OF POSSESSION 1. In one’s Own name – possessor claims the thing for himself 2. Voluntary – by virtue of an agreement 7. Possession in Good faith Q: Is it possible for a person who has been declared as the owner of a certain property not to be entitled to its possession? A: Yes. Possession and ownership are distinct legal concepts. Ownership confers certain rights to the owner among which are the right to enjoy the thing owned and the right to exclude other persons from possession thereof. On the other hand, possession is defined as the holding of a thing or the enjoyment of a right. Literally, to possess means to actually and physically occupy a thing with or without a right. Thus a person may be declared an owner but not entitled to possession. (Heirs of Roman Soriano v. CA, GR No. 128177, August 15, 2001) Note: Possession is merely one of the attributes of ownership. (Jus Possidendi) SOME PRESUMPTIONS REGARDING POSSESSION: a. GOOD FAITH - Good Faith is always presumed (Art. 527) b. CONTINUITY OF CHARACTER OF POSSESSION (whether in good faith or bad faith) Art. 529 c. NON-INTERRUPTION OF POSSESSION (Art. 533) d. PRESUMPTION OF JUST TITLE – (Art. 541) e. NON-ITERRUPTION OF POSSESSION OF PROPERTY UNJUSTLY LOST BUT LEGALLY RECOVERED –(Art. 561) f. POSSESSION DURING INTERVENING PERIODGOOD FAITH Entitled while possession is in good faith BAD FAITH Entitled while possession is in good faith Liable to the lawful possessor for expenses of cultivation and shall share in net harvest to time of possession No right to such pending fruits As to expenses (Necessary expenses) Right of reimbursement and retention Right of reimbursement and retention (Useful Expenses) Right of removal No right of removal As to liability in case Of deterioration or loss No liability, unless due to his fault/ negligence Always liable for deterioration or loss As to fruits received As to pending fruits g. h. ACQUISITION OF POSSESSION Ways of Acquiring Possession 1. By Material occupation/exercise of a right 2. By Subjection of the thing/right to our will 3. By proper Acts and legal Formalities established for acquiring such right (Art. 531, NCC) WHEN POSSESSION IS ACQUIRED BY A STRANGER Where possession is acquired not by an agent or representative but by a stranger without agency, possession is not acquired until the act of the agent or representative is ratified (Art. 532, NCC). DISTINCTION BETWEEN GOOD FAITH & BAD FAITH IN POSSESSION ACTS WHICH POSSESSION DO NOT GIVE RISE TO Possession through: (Art. 1138 [2]) POSSESSION OF MOVABLES WITH REAL PROPERTY- (Art. 542) EXCLUSIVE POSSESSION OF COMMON PROPERTY – (Art. 543) 1. Force or intimidation as long as there is a possessor who objects thereto. (Art. 536, NCC) 2. Acts executed clandestinely and without the knowledge of the possessor which means that: a. acts are not public; and b. unknown to the owner or possessor 3. Mere Tolerance by the owner or the lawful possessor. 4. Acts executed by Violence. (Art 537, NCC) KIND OF POSSESSION THAT CAN SERVE AS A TITLE FOR ACQUIRING DOMINION -Only the possession acquired and enjoyed in the concept of owner. (Art. 540, NCC) EFFECTS OF POSSESSION Possessor in Good Faith When he is not aware that there exists in his title or mode of acquisition any flaw which invalidates it. (Art. 526, NCC). Possession in good faith ceases from the moment defects in his title are made known to the possessor. This interruption of good faith may take place: 1. at the date of summons or 2. that of the answer if the date of summons does not appear at the date However, there is a contrary view that the date of summons may be insufficient to convince the possessor that his title is defective. EFFECT WHEN POSSESSION CEASES TO BE IN GOOD FAITH Possessor in bad faith is required to pay rent or in case vacate the property, in both cases he is required to pay damages to the lawful owner or possessor of the property. RIGHTS OF A POSSESSOR: WHEN FRUITS CONSIDERED RECEIVED 1. Natural and industrial fruits ‐ from the time they are gathered or severed 2. Civil fruits ‐ from the time of their accrual and not their actual receipt. (Art. 544, NCC) EXPENSES: 1. Necessary Expenses -They are those without which the thing would physically deteriorate or be lost; hence, those made for the preservation of the thing. 2. Useful Expenses (Gastos Utiles) - They are those that add value to the property, or increase the object’s productivity, or useful fr the satisfaction of spiritual and religious yearnings, or give rise to all kinds of fruits. 3. Ornamental Expenses - Those which add value to the thing only for certain determinate persons in view of their particular whims. They are neither essential for preservation nor useful to everybody in general. RULES APPLICABLE ON POSSESSOR’S LIABILITY: a. Possessor in GOOD FAITH 1. BEFORE the receipt of judicial summons – NOT LIABLE 2. AFTER judicial summons a. Loss or deterioration through fortuitous event- not liable b. Through fraudulent intent or negligence- liable b. Possessor in BAD FAITH Whether before or after judicial summons, and whether due to fortuitous event or not, such possessor is LIABLE. WAYS OF LOSING POSSESSION (Art. 555) a. Thru the possessor’s voluntary will and intent 1. Abandonment 2. Assignment (onerous or gratuitous conveyance) b. Against the possessor’s will 1. Possession of another for more than one year. 2. Final judgment in favor of another (with a better right) 3. Expropriation 4. Prescription in favor of another 5. Recovery or reivindication by the legitimate owner or possessor. c. Because of the object 1. Destruction or total loss of the thing (Art.555) 2. Going out of commerce(Art.555) 3. Escaping from possessor’s control of wil[d animals (Art.560) ◘ RULES POSSESSION: OF PREFERENCE OF 1. Present/actual possessor shall be preferred; 2. Two possessors, the one longer in possession; 3. If the dates of possession are the same, the one with a title; and 4. If the above are equal, the fact of possession shall be judicially determined, and in the meantime, the thing shall be placed in judicial deposit. Cases: DBP v. CA, 316 SCRA 650 Facts: Spouses Pineda were the owners of a parcel of land which they mortgaged to DBP in consideration of a loan. As the loan was unpaid, the mortgage was foreclosed and DBP took possession of the property. It was opined by the Ministry of Justice that the subject property may not be the subject of foreclosure proceedings. The spouses then sought to redeem the property but was denied as the land was allegedly tenanted. They then sought the cancellation of the title and specific performance. HELD: A possessor in good faith is one who is not aware that there exists in his title or mode of acquisition any flaw, which invalidates it and he who alleges bad faith on the part of the possessor has the burden of proof. USUFRUCT It is a real right by virtue of which a person is given a right to enjoy property of another with the obligation of preserving its form and substance unless the title constituting it or the law provides otherwise. (Jus Utendi + Jus Fruendi = Usufruct) Characteristics 1. real right of use and enjoyment of property owned by another 2. of a temporary duration 3. transmissible 4. may be constituted on real or personal property, on tangibles or intangibles ◘ DISTINCTION BETWEEN USUFRUCT AND LEASE 1. As to nature of right - Usufruct is always a real right, whereas lease becomes a real right only when registered; 2. As to constitution – Usufruct is constituted by law, by the will of private persons expressed in acts inter vivos or in a last will or testament, and by prescription; whereas lease is a rule constituted by contract; 3. As to the person constituting it - In usufruct, the person constituting it is the owner, whereas in lease the person constituting it need not be the owner; 4. As to extent – Usufruct includes the right to use and to enjoy the fruits (jus utendi and jus fruendi) of the thing, whereas lease is more limited; 5. As to duration – There is no limitation to the duration of a usufructuary right, whereas there is a limitation to the duration of a lease right; 6. As to repairs – The usufructuary is responsible for ordinary repairs, whereas the lessee is not; and 7. As to taxes – The usufructuary is responsible for taxes on the fruits, whereas in lease, the lessee is not. OBJECT OF USUFRUCT a. May be real or personal property b. May be sterile or productive (fruitful things) c. May be created over a right (as long as it is not strictly personal or intransmissible, and as long as it has an independent existence). RIGHTS OF ACTION AVAILABLE USUFRUCTUARY (the person entitled to the usufruct) a. Action to protect the usufruct itself; b. Action to protect the exercise of usufruct. USUFRUCT Includes all uses of the property and for all purposes, including jus fruendi. EASEMENT Limited to a specific use. TO the Constituted on an immovable property. Extinguished by the death of the usufructuary, unless contrary intention appears. Contemplates only one property (real or personal) whereby the usufructuary uses and enjoys the property as well as its fruits, while another owns the naked title during the period of the usufruct. Usufruct may be alienated separately from the property to which it attaches. Constituted on an immovable property. Not extinguished by the death of the owner of the dominant estate. 1. By law 2. By will of private persons in act inter vivos 3. By will of private persons expressed in the last will and testament 4. By prescription. Contemplates two estates belonging to two different owners.  Cannot be alienated separately from the property to which it attaches. Art. 564 CLASSIFICATION OF USUFRUCT ACCORDING TO QUANTITY OR EXTENT (OF FRUITS OR OBJECT) a. As to fruits – total or partial b. As to object – universal (if entire patriomony) or singular or particular (if only individual things) CLASSIFICATION OF USUFRUCT AS TO THE NUMBER OF PERSONS ENJOYING THE RIGHT a. Simple – if only one Usufructuary enjoys b. Multiple – if several usufructuaries enjoy 1. Simultaneous – at the same time 2. Successive – one after another Classification of usufruct as to the QUALITY or KIND of OBJECTS involved a. Usufruct over rights b. Usufruct over things -normal -abnormal ABNORMAL USUFRUCT  How Constituted: Those where the usufructuary does not have the obligation of preserving the form and the substance of the property which is the object of the usufruct, CAUCION JURATORIA a sworn duly to take good care of the property of another and return same as the end of the usufruct. Requisites: 1. Proper court petition. 2. Necessity for delivery of furniture, implements or house 3. Approval of the court 4. Sworn promise Note: This does not apply if usufructuary is exempted from giving security. RIGHTS OF USUFRUCTUARY 1. Rights to civil, natural, and industrial fruits of property. (Art. 566)  right to possess and enjoy the thing itself, its fruits and accessions; right to lease the thing and improve the thing  a dividend (whether in the form of cash or stock) is income or civil fruits and should belong to the usufructuary and not to the remainderman (naked owner). 2. Rights to hidden treasure as a stranger. (Art. 566)  not entitled as owner, but is entitled as a finder (to one-half of the treasure, as a rule, unless there is a contrary agreement) if he really is the finder. If somebody else is the finder, the usufructuary gets nothing. 3. Rights to transfer usufructuary but is coterminus with the term of usufruct. (Art. 572)  he may alienate (sell, donate, bequeath, or devise) the usufructuary RIGHT (except a legal usufruct)  he may pledge or mortgage the usufructuary right BUT he cannot pledge or mortgage the thing itself because he does not own the thing. 4. Right to exempt from execution and can be sold at public auction by the owner. 6. Naked owner still have rights but without prejudiced to the usufructuary; may still exercise rights of ownership. 7. Rights to fruits growing at time of usufructuary; growing fruits at termination of usufruct belongs to owner. (Art. 567)  Fruits pending at the beginning of the usufruct belong to the usufructuary, with no obligation to refund the expenses of the owner  But, if expenses for production were incurred by third persons, they must be reimbursed  Fruits growing at the time of the termination of the usufruct belong to the owner, but the usufructuary must be reimbursed from the proceeds of such fruits for his production expenses. 8. Right to necessary expenses from cultivation at end of usufruct. 9. Right to enjoy accession and servitudes in its favor and all benefits inherent therein. (Art. 571) 10. Right to make use of dead trunks of fruit bearing trees and shrubs or those uprooted or cut by accident but obliged to plant a new one. (Art 575). 11. Right to usufructuary of woodland. (Art. 577) 12. Right to leave dead, uprooted trees at the disposal of owner with right to demand the owner should clear and remove them. (Art. 576) 16. Right to set-off improvements against damages he made against property. (Art. 580)  Requisites Before a Set-Off Can Be Made a. The damage must have been caused by the usufructuary b. The improvements must have augmented the value of the property 17. Right to administer when property is coowned. (Art. 582) 18. Right to demand the increase in value of property if owner did not spend for extraordinary repairs when urgent and necessary for preservation of thing (Art. 594). As a rule, the lease executed by the usufructuary should terminate at the end of the usufruct or earlier, except in the case of leases of rural lands (Art. 572), because in said case, if the usufruct ends earlier than the lease, it continues for the remainder of the agricultural year. It is not the naked owner, but the usufructuary that has the right to choose the tenant.  The lease agreements with no specified period but in which rentals are paid monthly are considered to be on a month to month basis. They are for a definite period and expire after the last day of any given thirty-day period, upon proper demand and notice by the lessor to vacate. (LMR Corp. vs. CA, 252 SCRA 335) SALE BY THE USUFRUCTUARY  Future crop may be sold; but such sale will be void if not ratified by the owner. It’s a sale of property not belonging to the usufructuary and those gathered at the termination of the usufruct belonging to the owner.  If things are consumable or were appraised when delivered, the usufructuary can dispose of them. 13. Right to oblige owner to give authority and furnish him with proofs if usufruct is extended to recover real property. (Art. 578) 14. Rights to necessary expenses. 15. Right to introduce useful and luxurious expenses (Art. 579)but with no obligation of reimbursement on the part of the owner.  he must not alter the form or substance of the property held in usufruct  he is not entitled to a refund but he may either remove the improvements if no substantial damage to the property in usufruct is caused (Art. 579) OR set off (compensate) the improvements against damages for which he may be liable (Art. 580) ◘ RIGHTS OF THE NAKED OWNER: 1. At the beginning of the usufruct  all obligations of the usufructuary at the beginning of the usufruct 2. During the usufruct  retains title to the thing and improve it  may alienate the property 3. At the termination or end of the usufruct  recover property from the usufructuary in the same preserved form and substance with room for ordinary wear and tear subject to ordinary repairs DOUBLE SALE BY NAKED OWNER  The naked owner is ordinarily not allowed to sell the usufructuary to another after having sold it first to the usufructuary; but if he does so, Art. 1544 relating to double sale applies. Thus, if the second buyer in good faith registers the usufruct, he can oust the first buyer who did not register, even though the latter be in the possession. The right of the first usufructuary would be to proceed against the naked owner for breach of the warranty against eviction. ◘ OBLIGATIONS OF THE USUFRUCTUARY: 1. At the commencement of the usufruct: a. Make an inventory of the property, (Art 583, par. 1) EXCEPT when no one will be injured thereby (as in the case of usufruct over a periodical pension or incorporeal right) provided the naked owner consents, and in case of waiver by the naked or the law or when there is a stipulation in a will or contract d. Give necessary security. (Art 583, par. 2) When Security is Not Required: 1.) When no one will be injured thereby (NO PREJUDICE) (Art. 583) 2.) When there is waiver by the naked owner, or there is a stipulation either in a will or by contract 3.) When the usufructuary is the donor of the property (who has reserved the usufruct). (Art. 584) 4.) When there is a parental usufruct (that is in the case of parents who are usufructuaries of their children’s property, except when the parents contract a second marriage or subsequent marriage, PROVIDED that each child’s property does not exceed Php 50,000 in which case the parents have to file a bond not as usufructuary, but as guardian or administrator 5.) When there is a caucion juratoria, which takes the place of a bond, and is made by taking an oath to fulfill properly the duties of a usufructuary, BUT this is available only under the conditions prescribed in Art. 587(promise under oath) 2. During the pendency of the usufruct a. Take care of the property as a good father of the family (Art. 589)  bad use of the thing will not extinguish the usufruct  owner becomes entitled to delivery and administration of the thing should the abuse cause substantial injury to the owner b. Make ordinary repairs (Art. 592)  for the preservation  if not repairs made by usufructuary, even after the demand by the owner, the latter may pay for the repairs, with right of reimbursement from the usufructuary c. Notify the owners in case the need of extraordinary repairs in the property is urgent      Those caused by exceptional circumstances, WON they are necessary for the preservation of the thing Those caused by the natural use of the thing, but are not necessary for its preservation Naked owner obliged to undertake them but when made by the owner, usufructuary pays legal interest on the amount while usufruct lasts Naked owner cannot be compelled to undertake extraordinary repairs If indispensable and owner fails to undertake extraordinary repairs – may be made by the usufructuary d. Pay annual taxes and those considered as liens on the fruits (Art. 596); e. Notify the owner of any act of a third person that may be prejudicial to the right of ownership (Art. 601); and f. Pay the expenses, cost and liabilities in suits with regard to the usufruct. (Art. 602) LIABILITY OF USUFRUCTUARY FOR ACTS OF THE SUBSTITUTE a. Usufruct made liable for acts of subsitute either through fault, negligence ior deceit. b. in sub-usufructuary, payment of ordinary repairs shall still be given to the naked owner by the ususfruct. ◘ Other SPECIAL Usufructs: 1. 2. 3. 4. 5. 6. 7. Of periodical pension, income, dividends. (Art. 570) Of woodland. (Art. 577) Of right of action to recover real property, real right, or movable property. (Art. 578) Of part of property owned in common. (Art. 582) Of the entire patrimony of a person (Art. 598) On a mortgaged immovable (Art. 600) On a flock or herd of livestock (Art. 591) MODES OF EXTINGUISHING USUFRUCT (Art. 603): 1. Death of the usufructuary, unless contrary intention appears; 2. Expiration of the period or fulfillment of the resolutory condition; 3. Merger of the usufruct and ownership in the same person; 4. Renunciation of the usufructuary; 5. Total loss of the thing; 6. Termination of the right of the person constituting the usufruct; 7. Prescription. EASEMENT OR SERVITUDES Section 1: Different Kinds of Easements Easements or Servitudes Encumbrance imposed upon an immovable for benefit of another immovable belonging to a different owner (Art. 613) ■ Easement is a real right on another’s property, corporeal and immovable, whereby the owner of the latter must refrain from doing or allowing somebody else to do or something to be done on his property, for the benefit of another person or tenement. (Quimen vs. Court of Appeals, 257 SCRA 163) Dominant Estate in favor of which an easement is established. (Art. 613, NCC) Servient Estate - that which is subject to easement. (Art. 613, NCC) EASEMENT DISTINGUISHED FROM LEASE LEASE A real right only when it is registered or when the lease (of real property) exceeds one year. There is a rightful and limited use and possession without ownership. May involve real or personal property. EASEMENT Always a real right. There is rightful limited use without ownership or possession. Can refer only to immovable. CHARACTERISTICS OF EASEMENT 1. A real right 2. Imposable only on another’s property 3. It is a jus n re aliena or a real right that may be alienated although the naked ownership is maintained) 4. It is a limitation or encumbrance on the servient estate f or another’s benefit 5. There is inherence or inseparability from the estate to which it belongs 6. It is indivisible even if the tenement is divided 7. It is intransmissible unless the tenement affected be also transmitted or alienated 8. It is perpetual as long as dominant and/or servient estate exists unless sooner extinguished by the causes enumerated in the law. ◘ CLASSIFICATION OF EASEMENTS: 1. As to Recipient Benefit: a. Real – in favor of another immovable. b. Personal – in favor of community, or of one or more persons to whom encumbered estate does not belong. 2. As to Source: a. Legal – established by law. 1) Public legal easements 2) Private legal easements b. Voluntary – established by will of owners. c. Mixed – created partly by agreement and partly by the law 3. As to exercise: a. Continuous – use of which is or may be incessant without intervention of acts of man. b. Discontinuous – used at intervals and depends upon the acts of man. 4. As to Existence Indicated: a. Apparent – made known and are continually kept in view like external signs. b. Non-apparent – shows no external indication of their existence. 5. As to Purpose: a. Positive – impose upon the owner of servient estate obligation of allowing something to be done or of doing it himself; and b. Negative – prohibit the owner of servient estate from doing something which he could do if the easement did not exist. 6. As to Right Given: a. Right to partially use the servient estate b. Right to get specific materials or objects c. Right to participate in ownership d. Right to impede or prevent the neighboring estate from performing a specific act of ownership. INSEPARABILITY OF EASEMENTS Easements are inseparable from the estate to which they actively or passively belong. (Art. 617) CONSEQUENCES OF INSEPARABILITY a. Easements cannot be sold or donated or mortgaged independently of the real property to which they may be attached. b. Registration of the dominant estate under Torrens System without the registration of the voluntary easements in its favor, does not extinguish the easements; but the registration of the servient estate without the registration of the easements burdening it extinguishes said voluntary easements. INDIVISIBILITY OF EASEMENTS Partition or division of an estate doe not divide the easement, which continues to be complete in that each of the dominant estates can exercise the whole easement over each of the servient estates, but only on the part corresponding to each of them. MODES OF ACQUIRING EASEMENTS EASEMENTS ARE ACQUIRED THROUGH: 1. If continuous and apparent a. By title – not necessarily mean a document. It means a juridical act or law sufficient to create the encumbrance. b. By prescription – requires 10 years irrespective of the good faith or bad faith, the presence or absence of just title on the part of the possessor. (Art. 620) 1. 2. 3. If discontinuous and apparent - only by title If continuous and non-apparent – only by title If discontinuous and non-apparent – only by title  The easement of right of way cannot be acquired by prescription because it is discontinuous or intermittent. The limitation on the servient owner’s right of ownership exists only when the dominant owner actually crosses or passes over the servient estate. Since the dominant owner cannot be continually crossing the servient estate, but can do so only at intervals, the easement is necessarily of a discontinuous nature. (Ronquillo vs. Roco, et al, L-10619, February 28, 1958) RULES 0N EASEMENTS ACQUIRABLE BY PRESCRIPTION 1. If the easement is POSITIVE, begin counting the period from the day the dominant estate began to exercise it. 2. If the easement is NEGATIVE, begin counting from the time notarial prohibition was made on the servient estate.  The dominant estate, thru its owner or usufructuary or possessor or legal representative makes the notarial prohibition. PROOFS THAT MAY BE GIVEN ON THE EXISTENCE OF THE EASEMENTS 1. By deed of recognition by the servient owner 2. Final judgment- court does not create the easement, but merely declares its existence. RULES ON APPARENT SIGNS OF AN EASEMENT THAT APPARENTLY EXISTS Sign – does not mean a placard or sign post, but an outward indication that the easement exists. a. Before the alienation, there is no true easement b. After alienation 1. There arises an easement if the sign continues to remain there unless there is a contrary agreement. 2. There is no easement if the sign is removed or if ther is an agreement to this effect. RIGHTS AND OBLIGATONS OF THE OWNERS OF THE DOMINANT AND SERVIENT ESTATES RIGHTS TO DOMINANT ESTATE 1. To exercise the easement and all necessary rights for its use including accessory easement. (Art.625) 2. To make on the Servient estate all works necessary for the use and preservation of the servitude out. a. This must be at his own expense b. He must notify the Servient owner c. Select convenient time and manner d. He must not alter the easement not render it more burden some 3. To ask for a mandatory injunction to prevent impairment or obstruction in the exercise of the easement as when the owner of the servient estate obstructs the right of way by building a wall or fence. 4. To renounce totally the easement if he desires exemption from contribution to expenses. OBLIGATIONS OF THE DOMINANT ESTATE 1. He cannot alter the easement. (Art.627) 2. He cannot make it more burdensome. (Art.627) a. Thus he cannot use the easement except for movable originally contemplated. (Art.626) b. In the easement of right of way, he cannot increase the agreed width of the path, nor deposit soil or materials outside of the boundaries agreed upon, but he may allow others to use the path except if the contary has been stipulated. ( Valderrama v. North Negros Sugar Co., 48 Phil 492) c. If there be several dominant estates, each must contribute to necessary repairs and expenses in proportion to the benefits received by each estate. RIGHTS OF THE SERVIENT ESTATE 1. To retain ownership and possession of the portion of his land affected by the easement unless the contrary has been stipulated. 2. To make use of the easement, unless deprived by stipulation and provided further that he contributes to the expenses in proportion to benefits received, unless there is contrary stipulation. 3. To charge the location of a very inconvenient easement provided that an equally convenient substitute is made, without injury to the dominant estate. OBLIGATIONS OF THE SERVIENT ESTATE 1. He cannot impair the use of easement. 2. He must contribute to expenses in case he uses the easement, unless there is a contrary stipulation. 3. In case of impairment, to restore conditions to the status quo at his expense plus damages. 4. To pay for the expenses incurred for the cha nge of location or form of the easement. MODES OF EXTINGUISHMENT OF EASEMENTS EASEMENTS ARE EXTINGUISHED: 1. By merger in the same person of the ownership of the dominant and servient estates;  Merger must be absolute, complete, not temporary. Thus, if the owner of the servient estate buys the whole portion affected, the merger is complete and the easement is extinguished. But if the portion bought is not the portion affected, the easement naturally remains. In Cabacungan v Corrales, L-6626, Sept. 30, 1964), it was held that if the dominant estate acquires only a part interest in the servient estate, there is deemed to be no merger. 2. By non-user for ten-years; with respect to discontinuous easements, this period shall be computed from the day on which they ceased to be used; and with respect to continuous easements from the day on which an act contrary to the same took place;  Non- user refers to an easement that has once been used because one cannot discontinue using what one has never used.  From what time to compute a. if discontinuous easement – from the time it ceased to be used. b. if a continuous easement – from the day on which an act contrary to the same took place. 3. When either or both of the estates fall into such condition that the easement cannot be used; but it shall revive if the subsequent condition of the estates or either of them should again permit its use, unless when the use becomes possible, sufficient time for prescription has elapsed, in accordance with the provisions of the preceding number; 4. By the expiration of the term or the fulfillment of the condition, if the easement is temporary or conditional; 4. By the renunciation of the owner of the dominant estate;  Renunciation must be express, clear, specific. 6. By the redemption agreed upon between the owners of the dominant and servient estates. OTHER CAUSES FOR EXTINGUISHMENT OF EASEMENT 1. Expropriation of the servient estate 2. Permanent impossibility to make use of the easement 3. Annulment, rescission, or cancellation of the title that constituted the easement 4. Abandonment of the servient estate 5. Resolution of the right of the grantor to create the easement 6. Registration of the servient estate as FREE, that is, although the servient estate was registered under the Torrens system, the easement thereon was not registered, unless there is a stipulation or actual knowledge of the existence of the easement on the part of the transferee 7. In the case of the legal easement of right of way, the opening of an adequate outlet to the highway extinguishes the easement, if the servient owner makes a demand for such extinguishment PRESCRIPTION ON VOLUNTARY EASEMENTS a. The easement may itself prescribe. b. The form or manner of using may also prescribe in the same manner as the easement itself. PRESCRIPTION ON LEGAL EASEMENTS a. Some legal easements do not prescribe, moreover, the right to exercise them cannot also prescribe. But the manner and form of using them may prescribe, as in the case of the easement of right of way. b. But some legal easements do prescribe, as in the case of the servitude of natural drainage. PRESCRIPTION OF USE BY ONE CO-OWNER OF THE DOMINANT ESTATE The use benefits the other co-owners; hence, there will be no prescription even with respect to their own shares. LEGAL EASEMENTS THE DIFFERENT LEGAL EASEMENTS: a. the easements relating to waters b. right of way c. party wall d. light and view e. drainage f. intermediate distances g. easement against nuisance h. lateral and subjacent support EASEMENTS RELATING TO WATERS Duties of Servient Estate: The owner cannot construct works that would impede the easement, which would divert the flow, and burden another tenement but he may regulate or control the descent of the water. DUTIES OF DOMINANT ESTATE: a. He cannot make works which will increase he burden. b. But he may construct works preventing erosion. c. If the descending waters are the result of artificial development recently set up, the owner of the lower estate shall be entitled to compensation for his loss or damage. EASEMENT ALONG RIPARIAN BANKS Width of zone burdened: a. 3 meters along the river margins, for navigation, floatage, fishing, salvage b. Tow path –  2 meters – if for animals  1 meter – if for pedetrians EASEMENT FOR DRAWING WATER OF FOR WATERING ANIMALS A combined easement for drawing of water and right way Requisites: a. Must be imposed for reasons of public use b. Must be in favor of a town or village c. The right must be sought not by one individual, but by the town or village, thru its legal representation d. There must be payment of the proper indemnity e. The right of way should have a maximum width of 10 meters, which cannot be altered by the owners of the servient estates although the direction of the path may indeed be changed. ◘ EASEMENT OF RIGHT OF WAY The right granted to the owner of an estate which is surrounded by other estates belonging to other persons and without an adequate outlet to a public highway to demand that he be allowed a passageway throughout such neighboring estates after payment of proper indemnity. Requisites: 1. The property is surrounded by estates of others. 2. There must be no adequate outlet to a public highway. 3. Demandable only by the owner or one with a real right like usufructuary. 4. Isolation must not be due to the proprietor’s own act. 5. Easement must be established at the point least prejudicial to the servient estate. 6. Payment of proper indemnity. ◘ EASEMENT OF AQUEDUCT The right arising from a forced easement by virtue of which the owner of an estate who desires to avail himself of water for the use of said estate may make such waters pass through the intermediate estate with the obligation of indemnifying the owner of the same and also the owner of the estate to which the water may filter or flow. ART. 642 to 646 deal with the legal (compulsory) easement of aqueduct. Proper indemnity: If the passage is permanent, pay the value of land occupied by the path plus damages and if temporary, pay for the damages caused. In an extrajudicial partition of land, a legal easement of right of way was annotated in the deed of partition (the lot in whose favor the easement was granted had no convenient access to highway). It is alleged that 2 signatures (of the debtor and the co-owners) had not been obtained. Can the annotation be ordered cancelled? Supreme Court held that No, in as much as the easement is a legal or compulsory one (there being no access to highway), not a mere voluntary easement . its existence does not depend on the consent of the co-owners. (Jartol v Court of Appeals L-57641, Oct. 23, 1982) NOTE: the existence of the easement of right of way does not necessarily include the easement of aqueduct. REQUISITES TO ACQUIRE EASEMENTS: 1. Indemnity must be paid. The amount usually depends on duration and inconvenience caused. 2. If for private interest, the easement cannot be imposed on EXISTING buildings, courtyards, annexes, out-houses, orchards, or gardens (but can be on other things, like road, provided no injury is caused to said properties.) (See Art. 644) 3. There must be proof: a. Dominant owner must prove that he has the capacity to dispose of the water; (the right is given thru prescription or administrative concession) b. That the water is sufficient for the intended use; (The use must be indicated, otherwise, it is hard to determine the sufficiency.) (4 Manresa 727). But the use may be any kind as long as it is lawful, and may be, for example, for irrigation, or for a fish pond. c. That the course is most convenient, and least onerous to the 3rd person and servient estate; d. that proper administrative permission be obtained. RULES IF GRANTOR’S OR GRANTEE’S LAND IS ENCLOSED (ART. 653) 1. if the ENCLOSING estates is that of the grantor, (seller, barter, or co-owner but NOT donor), the grantee does not pay indemnity for the easement. 2. If the ENCLOSED estate is that of the grantor (seller, barterer, or co-owner but NOT donor), the grantor must pay indemnity.  Special Cause of Extinction: the opening of a public road, or joining the dominant tenement to another with exit on a public road. EASEMENT OF RIGHT OF WAY FOR THE PASSAGE OF LIVESTOCK Width: a. animal path- 75 meters b. animal trail- 37 meters and 50 centimeters c. cattle- 10 meters (unless prior to the OCC, vested rights had been acquired to a greater width.) ◘ EASEMENT OF PARTY WALL or SERVIDUMBRE DE MEDIANERA     A common wall which separates 2 estates built by common agreement at the dividing line such that it occupies a portion of both estates on equal parts. It is indivisible and the part pertaining to each coowner can be materially designated. Rights of a co-owner of a party wall are greater than those of an ordinary co-owner such as with respect to increasing the height of the wall. Co-ownership must be accepted unless the contrary appears from title showing that the entire wall belongs to one of the property owners or unless there is an exterior sign to destroy such presumption (Art. 660, NCC) Party Wall Shares of parties cannot be physically segregated but they can be physically identified. No limitation as to use of the party wall for exclusive benefit of a party Owner may free himself from contributing to the cost of repairs and construction of a party wall by renouncing all his rights thereto Co-ownership Shares of the coowners can be divided and separated physically but before such division, a coowner cannot point to any definite portion of the property as belonging to him None of the co-owners may use the community property for his exclusive benefit Partial renunciation is allowed. PRESUMPTIONS TO EXISTENCE 1. In adjoining walls of buildings, up to common elevation; 2. In dividing walls of gardens and yards; 3. In dividing fences, walls, and live hedges of rural tenements; 4. In ditches or drains between tenements. PRESUMPTION IS REBUTTED BY: a. title to the contrary; b. exterior signs to the contrary; c. proof to the contrary. A title conferring (expressly) ownership in one owner prevails over a mere exterior sign (from which, there is merely an inference). RIGHTS OF PART OWNERS: 1. To make use of the wall in proportion to their respective interests, resting buildings on it or inserting beams up to one-half of the wall’s thickness. 2. To increase the height of the wall: a. at his expense; b. upon payment of proper indemnity; c. to acquire the half interest in any increase of thickness or height, paying a proportionate share in the cost of the work and of the land covered by the increase. OBLIGATIONS OF EACH PART OWNER 1. To contribute proportionately to the repair and maintenance unless he renounces his partner ownership. 2. If one part owner raises the height of the wall, he must: a. bear the cost of maintenance of the additions; b. bear the increased expenses of preservation; c. bear the cost of construction; d. give additional land, if necessary, to thicken of the wall. REQUISITES FOR THE RENUNCIATION OF SHARE: 1. Must be total or complete (not partial); 2. Must be made voluntarily and with full knowledge of the facts; 3. Must be made before the expenses are incurred; 4. Is made with the implied condition that the other owner should make or pay for the repairs; 5. Must be both the share in the wall and the share in the land, for the wall cannot be used without the land. ◘ EASEMENT OF LIGHT AND VIEW 1. Easement of Light (jus luminum)- the right to admit light from the neighboring estate by virtue of the opening of a window or the making of certain openings Requisites: a. opening must not be greater than 30 centimeters squared, made on the ceiling or on the wall; and b. there must be an iron grating. 2. Easement of View (jus prospectus) – the right to make openings or windows, to enjoy the view through the estate of another and the power to prevent all constructions or work which would obstruct such view or make the same difficult. It necessarily includes easement of light Restrictions on Openings (When contiguous and less than the 2 meters to another’s tenement): 1. It cannot exceed 1 foot square 30 cm. each side; 2. Openings must be at height of the joists near the ceiling; ( Choco vs. Santa Maria, 21 Phil 32) 3. The abutting owner may: a. close the openings if the wall becomes a party wall; b. block the light by building or erecting his own wall unless a servitude is acquired by the title or prescription; c. ask for the reduction of the opening to the proper size; RESTRICTION AS TO VIEWS 1. Direct Views: The distance of 2 meters 2. between the wall and the boundary must be observed. Oblique views: (walls perpendicular or at an angle to the boundary line) must not be less than 60 cm from the boundary line to the nearest edge of the window. It is permissible to build even up to the boundary line provided that NO regular windows are opened (restricted windows are allowed) (Art. 669). b. Rain water must be collected, instead of just being allowed to drift to the adjacent or lower land. ◘ EASEMENT OF INTERMEDIATE DISTANCES AND WORKS 1. No constructions can be built or plantings made near fortified places or fortresses without compliance with the conditions required in special laws, ordinances, and regulations relating thereto. Reason: public safety. 2. In the construction of any aqueduct, well, sewer, furnace, forge, chimney, etc. The person building shall follow the distances prescribed by the regulations (ordinances) and customs, if there be any, otherwise take precautions. 3. No trees shall be planted near a tenement or piece of land belonging to another, except when authorized by: a. ordinances b. customs c. civil code 1) Tall trees – 2 meters from boundary line to center of tree 2) Small trees or shrubs – 50 cm from boundary line to center of tree or shrub 4. Intrusions or Extensions of Branches and Roots a. Branches – adjacent owner has the right to demand that they be cut off (insofar as they spread over his property) b. Roots – he may cut them himself (he has acquired ownership by right of accession) 5. Fruits naturally falling upon adjacent land belong to the owner of said land. ◘ EASEMENT AGAINST NUISANCE ◘ EASEMENT OF DRAINAGE a. A person should let rain water FALL on his own land, and not on the adjacent land, even if he be a co-owner of the latter. Nuisance, is that which, among others, annoys or offends the senses and it should therefore be prohibited. 1. Dominant – the general public, or anybody injured by the nuisance 2. Servient – the person who commits the nuisance ◘ EASEMENT OF LATERAL SUBJACENT SUPPORT AND 1. No proprietor shall make such excavations upon his land as to deprive any adjacent land or bilding of sufficient lateral or subjacent support. 2. Any stipulation or testamentary provision allowing excavations that cause danger to an adjacent land or building shall be void. 3. Not only for buildings standing at the time of excavations, but also for constructions that may be erected. ◘ MODES OF ACQUIRING EASEMENTS: 1. By the title ; 2. by prescription of 10 years (continuous and apparent easements); a. Positive – counted from the time of the opening of the window. If it is through a party wall. b. Negative – counted from the formal prohibition on the servient owner 3. by deed of recognition; 4. by final judgment; and 5. by apparent sign established by the owner of the two adjoining estates. ◘ MODES OF EXTINGUISHMENT OF EASEMENTS 1. Merger in same person of ownership of dominant and servient estate Non-user Discontinuous: 10 years from cessation of usage; Continuous: 10 years from day on which act contrary to the same took place 2. When anymore easement cannot be used; 3. By expiration of the term or the fulfillment of the condition; 4. Renunciation of owner of the dominant estate; and 5. Redemption agreed upon. OTHER CAUSES FOR EXTINGUISHMENT OF EASEMENT 1. Permanent impossibility to make use of the easement. 2. annulment, rescission or cancellation of the title that constituted the easement. 3. resolution of the right of the grantor to create the easement (as when there is redemption of the property sold a retro because of the exercise of the right of conventional redemption). 4. expropriation if the servient estate. 5. registration of the servient estate as free, that is, although the servient estate was registered under the Torrens System, thereon was not registered, unless there is a stipulation or actual knowledge of the existence of the easement on the part of the transferee. 6. in the case of legal easement of right of way, the opening of an adequate outlet to the highway extinguishes the easement, if the servient owner makes a demand for such extinguishment. 7. abandonment of the servient estate 1. Must be especially injurious to the person affected; 2. No breach of peace or unnecessary injury must be committed; 3. Demand made; 4. Demand has been rejected; 5. Approval by the district health officer and assistance of local police; and 6. Value the destruction does nor exceed P3,000.00 NUISANCE Any acts, omission, establishment, business or condition of the property or anything else which 1. injures or endangers the health and safety of others; 2. annoys or offends the senses 3. shocks, defies or disregards the decency or morality; 4. obstructs or interferes with the free passage to any public highway or street or any body of water or; 5. hinders or impairs the use of the property CLASSES OF NUISANCES 1. PER SE – nuisance at all times and under all circumstances regardless of location and surroundings; 2. PER ACCIDENS – considered nuisance by reason of circumstances, location, and surroundings; 3. PUBLIC – affects the community or a considerable number of persons. 4. PRIVATE – affects only a person or a small number of persons. REMEDIES AGAINST PUBLIC NUISANCE 1. Prosecution under Penal Code or any local ordinance 2. Civil Action 3. Abatement, without judicial proceedings. REMEDIES AGAINST PRIVATE NUISANCE 1. CIVIL ACTION 2. Abatement, without judicial proceedings DEFENSES AGAINST PRIVATE NUISANCE 1. Estoppel 2. Public Necessity 3. Non-existence of the nuisance 4. Impossibility of abatement REQUISITES OF SUMMARY OF ABATEMENT OF PRIVATE NUISANCE  DOCTRINE OF ATTRACTIVE NUISANCE A person who maintains in his premises a dangerous instrumentally of a character which is attractive to children of tender years at play and who fails to exercise due diligence to prevent such children from playing therewith or resorting thereto, is liable to a child who is injured thereby, even if the child is technically a trespasser. ( Jarco vs. Marketing vs. CA, 321 SCRA 375) REGISTRY OF PROPERTY ‘Register’ may refer to: 1. the act of recording or annotating 2. the book of registry 3. the office concerned 4. the official concerned THREE SYSTEMS OF REGISTRATION: 1. Land Registration Act (Torrens System) 2. Spanish Mortgage Law 3. Sec. 194 of the Revised Administrative Code, as amended by Act 3344. PURPOSE OF REGISTRATION: 1. to give true notice of the true status of real property and real rights 2. to prejudice third persons 3. to record acts or contracts 4. to prevent commission of frauds, thus insuring the effectivity of real rights over real property NOTE: Registration is not a mode of acquiring ownership. It is simply a means of notification. However, some modes of acquiring ownership cannot be binding without the proper registration as required by law. Third Persons (those who did not participate in the act, contract, or deed registered) shall not be prejudiced by titles of ownership or other rights over immovable property, which are not duly inscribed or annotated in the Registry of Property. NOTE: Actual knowledge by third persons of a contract that binds the parties thereto, is equivalent to registration. The books in the Registry of Property shall be public (includes even those without a pecuniary or financial interest), except when the purpose of examining the registration is: 1. clearly unlawful 2. arises from sheer, idle curiosity 1. OCCUPATION_____ -Seizure of a corporeal thing, without an owner, with the intention to acquire ownership in accordance with law. REQUISITES: 1. There must be seizure of a thing; 2. The thing seized must be corporeal personal property; 3. The thing must be susceptible of appropriation by nature; 4. The thing must be without an owner; 5. There must be an intention to appropriate. 6. Requisites laid down by law must be complied with (Villanueva vs. Claustro, 23 Phil. 54); SPECIFIC INSTANCES: 1. Hunting and fishing 2. Finding of movables which do not have an owner 3. Finding of abandoned materials 4. Finding of hidden treasure 5. Catching of swarm bees that has escaped from its owner, under certain conditions 6. Catching of domesticated animals that have escaped from their owners, under certain conditions 7. Catching of pigeons without fraud or artifice 8. Transfer of fish to another breeding place without fraud or artifice DIFFERENT MODES OF ACQUIRING OWNERSHIP MODES OF OWNNERSHIP 1. 2. 3. 4. 5. 6. 7. ACQUIRING Occupation; intellectual creation; donation; prescription; law; testate and intestate succession; in consequence certain contacts. IMPORTANT DOCTRINES/PRINCIPLES: *A thing that has been lost or taken by force is not ipso facto converted to res nullius for it to belong to the person who takes possession of the same without the necessity of proving the mode of his acquisition and it may thus be recovered by the original owner (See Art. 559). Such thing cannot be acquired by prescription even if extraordinary. *Land cannot be the object of occupation because when land is without an owner, it pertains to the State (Report of Code Commission). TRADITION / DELIVERY ■ Derivative mode of acquiring ownership and other real rights by virtue of which they previously existed, to that of the grantee by means of a just title, there being both the intention to appropriate REQUISITES: 1. Right transmitted should have previously existed in the patrimony of the grantor; 2. Transmission should be by just title; 3. 4. grantor and grantee should have intention and capacity to transmit and acquire; Transmission should be manifested by some act, which is physical, symbolical or legal. KINDS: 1. REAL TRADITION – actual delivery 2. CONSTRUCTIVE TRADITION a. Traditio Symbolica – parties make use of a token or symbol to represent the thing delivered b. Traditio Longa Manu – by mere consent of the parties if the thing sold cannot be transferred to the possession of the vendee at the time of sale c. Traditio Brevi Manu – when the vendee already has the possession of the thing sold not as owner but in some other capacity d. Traditio Constitutum Possessorium when the vendor continues in possession of the thing sold not as owner but in some other capacity 3. QUASI-TRADITION – exercise of the right of the grantee with the consent of the grantor. 4. TRADICION POR MINISTERIO DE LA LEY – delivery by operation of law 5. TRADITION BY PUBLIC INSTRUMENT 2. INTELLECTUAL CREATION Mode where the author acquires ownership over the products of his intellect and consists, fundamentally, in the power to authorize or refuse the publication or production of such creations or products (Please read the notes on Commercial Law: Intellectual Property Rights) The following persons acquire ownership by virtue of intellectual creation (Art. 721): 1. The author with regard to his literary, dramatic, historical, legal, philosophical, scientific or other work; 2. The composer, as to his musical composition; 3. The painter, sculptor, or other artist, with respect to the product of his art; 4. The scientist or technologist or any other person with regard to his discovery or invention. Definition of Intellectual Property/ Intellectual Property Rights - It refers to creations of the mind: inventions, literary and artistic works, and symbols, names, images and designs used in commerce. (Source: Property by Elmer T. Rabuya) According to the Intellectual Property Code of the Philippines, the scope of the term “intellectual property rights,” is as follows: 1. 2. 3. 4. 5. 6. Copyright and related rights; Trademarks and service marks; Geographic indications; Industrial designs; Patents; Layout-designs (topographies) of integrated circuits; and 7. Protection of undisclosed information WHEN OWNERSHIP IS ACQUIRED The author, the composer, the painter, the sculptor or other artists, the scientists and the inventors acquire ownership over their works from the moment of creation, even before the same are published, copyrighted or patented. (Art. 721-722, NCC) Being the owner thereof, the creator has absolute control over his work and he may do anything with it as he pleases, including the right to share it with others. He also enjoys the exclusive right to its publication—but this exclusive right is limited only to the first publication. (Santos v. McCullough Printing, 12 SCRA 321) Ownership of Letters - With respect to the ownership of letters and other private communications in writing, a distinction must be made between the material or physical object (the letter itself) and the ideas or thoughts contained in the letter (its contents). (Art. 723) 1. Letter itself belongs to the recipient of the letter 2. Ideas/thought/Content/Copyright of the letter belongs to the sender. (Sec. 178, R.A. No. 8293) If the author’s consent is not obtained in the publication of the contents of the letter, the author may seek injunctive relief in the courts and the right to recover damages. If the public good/interest of justice requires, the courts may authorize the publication/dissemination of the letter. 3. DONATION -An act of liberality whereby a person disposes gratuitously of a thing or right in favor of another, who accepts it. (Ocampo vs. Ocampo, GR 150707, April 14, 2004) REQUISITES: 1. Donor must have capacity to make the donation 2. He must have donative intent (animus donandi) 3. There must be delivery 4. Donee must accept or consent to the donation ESSENTIAL FEATURES/ELEMENTS OF A TRUE DONATION: a. Consent, subject matter, cause (as in other contracts) b. The necessary form (including delivery in some cases) c. Consent or acceptance by donee during donor’s lifetime d. Irrevocability by the donor (except for legal causes) c. Intent to benefit the donee (Animus donandi) d. Consequent impoverishment of the donor (diminution of his assets) CLASSIFICATION of DONATIONS: 1. As to their effectivity: a. Donations inter vivos b. Donation morits causa c. Donation propter nuptias 2. As to perfection or extinguishment: a. Pure (immediately demandable) b. With condition c. With term 3. As to consideration: a. Simple - gratuitous b. Remuneratory or compensatory – made on account of donee’s merits c. Modal–impose upon the donee a burden which is less than the value of the thing donated. DONATIONS INTER VIVOS & MORTIS CAUSA DISTINCTIONS AS TO FORM AND EFFECT a) Inter Vivos 1. Must comply with the formalities of donations required by Arts. 748 and 749 of the Code; 2. Made out of donor’s pure generosity; 3. Title conveyed to the donee before the donor’s death; 4. Takes affect during the lifetime of the donor; 5. Cannot be revoked except for grounds provided for by the law (Arts. 760-765); 6. In case of impairment of the legitimate donations inter vivos are referred to donations mortis causa; 7. The right to disposition is completely transferred to the donee; 8. Acceptance by donee must be during lifetime of donor; 9. Subject to donor’s tax b) Mortis Causa 1. Takes effect upon donor’s death with conveyance of title; 2. Made in contemplation of his death without the intention to lose the thing or its free disposal in case of survival; 3. Void if donor survives donee; 4. Must follow the formalities of wills or codicils (holographic or notarial); 5. In case the legitime is impaired, donations mortis causa (since they partake of the nature of, or are really, legacies or devises) are reduced ahead of donations inter vivos, the latter being preferred; 6. The right of disposition is not transferred to the donee while the donor is still alive; 7. Acceptance by donee mortis causa can only be done after the donor’s death; any prior acceptance is immaterial or void; 8. Always revocable at any time and for any reason before the donor’s death; 9. Subject to estate tax. FORMALITIES IN DONATIONS: 1. Formalities of movable property a. With simultaneous delivery of property donated: i. if value is P5,000.00 or less – may be made orally or in writing. ii. if value exceeds P5,000 - shall be made in writing; otherwise, it shall be void. b. Without simultaneous delivery * Both the giving and acceptance must be in writing, regardless of value. 2. Formalities of Immovable Property a. must be in a public instrument, specifying therein the property donated and the value of the charges which the donee must satisfy. b. acceptance must be either: i. in the same deed of donation; or ii. if in a separate public instrument, the donor shall be notified thereof in an authentic form, and this step shall be noted in both instruments. Otherwise, donation is void. Note: This shall not take effect unless it is done during the lifetime of the donor. NOTE: Expression of gratitude to the donor without express acceptance was held a sufficient acceptance (Cuevas vs. Cuevas, G.R. No. L-8327, December 14, 1955) DONATIONS PROHIBITED BY LAW: 1. Made by persons guilty of adultery or concubinage at the time of donation; 2. Made between persons found guilty of same criminal offense, in consideration thereof; 3. Made to a public officer or his or her spouse, descendants and ascendants, by reason of his or her office; 4. Made to the priest who heard confession of donor during latter’s last illness, or minister of gospel who extended spiritual aid to him during the same period; 5. Made to relatives of such priest or minister within the 4th degree, the church, order, etc., to which such priest or minister may belong; 6. Made by ward to the guardian before approval of final accounts; 7. Made to an attesting witness of execution of donation, if there is any, or to the spouse, parents, or children, or anyone claiming under them; 8. Made to a physician, surgeon, nurse, health officer or druggist who took care of donor during his/her last illness; 9. Made by individuals, associations and corporations not permitted by law to make donations; and 10. Made by spouses to each other during marriage, or to persons of whom the other spouse is a presumptive heir. LIMITATIONS ON DONATION OF PROPERTY 1. Future property cannot be donated; 2. Present property that can be donated: a. if the donor has forced heirs: he cannot give or receive by donation more than what he can give or receive by will b. if the donor has no forced heirs: donation may include all present property he reserves in full ownership or in usufruct: i. the amount necessary to support him and those relatives entitled to support from him ii. property’s sufficient to pay the donor’s debt contracted prior to the donation 3. Donation should not prejudice creditors; 4. Donee must reserve sufficient means for his support and for his relatives which are entitled to be supported by him. EFFECTS OF DONATION 1. Donee may demand the delivery of the thing donated. 2. Donee is subrogated to the rights of the donor in the property. 3. In donations propter nuptias, the donor must release the property from encumbrances, except servitudes. 4. Donor’s warranty exists if: a. expressed b. donation is propter nuptias c. donation is onerous d. donor is in bad faith 5. When the donation is made to several donees jointly, they are entitled to equal portions, without accretion, unless the contrary is stipulated. PAYMENT OF THE DONOR’S DEBT BY THE DONEE 1. If there is express stipulation: the donee is to pay only debts contracted before the donation, if not otherwise specified; but the donee answers only up to the value of the property donated, if no stipulation is made to the contrary. 2. If there is no stipulation: the donee is answerable for the debts of the donor only in case of fraud against creditors. REVOCATION AND REDUCTION OF DONATIONS (Art. 760) Every donation inter vivos, made by a person having no children or descendants, legitimate or legitimated by subsequent marriage, or illegitimate, may be revoked or reduced as provided in Art. 761, by the happening of any of these events: (1) If the donor, after the donation, should have legitimate or legitimated or illegitimate children, even though they be posthumous; (2) If the child of the donor, whom the latter believed to be dead when he made the donation, should turn out to be living; (3) If the donor should subsequently adopt a minor child. WHAT THE DONEE MUST DO IF THE DONATION IS REDUCED: a. If the property is still with him, return the property. b. If the property has been sold, give the value (usually the price of the sale) to the donor. c. If the property has been mortgaged, the donor may pay off the debt, but he can recover reimbursement from the donee. d. If the property cannot be returned (as when it has been lost or totally destroyed), return its value (value not at time of loss but at perfection of donation). GROUNDS FOR REDUCTION a. Birth, adoption, reappearance (Art. 760) b. Inofficiousness (Art. 771) c. If insufficient property is left for support of donor and his relatives (Art. 750) d. If made in fraud of creditors (creditors at the time of the donation) (Art. 1387) VOID, INEFFECTIVE, OR UNPERFECTED DONATIONS: a. Those not perfected in accordance with the forms and solemnities of law (particularly when there is no proper acceptance). b. Those made with property outside the commerce of man. c. Those made with future property (Art. 751) except those provided for in marriage settlements. d. Those made to persons specially disqualified: 1) by reason of public policy 2) by reason of unworthiness 3) by reason of possible undue influence * The donation shall be revoked or reduced insofar as it exceeds the portion that he may be freely disposed of by will, taking into account the whole estate of the donor at the time of the birth, appearance or adoption of a child (Art. 761). * The action for revocation or reduction on the grounds set forth in Article 760 shall prescribe after four years from the birth of the first child, or from his legitimation, recognition or adoption, or from the judicial declaration of filiation, or from the time information was received regarding the existence of the child believed dead. This action cannot be renounced, and is transmitted upon the death of the donor, to his legitimate and illegitimate children and descendants (Art. 763). INOFFICIOUS DONATIONS 1. Those referred to in Articles 760 and 761 (where the donor at the time of donation either had no children or thought he had no more). 2. Those referred to in Art. 771-772 (where the donor had at least one child already at the time he made the donation). ACTS OF INGRATITUDE (ART. 765) 1. If the donee should commit some offense against the person, the honor or property of the donor, or of his wife or children under his parental authority; He imputes to the donor any criminal offense, or any act involving moral turpitude, even though he should prove it, unless the crime or the act has been committed against the donee himself, his wife or children under his authority; and He unduly refuses him support when the donee is legally or morally bound to give support to the donor. Acquisition of ownership and other real rights through the lapse of time in the manner and under the conditions laid down by law In the same way, “rights and actions are lost by prescription” (Art. 1106, NCC) Query: At time of donation, the donor’s child was already conceived but not yet born. Should article 760 or article 771 be applied? Answer: It depends: 1. If the donor did not know of such conception, Article 760 applies. For all intents and purposes, it is as if he had no child. 2. If the donor knew of such conception, then Article 771 applies because in such a case the non-knowledge required by the reason of the law for article 760 will not apply. Who May Acquire By Prescription 1. Person who is capable of acquiring property by other legal modes 2. State 3. Minors – through guardians 2. 3.  The prohibition in the deed of donation against the alienation of the property for an entire century, being an unreasonable emasculation and denial of an integral attribute of ownership, should be declared as an illegal or impossible condition within the contemplation of Article 727. Such condition shall be considered as not imposed. The net result is that, absent said proscription, the deed of sale supposedly constitutive of the cause of action for the nullification of the deed of donation is not in truth violative or the latter hence, for lack of cause of action, the case for private respondents must fail. (Roman Catholic Archbishop of Manila vs. Court of Appeals 198 SCRA 300) Since the donee becomes the owner from the time the donation was perfected, it is only logical that he bears the loss and the risk of deterioration or depreciation. Persons with capacity to alienate property may renounce prescription already obtained, but not the right to prescribe in the future. Prescription is deemed to have been tacitly renounced when the renunciation results from acts which imply the abandonment of the right acquired. (Art. 1112, NCC) Against Whom Prescription Run 1. Minors and incapacitated person who have guardians 2. Absentees who have administrators 3. Persons living abroad who have administrators 4. Juridical persons except the state with regards to property not patrimonial in character 5. Between husband and wife 6. Between guardian and children (during minority/insanity) 7. Between guardian and ward (during guardianship) 8. Between co-heirs/co-owners 9. Between owner of property and person in possession of property in concept of holder   All things within the commerce of man. Such as patrimonial property and patrimonial property of the state, are subject to prescription/ Public domain, intransmissible rights, movables possessed through a crime and registered land are not subject to prescription. ◘ KINDS OF PRESCRIPTION 1) Acquisitive Prescription – one acquires ownership and other real rights through the lapse of time. 4. PRESCRIPTION a. Ordinary Acquisitive Prescription – requires possession of things in good faith and with just title for the time fixed by law; Requisites: 1. Possession in good faith 2. Just title 3. Within the time fixed by law (4 years for movables and 8 years for immovables) 4. In the concept of an owner 5. It must be public, peaceful and uninterrupted b. Extraordinary Acquisitive Prescription acquisition of ownership and other real rights without need of title or of good faith or any other condition; Requisites: 1. Just title is proved 2. Within the time fixed by law (10 years for movables, 30 years for immovables) 3. In the concept of an owner 4. Public, peaceful and uninterrupted (Arts. 1120, 1121, NCC) if the interruption is for only one year or less, the time elapsed shall be counted in favor of the prescription. (Art. 1122) 2. Civilly – when there is a judicial summons to the possessor. (Art. 1123) Exceptions: a) If it should be void for lack of legal solemnities b) If the plaintiff should desist from the complaint or should allow the proceedings to lapse; and c) If the possessor should be absolved from the complaint 3 Express or tacit recognition by the possessor of the owner’s right. Possession in wartime. PYabao Notes 2. Extinctive prescription – rights and actions are lost through the lapse of time. GOOD FAITH  Reasonable belief that a person who transferred thing is the owner and could validly transmit ownership (Positive Aspect, Art. 1127, NCC)  Ignorance of the possessor of any flaw of acquisition (Negative Aspect, Arts. 1128, 526, NCC)  It must exist throughout the entire period required for prescription  JUST TITLE There is just title when the adverse claimant came into the possession of the property through one of the modes recognized by law for the acquisition of ownership or other real right, but the grantor was not the owner or could not transmit any right. Requisites: 1. It must be proved and never presumed; 2. Capacity to acquire prescription; 3. The object must be susceptible of prescription; 4. The possession must be in concept of owner, public, peaceful, continuous, and uninterrupted; and 5. The period of possession must be 8 years if the object is movable or 30 years if it is immovable. ◘ INTERRUPTION OF PRESCRIPTION 1. Naturally – when through any cause, the possession shall cease for more than one year TABLE OF PRESCRIPTIVE PERIODS Prescriptive Period Actions Imprescriptible  To declare an inexistent or void contract  To quiet title  To demand a right of way  To demand the cutting of branches if tolerated by invaded owner (Art. 680, NCC)  To cut off the roots, unless notaria prohibition is made (Art. 680, NCC; 4 Manresa 830)  To bring an action for abatement of public nuisance  To demand partition in coownership  To enforce a trust  Probate of a will  To recover possession of a registered land under the land registration act by the registered owner  To recover a movable possessed thru a crime  To declare absolute nullity of marriage on the grounds in Arts. 35/36, FC.  Action to claim legitimacy. (Art. 173, FC.)  Action to obtain declaration of illegitimate filiation. (Art. 175, FC.) 30 Years for reconveyance of the titled immovable is 4 years from discovery of fraud, cf. Arts. 1390, 1391  Action for damages against those who caused fraud or were instrumental I depriving one of his property by fraudulent registration – if reconveyance based on constructive trust, if the property is now registered by an innocent purchaser for value, cannot be had  Action upon a mortgage contract. (Art. 1142, CC.)  To demand the cutting of branches if not tolerated by invaded owner as when demand is made from date of said demand (Art. 680, NCC)  Real actions over immovables (but not foreclosure, not reconveyance of real property in case of implied or constructive trust, not those other actions with their specific prescriptive periods) without prejudice to the acquisition of ownership or real rights by acquisitive prescription Note: Take note of the requisites of acquisitive prescription = Just title within the time fixed by law; In the concept of an owner; Public, adverse, peaceful and uninterrupted. 10 Years  Actions upon a written contract (Art.1144, eg. Arts.1191, 1592 )  Actions upon an obligation created by law (Art. 1144)  Actions upon a judgment from the time judgment becomes final (Art. 1144)  Actions among co-heirs to enforce warranty against eviction in partition  Action for declaration of nullity under Art. 36, where marriage was celebrated before effectivity of the FC.  Action for recovery of possession of immovables (accion publiciana) if real right of possession is lost. (Arts. 555, 1134, CC.)  Action for recovery of ownership of immovables (accion reinvindicatoria) if possessor is in good faith. (Art. 1134, CC.)  Action for reconveyance of property based on an implied or constructive trust (Art 1144 CC in relation to Art, 1456 CC and Sec 53 (3) of PD 1529) – reckoned from the date trustee repudiates the express trust – ie., registration of sale/issuance of the certificate of title Note: In the case Sps. Pascual, et al. vs. CA, et al. GR 115925, Aug. 15, 2003, it was held that repudiation takes place when the adverse party registers the land. Note: This is not ordinary fraud, where the prescriptive period 8 Years  Action to recover movables (repliven) if possessor is in bad faith, without prejudice to acquisition of title for a shorter period or to the possessor’s title (Arts. 559, 1505 and 1133 ) 6 Years  Actions upon an oral (verbal) contract  Actions upon a quasi-contract  Actions for compensation against the Assurance Fund by the person deprived of his land under the Torrens system, from the time the right to bring such action occurred (Sec. 102, PD 1529) NOTE: If party is minor, insane or imprisoned, 2 years after such disability has been removed notwithstanding the expiration of the original period of 6 years. 5 Years  Actions for annulment of marriages based on (1) lack of parental consent (Art. 47, par. 1, FC), (2) Fraud (par. 3); (3) Force, intimidation or undue influence (par. 4); (4) Physical incapacity and afflicted with a sexuality transmissible disease (par. 5.) - except on the ground of insanity from the occurrence of the cause  Action for legal separation counted, from the occurrence of the cause (Art. 57, FC.)  Actions against the co-heirs for warranty of solvency the debtor in credits assigned in partition  Action for the declaration of the incapacity of an heir (devisee or legatee) to succeed (Art. 1040, CC)  Action to claim legitimacy if child should die during minority or in state of insanity. (Art. 173, FC.)  Action for warranty of solvency of debtor if credit is assigned to coheir during partition. (Art. 1095, CC.)  All other actions whose periods are not fixed by law. (Art. 1149, CC. counted from the time the right of action accrues 4 Years  Action to revoke donations due to non-compliance of conditions – counted from date of noncompliance (Art. 764)  Action to rescind partition of deceased’s estate on account of lesion  Action for reconveyance of titled immovable if registered by another with the use of fraud under his name (but without implied/ constructive trust) from discovery of the fraud NOTE: The 4-year prescriptive period under Art. 1391 applies only if the fraud does not give rise to an implied trust, and the action is to annul a voidable contract under Art. 1390.  Action to claim rescission of contracts (Art. 1389 on Rescissible Contracts under Art. 1381) Note: Remember the different causes; if fraud, from date of discovery of the fraud  Actions upon a quasi-delict  Action to revoke or reduce donations based on birth, appearance or adoption of a child – counted from the birth of the first child, or from his legitimation, recognition or adoption, or from the judicial declaration of filiation, or from the time information was received regarding the existence of the child believed dead. (Art. 763)  Actions upon an injury to the rights of the plaintiff (not arising from contract)  Action for repliven where possessor is in good faith  Action for annulment of voidable contracts (Art.1391) – reckoned date depends on the ground  Right to redeem in a Conventional Redemption, from date of contract, if no period is agreed; but if there is an agreement, the period should not exceed 10 years. (Art.1606 in relation to Art. 1601) NOTE: Vendor may still exercise the right to repurchase within 30 days from the time final judgment was rendered in a civil action on the basis that the contract was a true sale with right to repurchase. (Art.1606) 3 Years 2 Years 1 Year  Actions under the eight-hour labor law  Actions to recover losses in gambling  Money claims as a consequence of employer-employee relationship  Action to impugn legitimacy of a child if the husband or his heirs reside abroad (Art. 170, FC)  Action to impugn child's legitimacy      if husband is in the Philippines but not in same place as wife. (Art. 170, FC.) Action by husband against wife to impugn child's legitimacy if husband is in the same place as wife. (Art. 170, FC.) Action for revocation of donation for acts of ingratitude. (Art. 769, CC.) Action for forcible entry or unlawful detainer. (Art. 1147, CC.) Action for defamation. (Art. 1147, CC.) Action for rescission or for damages if immovable sold is encumbered with non-apparent burden or servitude. (Art. 1560, CC.) 6 Months  Action for reduction of price, or for rescission in case of breach of sale of real estate, either with a statement of its area at a certain price for a unit of measure or number (Arts. 1543, 1539, CC), or for a lump sum - from the delivery of the thing sold (Arts. 1543, 1542, CC.)  Rescission by vendee of sale, even if area is the same, when the inferior value of the thing sold exceeds 1/10 of the price agreed upon - from delivery of the thing sold (Arts. 1539, 1543 CC)  Rescission of sale if the vendee would not have bought the immovable had he known of the smaller area or inferior quality from delivery of the thing sold (Arts. 1539, 1543, CC)  Action for warranty against hidden defects of thing sold - from the delivery of the thing sold (Art. 1571, CC.) 40 Days  Redhibitory action based on defects of animals - from date of delivery of animals to vendee. (Art. 1577, CC.) 30 Days  Vendor’s right to repurchase, from the time final judgment was rendered in a civil action on the basis that the contract was a true sale with right to repurchase. (Art. OBLIGATIONS AND CONTRACTS I. OBLIGATIONS A. GENERAL PRINCIPLES Obligation Juridical necessity to give, to do or not to do. (Art. 1156) SOURCES OF OBLIGATION 1. Law Must be expressly or impliedly set forth and cannot be presumed. 2. Contract Must be complied with in good faith. The law between the parties Parties are allowed to enter into any stipulations, provided they are not contrary to law, morals, good customs, public order or public policy. 3. Quasi-Contract Juridical relations resulting from a lawful, voluntary and unilateral act, and which has for its purpose, the payment of indemnity to the end that no one shall be unjustly enriched r benefited at the expense at the expense of another. Two Kinds of Quasi-Contracts a. Negotiorum Gestio Unauthorized management; this takes place when a person voluntarily takes charge of another’s abandoned business or property without the owner’s authority. b. Solutio Indebiti 1606, CC) Undue payment; this tales place when something is received when there is no right to demand it, and it was unduly delivered thru mistake. 4. Delict See appropriate provisions of the Revised Penal Code (Art. 100 RPC). Civil liability arising from crimes include restitution, reparation of damage caused and indemnity for consequential damages. Effect Of Acquittal: if acquittal is due to reasonable doubt, there is no civil liability. If the acquittal is due to exempting circumstance or there is preponderance of evidence, there is civil liability. 5. Quasi-Delict It is a fault or act of negligence which causes damage to another, there being no pre-existing contractual relations between the parties. Requisites of Obligation 1. Juridical tie (vinculum juris) 2. Active subject (obligee or creditor) 3. Passive subject (obligor or debtor) 4. Prestation (object of the obligation) Accessory Obligations 1. Exercise due diligence/preserve the thing 2. Delivery of fruits 3. Delivery of accessories and accessions Rights of the Creditor: A. Determinate Obligations: 1) Specific performance and 2) Damages exclusive or in addition to the remedy at the option of the creditor B. Generic Obligations 1) Specific performance 2) To demand that obligation be complied with at the expense of the debtor, and 3) Damages Obligations of the Debtor A. Determinate Obligations: 1) Specific performance 2) Take care of the thing with proper diligence 3) Deliver all accessions and accessories 4) Pay for damages in case of breach by reason of delay, fraud, negligence or contravention of the tenor thereof B. Generic Obligations: 1) Deliver the thing which is neither superior nor inferior quality; and 2) Pay damages in case of breach obligation. Diligence Required 1. That agreed upon by the parties; 2. In the absence of stipulation, that required by law in the particular case; and 3. If both the contract and law are silent, diligence of a good father of a family. of of Incidental Fraud (Dolo Incidente) Present during the performance of a preexisting obligation. Purpose is to evade the normal fulfillment of the obligation. BREACH OF OBLIGATIONS Voluntary – debtor, in the performance of the obligation, is guilty of: a. default (mora) b. fraud (dolo) c. negligence (culpa) d. contravention of the tenor of the obligation Note: debtor is liable for damages ◘ 1. Results in the nonfulfillment or breach of the obligation. Gives rise to a right of the creditor to recover damages from the debtor. 2. Involuntary – debtor is unable to comply with his obligation because of fortuitous event Note: debtor is not liable for damages ◘ DELAY (MORA) – Incurred from the moment the obligee judicially or extra-judicially demands the fulfillment of the obligation. General Rule: There must be a demand before delay may be incurred. Exceptions: 1. Time is of the essence 2. Obligation or law expressly declares 3. Demand is useless as when obligor has rendered it beyond his power to perform 4. There is an acknowledgement of default ◘ Gives rise to a right of an innocent party to annul the contract. FORTUITOUS EVENT – an event which could not be foreseen, or which, though foreseen is inevitable. General Rule: No liability in case of fortuitous event. Exceptions: 1. By contrary stipulation in the contract; 2. Declared by law; E.g. Art. 552(2), 1165(3), 1268, 1942, 2147, 2148 and 2159 of the Civil Code. 3. Nature of the obligation requires assumption of risk when expressly declared by law 4. When the obligor is in default or has promised to deliver the same thing to 2 or more persons who do not have the same interest (Art. 1165(3)). Classification of Delay (MORA) 1. Mora solvendi (delay of the debtor)  Mora sovendi ex person – demand is necessary.  Mora sovendi ex re – demand is not necessary. 2. Mora accepiendi (delay of the creditor) 3. Compensatio morae (mutual delay of the parties); has the effect of canceling the liabilities of the parties. Essential Characteristics of a Fortuitous Event 1. Cause is independent of the will of the debtor; 2. Impossibility of foreseeing or impossibility of avoiding it to be foreseen even if foreseen; 3. Occurrence renders it impossible for debtor to fulfill his obligation in a normal manner; and 4. Debtor is free from any participation in the aggravation of the injury to the creditor. Fraud (DOLO) – Must be present during the performance of the obligation and not fraud at the time of the birth of the obligation (CAUSAL OR INCIDENTAL FRAUD). Negligence (CULPA) – Consists in the omission of that diligence which is required by the nature of the circumstances of the persons of the time and of the place. Causal Fraud (Dolo Causante) Present during the time of birth of the obligation Purpose is to secure the consent of the other to enter into a contract. Results in the vitiation of consent.  The lessee failed to employ reasonable foresight, diligence and care that would have exempted it from liability resulting from the burning of the truck. Negligence as commonly understood, is that conduct that naturally or reasonably creates undue risk or harm to others. It may be a failure to observe that degree of care, precaution or vigilance that the circumstances justly demand. (Valenzuela vs. CA, 253 SCRA 303; Quibal vs. Sandiganbayan, 244 SCRA 224; Citibank vs. Gatchalian, 240 SCRA 212) or to do any other act that would be done by a prudent and reasonable person, who is guided by consideration that ordinarily regulate the conduct of human affairs. (Layuga vs. IAC, 167 SCRA 363; Buillan vs. COA, 300 SCRA 445; Minder Resources Development vs. Morillo, GR 138123, March 2002)   In order that a common carrier may be absolved from liability where the loss, destruction or deterioration or the goods is due to a natural disaster or calamity, it must further be shown that such natural disaster or calamity was the proximate and only cause of the loss (Art. 1739, NCC). There must be an entire exclusion of human agency from the cause of the injury or the loss. Moreover, even in cases where natural disaster is the proximate and only cause of the loss, a common carrier is still required to exercise due diligence to prevent or minimize loss before, during and after the occurrence of the natural disaster, for it to be exempt from liability under the law for the loss of the goods (Art. 1739, NCC). If a common carrier fails to exercise due diligence or that ordinary care which the occasion of a natural disaster, it will be deemed to have been negligent and the loss will not be considered as having been due to a natural disaster under Article 1734 (Philippine American General insurance Co. vs. MGG Marine Services, Inc., GR 135645, Mar. 8, 2002) B. KINDS OF OBLIGATION 1) 2) 3) 4) 5) 6) ◘ Pure and Conditional Obligation with a period Alternative and Facultative Joint and Solidary Divisible and indivisible Obligation with a penal clause PURE OBLIGATION Effectivity or extinguishment does not depend upon the fulfillment or non-fulfillment of a condition or upon the expiration of a term or period. CONDITIONAL OBLIGATION Effectivity is subordinate to the fulfillment or nonfulfillment of a future and uncertain fact of event. Kinds of Conditions: 1) Suspensive – fulfillment of the condition results in the acquisition of rights arising out of the obligation 2) Resolutory - fulfillment of the condition results in the extinguishments of rights arising out of the obligation 3) Potestative - fulfillment of the condition depends upon the will of a party to the obligation 4) Casual – fulfillment of the condition depends upon chance and/or upon the will of a third person 5) Mixed – fulfillment of the condition depends partly upon chance and/or the will of a third person 6) Possible – condition is capable of realization according to nature, law, public policy and good customs 7) Impossible – condition is not capable of realization according to nature, law, public policy and good customs 8) Positive – condition involves the performance of an act 9) Negative – condition is susceptible of partial realization 10) Divisible – condition is susceptible of partial realization 11) Indivisible – condition is not susceptible of partial realization 12) Conjunctive – where there are several conditions, all of which must be realized 13) Alternative – where there are several conditions but only one must be realized. 1. 2. Rule in Potestative Conditions Before the fulfillment of the condition, the right which the creditor has already acquired by virtue of the obligation is required by virtue of the obligation is subject to a threat of extinction. Upon fulfillment of the condition, the parties shall return to each other what they received including the fruits. Loss, Deterioration and Improvement (During the Pendency of the Condition) 1. Loss  Without debtor’s fault – obligation is extinguished.  With debtor’s fault – debtor pays damages. 2. Deterioration  Without debtor’s fault – obligation is extinguished.  With debtor’s fault – creditor may choose between the rescission of the obligation and its fulfillment with indemnity for damages in either case. 3. Improvements  By the thing’s nature or by time – improvement shall inure to the benefit of the creditor  At the debtor’s expense – debtor shall have no other right that that granted to a usufructuary A Thing is Lost when it: 1. 2. 3.   Perishes; Goes out of commerce (selling children as slaves, prohibited by law); Disappears in such a way that its existence is unknown or it cannot be recovered (cargo sinks with ship). Reciprocal Obligations Those which are created or established at the same time, out of the same cause, and which result in mutual relationships of creditor & debtor between the parties TACIT RESOLUTORY CONDITION If one of the parties fails to comply with what is incumbent upon him, there is a right on the part of the other to rescind the obligation. Right to Rescind General Rule: The right to rescind needs judicial approval. Exceptions: 1. If there is an express stipulation of automatic rescission 2. When the debtor voluntarily retuned the thing ◘  2. 3. Duration of the period depends upon the will of the debtor. Debtor finds himself when his means permit him to do so. When Debtor Losses the Right to Make Use of the Period 1. He becomes insolvent, unless he gives a sufficient guaranty or security; 2. He does not furnish to the creditor the guaranties or securities he promised; 3. By his own act he has impaired said guaranties or securities after their establishment, and when through fortuitous event they disappear, unless he gives new ones equally satisfactory; 4. Debtor violates any undertaking, in consideration of which the creditor agreed to the period; or 5. Debtor attempts to abscond. TERM 1. Interval of time which is future & certain 2. Interval of time w/c must necessarily come, although it may not be known when 3. Exerts an influence upon the time of demandability or extinguishment of an obligation 4. Does not have any retroactive effect unless there is an agreement to the contrary 5. When it is left exclusively to the will of the debtor, the existence of the obligation is not affected. CONDITION 1. Fact or event which is future and uncertain 2. Future and uncertain fact or event w/c may or may not happen 3. Exerts an influence upon the very existence of the obligation itself 4. Has retroactive effect 5. When it is left exclusively to the will of the debtor, the very existence of the obligation is affected. OBLIGATION WITH A PERIOD Consequences are subjected in one way or another to the expiration of the period or term. When May Court Fix Term 1. Obligation does not fix a period, but from its nature it can be inferred that a period was intended by the parties. ◘ ALTERNATIVE OBLIGATION – Debtor may give the creditor wither one of several prestations (to give, to do, or not to do). FACULTATIVE OBLIGATIONS ALTERNATIVE OBLIGATIONS 1. Comprehends only one object or prestations which is due, but it may be complied with by the delivery of another object or performance of another prestation in substitution 2. Choice pertains only to debtor 3. Culpable loss obliges the debtor to deliver substitute prestation without liability to debtor 4. Fortuitous loss extinguishes the obligation is entitled only to a proportionate part of the credit. 1.Comprehends several objects or prestations which are due but may be complied with by the delivery or performance of only one of them General Rule: Obligation is presumed joint if there is concurrence of 2 or more creditors in the same obligation Exceptions: 1. Expressly stated to be solidary 2. Law requires solidarity 3. Nature of the obligation requires solidarity 2. Choice may pertain to creditor or even third person 3. Culpable loss of any object due will give rise to liability to debtor Solidary liable for creditors obligation 4. Fortuitous loss of all prestations will extinguish the obligation Divisible Obligations – Those which have as their object a prestation which is susceptible of partial performance without the essence of obligation changed Indivisible Obligation – An obligation is not susceptible of partial performance. EFFECT OF LOSS OF OBJECT OF OBLIGATION 1. If right of choice belongs to debtor a. If through a fortuitous event – debtor cannot be held liable for damages b. If one or more but not all of the things are lost or one or some but not all of the prestations cannot be performed due to the fault of the debtor, creditor cannot hold the debtor liable for damages because the debtor can still comply with his obligation 2. If right of choice belongs to the creditor a. If one of the things is lost through a fortuitous event, the debtor shall perform the obligation by delivering that which the creditor should choose from among the remainder, or that which remains if only 1 subsists. b. If the loss of 1 of the things occurs through the fault of the debtor, the creditor may claim any of those subsisting, or the price of that which, through the fault of the former, has disappeared with a right to damages. c. If all the things are lost through the fault of the debtor, the choice by the creditor shall fall upon the price of any of them, also with indemnity for damages. ◘ JOINT AND SOLIDARY OBLIGATIONS Joint Obligation – Each debtor is liable only for the appropriate part of the debt, and each creditor Obligation – Each of the debtors are the entire obligations and each of the are entitled to demand the whole from any or all of the debtors. Reciprocal Obligation – Created or established at the same time, out of the same cause, and which result are mutual relationships of creditor and debtor between partners Joint Divisible Obligations – each creditor can demand for the payment of his proportionate share of the credit, while each debtor can be held liable only for the payment of his proportionate share of the debt. Joint Divisible Obligations 1. 2. If there are 2 or more debtors, compliance with the obligation requires the concurrence of all of them, although each for his own share. Consequently, only proceeding against all of the debtors can enforce the obligation. If there are 2 or more creditors, the concurrence of the collective acts of all the creditors, although each for his own share is also necessary for the enforcement of the obligation. A creditor cannot act in representation of the others, and it is also indivisible and, therefore, not susceptible of partial fulfillment, Effect of Assignment by Solidary Creditor without Consent of Others 1. Assignee is co-creditor – no violation of Art. 1213 because there can be no invasion of the personal or confidential relationship 2. Assignee is third person – co-creditors and debtors are not bound by the assignment. Effect of Novation upon Solidary Obligation 1. If the Novation is prejudicial, the solidary creditor who effected the Novation shall reimburse the others for damages incurred by them 2. If it is beneficial and the creditor who effected the Novation is able to secure performance of the obligation, such creditor shall be liable to the others for the share which corresponds to them, not only in the obligation, but also in the benefits. 3. If the Novation is effected by substituting another person in place of the debtor, the solidary creditor who effected the Novation is liable for the acts of the new debtor in case there is deficiency in performance or in case damages are incurred by the other solidary creditors as a result of the substitution. 4. If the Novation is effected by subrogating a third person in the rights of the solidary creditor responsible for the Novation, the relation between the other creditors not substituted and the debtor or debtors is maintained. Effect of Compensation and Confusion upon Solidary Obligation 1. If the confusion or compensation is partial, the rules regarding application of payment shall apply. 2. If the confusion or compensation is total, the obligation is extinguished, what is left is the ensuing liability for reimbursement within each group: a. The creditor causing the confusion or compensation is obliged to reimburse the other creditors b. The debtors benefited by the extinguishments of the obligation is obliged to reimburse the debtor who made the confusion or compensation possible Effect of Remission upon Solidary Obligation 1) If the remission covers the entire obligation, the obligation is totally extinguished and the entire juridical relation among the debtors is extinguished all together 2) If the remission is for the benefit of one of the debtors and it covers his entire share in the obligation, he is completely released from the creditors but is still bound to his co-debtors 3) If the remission is for the benefit of one of the debtors and it covers only a part of his share in the obligation, his character as a solidary debtor is not affected. Effect of Payment by Solidary Debtor 1) Whole or partial extinguishment of debt 2) Right to recover against co-debtor 3) Right to recover interest from time obligation becomes due the Defenses available to a Solidary Debtor 1) Defenses derived from the very nature of the obligation 2) Defenses personal to him or pertaining to his own share 3) Defenses personal to the others, but only as regards that part of the debt for w/c the latter are responsible ◘ OBLIGATION WITH A PENAL CLAUSE One to which an accessory undertaking is attached for the purpose of insuring its performance by virtue of which the obligor is bound to pay a stipulated indemnity or perform a stipulated prestation in case of breach. General Rule: The penalty fixed by the parties is a compensation or substitute for damages in case of breach of obligation. Exceptions: (Cases where creditor can recover penalty plus damages) 1. Stipulation to contrary 2. Obligor is sued for the refusal to pay the agreed penalty; and 3. Obligor is guilty of fraud. Purpose Penalty Clause 1. To insure the performance of the obligation 2. To liquidate the amount of damages to be awarded to the injured party in case of breach of the principal obligation. 3. In certain exceptional cases, to punish the obligor in case of breach of the principal obligation General Rule: The penalty fixed by the parties is a compensation or substitute for damages in case of breach. Exceptions: 1. Stipulation to the contrary 2. Debtor is sued for refusal to pay the agreed penalty     The stipulated penalty might even be deleted such as when there has been substantial performance in good faith by the obligor, (Article 1234, NCC), when the penalty clause itself suffers from fatal infirmity or when exceptional circumstances so exist as to warrant it. (Garcia vs. CA 167 SCRA 815; Palmares vs. CA, 288 SCRA 423; Ibarra vs. Aveyro, 37 Phil. 278; Ligutan vs. CA, et al., GR 138677, February 12, 2002) Note: The enumeration is not exclusive. Other modes not found in Art. 1231 are: 1. Death 2. Discharge in cases of insolvency 3. Discharge under Negotiable Instruments Law 4. Fortuitous event 5. Mutual desistance (mutuo disenso) Extraordinary Inflation In case extraordinary inflation or deflation of the currency stipulated supervene, the value of the currency at the rime of the establishment of the obligation shall be the basis of payment, unless there is an agreement to the contrary. (Article 1250, NCC; Singson vs. Caltex (Phil.), Inc., GR 137798, October 4, 2000). Extraordinary inflation exists when there is a decrease or increase in the purchasing power of the Philippine currency which is unusual or beyond the common fluctuation in the value of said currency and contemplation of the parties at the time of the establishment of the obligation (Hubonhoa vs. CA, GR 95897 and 102604, December 14, 1999; Serra vs. CA, 299 SCRA 60; Hanh vs. CA, 173 SCRA 675; Filipino Pipe and Foundry Foundation Corporation vs. NAWASA 161 SCRA 32) The effects of extraordinary inflation are applicable only when there is an official declaration by competent authorities (Lantion vs. NLRC, 181 SCRA 513; Commissioner of Public Highways vs. Burgos, 96 SCRA 831) ◘ PAYMENT OR PERFORMANCE General Rule: Creditor is not bound to accept payment or performance by a third person. Exceptions: 1. When made by third person who has an interest in the fulfillment of the obligation; and 2. Contrary stipulation. Rights of a Third Person Who Paid the Obligation of Another With the knowledge and consent of the debtor 1. Recover entire amount paid. 2. Subrogated to all the rights of the creditor. C. MODES OF EXTINGUISHING AN OBLIGATION Without the knowledge or against the will of debtor Can recover only insofar as payment has been beneficial to the debtor. To Whom payment must be made: 1. The third person whose favor the obligation has been constituted 2. His successor in interest 3. Any person authorized to receive it. 1. 2. 3. 4. 5. Loss of a thing due Annulment Rescission Novation Confusion or merger of rights of the creditor and debtor 6. Compensation 7. Condonation or remission of the debt 8. Payment or performance 9. Prescription 10. Fulfillment of resolutory condition General Rule: If payment is made to a person other than those enumerated, it shall not be valid. Exceptions: i. Payment made to a 3rd person, provided that it has redounded to the benefit of the creditor. ii. Payment made to the possessor of the credit, provided that it was made in good faith.  Obligation to Deliver a Generic Thing If the quality and circumstances have not been stated, the creditor cannot demand a thing of superior quality; neither can the debtor deliver a thing of inferior quality. Rules in Monetary Obligations: 1. Payment in Cash – must be made in the currency stipulated; if not possible, then in the legal tender in the Philippines 2. Payment in Check or Other Negotiable Instrument – not considered payment; not considered legal tender and may be refused by the creditor. It shall only produce the effect of payment: a. when it has been cashed or b. when it has been impaired through the fault of the creditor LEGAL TENDER  Such currency which may be used for the payment of all debts, whether private or public.  Legal tender of the Philippines would be all notes and coins issued by the Central Bank  COINS: Section 52, RA No. 7653 1. 25 cents and above, legal tender up to P50 2. 10 cents and below, legal tender up to P20 Special Forms of Payment 1) Application of payment 2) Dation in Payment 3) Payment by Cession 4) Tender of payment and Consignation  1) Application of Payment Designation of the debt to which the payment must be applied when the debtor has several obligations of the same kind in favor of the same creditor   In dacion en pago, properties are alienated to the creditor in satisfaction of a debt in money. (Art. 1245, NCC). It is “delivery and of a thing by a debtor to the creditor as an accepted equivalent of the performance of the obligation “It extinguishes the obligation to the extent of the value of the thing delivered, either as agreed upon by the parties or as may be proved, unless the parties by agreement, expressed or implied, or by their silence, considered the thing as equivalent to the obligation, in which case the obligation is totally extinguished. (Caltex [Philippines], Inc. vs. IAC, 215 SCRA 580) 3) Payment By Cession Debtor abandons all of his property for the benefit of his creditors in order that from the proceeds thereof, the latter may obtain payment of their credit Requisites: a) Plurality of debts b) Partial or relative insolvency of the debtor c) Acceptance of the cession by the creditors General Rule: The right to designate the debt to which the payment shall be applied primarily belongs to the debtor. Exception: If the debtor does not avail of such right and he accepts from the creditor a receipt in which the application is made. DATION IN PAYMENT One creditor Not necessarily in state of financial difficulty. Thing delivered is considered as equivalent of performance Payment extinguishes obligation to the extent of the value of the thing delivered as agreed upon, proved or implied from the conduct of the creditor Dation in Payment (Dacion En Pago)  The property alienated by the debtor to the creditor in satisfaction of the debt in money, as an 4) TENDER OF CONSIGNATION  Requisites: 1) One debtor and one creditor; 2) Two or more debts of the same kind; 3) All debts must be due; and 4) Amount paid by the debtor must not be sufficient to cover the debts 2) accepted equivalent of the performance of the obligation. Requisites: a. Existence of a money obligation b. Alienation to the creditor of a property by the debtor with the consent of the former c. Satisfaction of the money obligation of the debtor PAYMENT BY CESSION Plurality of creditors Debtor must be partially or relatively insolvent Universally of property of debtor is what is ceded. Merely releases the debtor for net proceeds of things ceded or assigned unless there is contrary intention. PAYMENT AND Tender of Payment  Manifestation of the debtor to the creditor of his decision to comply immediately with his obligation 2. 3. 4. 5. Consignation  Deposit of the object of the obligation in a competent court in accordance with rules prescribed by law after refusal or inability of the creditor to accept the tender of payment.  The rationale for consignation is to avoid the performance of an obligation for becoming more onerous to the debtor by reason or causes not imputable. (Jespajo Realty Corp vs. CA et al., GR 113626, September 27, 2002) Requisites: a. The debt sought to be paid must be due. b. There must be a valid and unconditional tender of payment or any of the causes stated by law for effective consignation without previous tender of payment exists. c. The consignation of the thing due must be first announced to the persons interested in the fulfillment of the obligation. d. Consignation shall be made by depositing the things due at the disposal of judicial authority. e. The consignation having been made, the interested parties shall also be notified thereof. General Rule: It shall produce effects of payment only if there is valid tender of payment. Exceptions: 1. Creditor is absent or unknown or does nor appear at the place of the payment. 2. Creditor is incapacitated to receive payment at the time it is due; 3. When 2 or more persons claim the right to collect; 4. When the title to the obligation has been lost. 5. When w/o just cause he refuses to give a receipt. 6. 7. Nature of the obligation requires the assumption of risk. Due partly to the fault of the creditor. Occurs after the debtor incurred delay. Promised by debtor to deliver the same thing to 2 or more persons who do not have the same interests. Debt of a certain and determinate thing proceeds from a criminal offense. When the obligation is generic. In Generic Obligations to Give: General Rule: Obligation is not extinguished; the genus of the thing never perishes (genus nunquam perit) Exception: In case of a generic obligation whose object is particular class or group with specific or determinate qualities (limited generic obligation) In Obligation to Do: Obligation is extinguish when prestation becomes legally or physically impossible ◘ REMISSION OR CONDONATION An act of pure liberality by virtue of which the oblige, without receiving any price or equivalent, renounces the enforcement of the obligation, as result of which it is extinguished in its entirety or in that part or aspect of the same to which the remission refers. ◘ LOSS OF THE THING DUE In Determinate Obligation to Give: General Rule: Extinguishes obligation. Exceptions: 1. By law, or stipulation in the contract, obligor is liable even for fortuitous event. Requisites: 1. It must be gratuitous. 2. It must be accepted by the obligor. 3. Formalities of a donation must be complied in case of express remission. 4. Obligation must be demandable. Kinds: 1. As to form Express – made in acceptance with formalities prescribed by law of donations. Implied – not made in acceptance with formalities of donation but deducible from the acts of oblige/creditor. 2. As to extent Total – when the entire obligation is extinguished. Partial – refers only to principal or accessory obligation. 3. As to constitution Inter Vivos – constituted by agreement between obligor and oblige which partakes the nature of donation inter vivos. Mortis Causa – constituted by last will and testament which partakes the nature of donation mortis causa. Essential Characteristics of Remission (Art. 1270) 1. Gratuitous in character. 2. Must be an act of pure liberality. 3. Creditor should not have received any price or equivalent from the debtor as a result of his act in removing the enforcement of obligation. Necessity of Acceptance by Debtor  Because in reality it is by nature a donation.  For a valid donation, there must be acceptance by the debtor. Applicability of Rules on Donations  Governs the forms of donation if remission is express, those governing the extent or amount of donation; and those governing the revocation of donation. ◘ CONFUSION OR MERGER OF RIGHTS Merger of the characters of the creditor and the debtor in one and the same debtor in one person by virtue of which the obligation is extinguished. Requisites: Characters of creditors and debtors must be in the same person. Take place in the person of either the principal creditor or the principal debtor. Complete and definite. Kinds: 1. As to cause or constitution Inter Vivos – constituted by agreement of the parties. Mortis Causa – by succession. 2. As to extent or effect: Total – if it results in the extinguishment of the entire obligation. Partial – only a part is extinguished. ◘ COMPENSATION Extinguishment in the concurrent amount of the obligation of those persons who are reciprocally debtors and creditors of each other. Requisites: 1. Two parties, who, in their own right, are principal creditors and principal debtors of each other. 2. Both debts must: a. Consists in money or of the same kind and quality. b. Due, liquidated and demandable. 3. No retention or controversy commenced by 3rd persons over either of the debts and communicated in due time to the debtor. 4. Not prohibited by law. DISTINCTION BETWEEN: Compensation Takes place ipso jure. Capacity to give and acquire not essential. Payment Takes effect by act of the parties. Capacity to give and acquire is essential. As a rules, partial. As a rule, couple are indivisible.  Compensation There must be two persons who, in their own right, are creditor and debtors with each other. Must be at least two. Confusion There is only one person in whom is merged the qualities of creditor and debtor. Rules in Case of Rescissible or Voidable Debts (Art. 1284)  Above rule is an exception to the general rule of demandability in order that compensation shall take place.  Justified by the fact that rescissible or voidable obligations are considered demandable while the vices with which they are tainted are not yet judicially declared.  Consequently, if the action for rescission or annulment is not exercised, or is renounced, or if the debts are ratified the obligation or obligations are susceptible of compensation. There is only one. Kinds of Compensation A. As to cause: 1. Legal – take effect by operation of law from the moment all requisites are present. 2. Voluntary – parties who are mutually creditor and debtors agreed to compensate their respective obligation, even though requisites are not present. 3. Judicial – takes effect by judicial decree B. As to effect: 1. Total – debts are equal in amount. 2. Partial – not equal in amount. Right of Guarantor to Set up Compensation  Exception for the rule that principal debtor can only set up compensation with the creditor for what the latter owes to him. (Art. 1279 in relation to 1278)  The guarantor, in case the payment of the debt was demanded from him, may set up compensation, not only for what such creditor owes him, but also for what such creditor owes the principal debtor.  Basis: Bond of the guarantor cannot be resorted to as long as the debtor can pay although it may be in the abbreviated form or compensation and also on the fact that if the principal obligation is extinguished, the accessory obligation of the guarantor is also extinguished since it is subordinated thereto. Judicial Compensation  In reality, what is set up with the other party is a counterclaim.  A counterclaim must be pleaded to be effectual; whereas compensation takes place by mere operation of law.  Hence, counterclaim defined by Rules of Court is not the legal compensation contemplated by the Code. Reason: The very nature of counter claim can have no effect unless it is pleaded. Effect of Assignment of Rights (Art. 1285) It is a firmly settled doctrine that the rights of an assignee are not any greater that the rights of the assignor, since the assignee is merely substituted in the place of the assignor and the assignee acquired his rights subject to the equities – i.e. the defenses – which the debtor could have set up against the original assignor before notice of the assignment was given to the debtor. (Sesbreno vs. CA and Delta Motors Corp., and Pilipinas Band, GR 89252, May 24, 1993) Effect of Assignment of Credit to Third Person  If the assignment of credit to third person is made after compensation took place, it shall have no effect since the compensation has already been perfected.  a. b. c. If the assignment is made before the compensation took place, this would depend: if the assignment was made with consent of the debtor, he is estopped unless he reserves his right and gave notice to the assignee; if the assignment was with knowledge but without consent of the debtor, the compensation may be set up as to debts maturing prior to the assignment; if the assignment was without knowledge, the compensation may be set-up on all debts prior to his knowledge. Compensation with Knowledge but Without Consent of Debtor 1. If notification preceded the assignment, the effects of the assignment are produced from the time it is made and not from the time the 2. 3. notification is given. Consequently, debtor can set up the defense of compensation of debts contracted prior to the assignment. If made simultaneously, debtor can set up a defense of compensation. Of notification is made after the assignment had already made, it is evident that the assignment must have been effected without the knowledge and consent of the debtor in which case the provision of Article 1285 is applicable. Debts Not Susceptible of Compensation 1. Arising from contract of deposit. 2. Arising from contracts of commodatum 3. Claims for support due by gratuitous title. 4. Obligation arising from criminal acts. 5. Certain obligations in favor of government Effect of Compensation  Most fundamental: extinguishes the obligation/debt to the extent that the amount of one is covered by the amount of the other.  If compensation is total because both debts are equal, obligation totally extinguished, since the amount of one is entirely covered by the other.  However, if partial, because the amounts are different, the extinguishment would be total with respect to the other. ◘ NOVATION Substitution or change in the obligation by another resulting in the extinguishment or modification either by: 1. Changing the object or principal conditions (Objective) 2. Substituting another in place of the debtor (passive subjective) 3. By subrogating another person in the rights of the creditor. Requisites of Novation 1. 2. 3. 4. Previous valid obligation; Agreement of the parties to the new obligation; Extinguishment of the old obligation; and Validity of the new obligation. Distinction Between Extinctive & Modificatory Novation Extinctive Novation The old obligation is terminated by the creation of a new obligation that takes place of the former Results either by changing the object or principal conditions (objective or real), or by substituting the person of the debtor or subrogating a third person in the rights of the creditor (subjective or personal) Modificatory Novation Old obligation subsists to the extent it remains compatible with the amendatory agreement The unmodified potion of the obligation remains effective In case of doubt on whether the Novation is extinctive or modificatory, it is presumed that it is only Modificatory. Requisites of Extinctive Novation A previous valid obligation; An agreement of all parties concerned to a new contract; The extinguishment of the old obligation; and The birth of a valid new obligation. Novation is never presumed, (Rillo vs. CA, 274 SCRA 461) and the animus novandi (intent to novate), whether total or partial, must appear by express agreement of the parties, or by their acts that are too clear and unequivocal to be mistaken. (Fortune Motors Phils. Corp vs. CA, 267 SCRA 653) Kinds: 1. As to essence: Objective or Real Novation – Refers to change either in the cause, object or principal conditions of the obligation. Subjective or Personal Novation – Refers to the substitution of the person of the third person in the rights of the creditor. 2. As to Form and Constitution: Express Novation - Declared in unequivocal terms that the old is extinguished by a new one and is incompatible with each other at every point. - Takes effect only when the intention to effect a Novation clearly results from the terms and agreement or is shown by full discharge of the original debtor. Second Form: Conventional Subrogation Extinguishes the original obligation and creates new one. Implied or Tacit Novation – When the old obligation and the new one are incompatible with each other at every point. - There are no express declarations that the old obligation is extinguished by the new one. However, the old and the new obligations are incompatible on every material point such that they cannot co-exist 3. As to Extent or Effect: Total Novation – extinguishment Partial Novation – Merely a there is The consent of the debtor is necessary. (Art. 1301). Effectivity begins from the moment or subrogation. The defect in the old obligation may be cured such that the new obligation becomes valid. Debtor cannot set up a defense against the new creditor which he could have availed himself of against the old creditor. This is governed by Articles 1300-1304 absolute modification Novation in Case of an Obligation with a Term or Period  Distinction must be made by the effect of any subsequent change of the term or period.  Changes that breed incompatibility must be essential in nature and not merely accidental.  Incompatibility must take place in any essential element, otherwise a change would only be Modificatory Novation by Substitution of Debtor:  Consists in the substitution of new debtor in the place of the original debtor.  It must be effected with the consent of the creditor at the instance of either the new debtor or the old creditor.  Assignment of Credit or Rights The transfer of the credit or rights does not extinguish or modify the obligation. The transferee becomes the new creditor for the same obligation. The consent of the debtor is not necessary. Notification is enough for the validity of the assignment (Art. 1626) Effectivity begins from the notification of the debtor. The defect in the credit or rights is not cured by its mere assignment to a third person. The debtor can still set up a defense (available against the old creditor) against the old creditor. This is governed by Articles 1624-1627 Subrogation It is the transfer of all the rights of the creditor to a third person, who substitutes him in all his rights. It may either be legal or conventional. Legal subrogation is that which takes place without agreement but be operation of law because of certain acts. Conventional subrogation is that which takes place by agreement of parties. Two Forms of Substitution of Debtors First Form: Expromission Effected with the consent of the creditor at the instance of the new debtor even without the consent or even against the will of the old debtor. Delegacion Effected with the consent of the creditor at the instance of the old debtor with the concurrence of the new debtor. General Rule: Subrogation cannot be presumed. Exceptions: 1. Creditor pays another creditor who is preferred, without debtor’s knowledge; 2. A third person not interested in the obligation pays with the express or tacit approval of the debtor; or 3. Even without debtor’s knowledge, a person interested in the fulfillment of the obligation pays without prejudiced to the effects of confusion as to the latter’s share. Necessity of Creditor’s Consent Whether substitution is through expromission or delegacion, the consent of the creditor must always be secured. II. CONTRACTS Distinction Between Payment by 3 Change of Debtor Payment by 3rd Person 1. Debtor is not necessarily released from debt 2. Can be done w/o consent of creditor 3. There is only one obligation 4. Third person has no obligation to pay if insolvent rd Person & Change of debtor 1. One debtor is released. 2. Needs consent of creditor- express or implied. 3. Two obligations: One is extinguished and new one created. 4. New debtor is obliged to pay Effect upon Accessory Obligation  General Rule: It is a necessary consequence of the principle that an accessory obligation is dependent upon the principal obligation to which it is subordinated.  Exception: When stipulation refers to a third person, which is demanded separately from the principal obligation, although subordinated to the latter. Two Forms of Subrogating a Third Person in the Rights of the Creditor: 1. Conventional Subrogation – takes place upon agreement of the original creditor, debtor and the third person subrogating the original creditor. 2. Legal Subrogation – takes place by operation of law Effect of Total Subrogation  Accessory obligations are not extinguished because in such obligation the person subrogated also acquires all the rights which the original creditor had.  Effect of Partial Subrogation Both rights shall co-exist Definition of Contract Contract is a meeting of minds between two persons whereby one binds himself, with respect to the other, to give something or to render some service. (Art. 13050) A. ELEMENTS OF CONTRACTS 1. Essential Elements – those without which there can be no contract. a. Consent b. Object c. Consideration In Real Contracts, DELIVERY is also an Essential Element. 2. Natural Elements – Those derived from the nature of the contract and ordinarily accompany the same. They are presumed to exist unless the contrary has been stipulated. 3. Accidental Elements – those which exist only when the parties expressly provide for them for the purpose of limiting or modifying the normal effects of the contract. ◘ CONSENT Manifested by the meeting of the offer and acceptance upon the thing and the cause which are to constitute the contract. Requisites: Legal capacity of the contracting parties; Manifestation of the conformity of the contracting parties; The parties’ conformity to the object, cause, and the terms and conditions of the contract must be intelligent, spontaneous and free from all vices of consent; The said conformity must be real, and not simulated or fictitious. RELATIVITY OF CONTRACTS Offer – a proposal made by one contracting party to another to enter into a contract. Offer must be definite. General Rule : A contract is valid only between parties, assigns, and heirs. (Art. 1311, NCC) Exceptions: 1. Stipulation Puor Atrui – stipulation in favor of a third party. Requisites: a) Stipulation must be in part, not the whole contract itself. b) Contracting parties must have clearly and deliberately conferred a favor upon a third person. c) Third person must have communicated his acceptance. d) Neither of the parties bears the legal representation of the third person. Acceptance – manifestation by the offeree of his assent to the terms of the offer. Acceptance must be absolute; otherwise it is a counter-offer. Withdrawal of Offer/Withdrawal of Acceptance: 1. Offer may be withdrawn so long as the offeror has no knowledge of acceptance by the offeree. 2. Acceptance may be revoked before it comes to the knowledge of the offeror.  Cognition Theory – Contract is perfected from the moment the acceptance comes to the knowledge of the offeror. General Rule: Contracts, being consensual in nature (except real contracts), are perfected from the moment there is a manifestation of concurrence between the offer and the acceptance regarding the object and the cause. Exception: Acceptance by letter or telegram, which does not bind the offeror except from the time it came to his knowledge. ◘ CHARACTERISTICS OF CONTRACTS 1. Autonomy – The parties are free to stipulate anything they deem convenient provided that they are not contrary to law, morals, good customs, public order and public policy. (Art. 1306, NCC) 2. Mutuality – The contract must bind both parties; its validity or compliance must not be left to the will of one of them. (Art. 1308, NCC) 3. Obligatoriness – Contracts are perfected by mere consent and from the moment, the parties are bound not only to the fulfillment of what has been expressly stipulated but also to all consequences which, according to their nature may be in keeping with good faith, usage and law. (Art. 1315, NCC) 4. Relativity – Contracts take effect only between parties, their assigns and heirs. (Art. 1311, NCC) Test of Beneficial Stipulation – The fairest test to determine whether the interest of a 3 rd person in a contract is a stipulation pour atrui or merely an incidental interest it to rely upon the intention of the parties as disclosed by their contract. Determine whether the contracting parties desired to tender him such an interest (Uy Tam vs. Leonard, 30 Phil. 471). 2. When a third person induces a party to violate contract (Art. 1314, NCC) Requisites: a. Existence of a valid contract. b. Knowledge of contract by third person. c. Interference by third person without justification. d. Third persons who come into possession of the object of the contract creating real rights. e. Contracts entered into in fraud of creditors. VICES OF CONSENT 1. Mistake – it should refer to substance of the thing which is object of the contract or to conditions which principally mo ved parties to enter into the contract. the the the the General Rule: Mistake should be a Mistake of Fact and not Mistake of Law. Exception: Mistake of Law under Art. 1334 Reluctant Consent – A contract is valid even though one of the parties entered into it against his wishes and desires or even against his better judgment. Contracts are also valid even though they are entered into by one of the parties without hope of advantage or profit. (Martinez vs. Hong Kong and Shanghai Bank, 15 Phil 252) Requisites if Mistake of Law: A. Mistake must be with respect to the legal effect of an agreement. B. Mistake must be mutual. C. The real purpose of the parties must have been frustrated. SIMULATION OF CONTRACTS 1. Absolute simulation – no real transaction is intended. Effect: Simulated contract is inexistent. 2. Relative simulation – the real contract is void but the hidden contract is valid if it is lawful and has the necessary requisites. Effect as to third persons with notice: The apparent contract is valid on the principle of estoppel.  OBJECT  2. 2. Intimidation – when one of the contracting parties is compelled by a reasonable and well-grounded fear of an imminent and grave evil upon his person or property, or upon the person or property of his spouse, descendants, or ascendants, to give his consent. 3. 3. Violence – when, in order to wrest consent, serious or irresistible force is employed. 4. 4. Undue Influence – when a person takes improper advantage of his power over the will of another depriving the latter of a reasonable freedom of choice. 5. 5. Fraud – when, through insidious words or machinations of one of the contracting parties, the other is induced to enter into a contract which without them, he would not have agreed to. The thing, rights, or service which is the subject matter of the obligation arising from the contract. Requisites: 1. The object must be within the commerce of man. 2. The object should be real or possible. 3. The object should be licit (not contrary to law morals, good customs, public order and public policy) 4. The object should be determinate. Things Which Cannot be the Object of Contract 1. Things which are outside the commerce of man. 2. Intransmissible rights. 3. Future inheritance, except in cases expressly authorized by law 4. Services which are contrary to law, morals, good custom, public order or public policy. 5. Impossible things or services. 6. Objects which are not possible or determination as to their kind. 3. For the convenience of the parties or to bind third persons.  CAUSE  It is the immediate, direct or most proximate reason which explains and justifies the creation of an obligation through the will of the contracting parties. Requisites: 1. The cause should be in existence at the time of the celebration of the contract. 2. The cause should be licit, or lawful. 3. The cause should be true. Effects of Absence, Falsity, Illegality or Inadequacy of Cause 1. Absence of cause – there is no perfected contract; thus, it produces no effect whatsoever. (Art. 135, NCC) 2. Falsity of cause – the contract is void. (Art. 1353, NCC) 3. Illegality of cause – the contract is void. (Art. 1353, NCC) 4. Inadequacy of cause – it shall not invalidate a contract, unless there has been fraud, mistake or undue influence (Art. 1353, NCC) Different Kinds of Causes: 1. In onerous contracts – the prestation or promise of a thing or service by the other. 2. In remuneratory contracts – the service of benefit remunerated. 3. In gratuitous contracts – pure beneficiary or liberality of the benefactor. 4. In accessory contracts – the cause if the accessory contract is identical with that of the principal contract. B. FORMS OF CONTRACTS General Rule: Contracts should be obligatory, in whatever form they may have been entered into, provided all the essential requisites for their validity are present. Exceptions: 1. When law requires that a contract be in some form in order that it may be valid. 2. When the law requires that a contract be in some form in order that it may be enforceable. Contracts Where Form is Required for Validity: 1. Donation of MOVABLE property, the value of which exceeds P5,000.00. Donation and acceptance must be in writing. (Art. 748) 2. Donation of IMMOVABLE property. Donation and acceptance must be contained in a public instrument (Art. 749) 3. Sale of land through an AGENT. The authority must be in writing; otherwise the sale is void. (Art. 174) 4. Partnerships where IMMOVABLE property or real rights are contributed to the common fund, the contract must appear in public instrument and there must be inventory of the immovable property or real rights signed by the partners, and attached to the public instrument. (Art. 1771; Art. 1773, NNC)  The contracting parties may compel each other to observe the form required by law once the contract is valid and enforceable. (Art. 1357)  The required formality of contracts under Article 1358 is merely for convenience of the parties and to ensure the efficacy of the contract, and does not affect its validity and enforceability between them. C. REFORMATION OF INSTRUMENTS Reformation is that remedy in equity by means of which the instrument is amended to conform to the real intention of the parties. Requisites: 1. Meeting of the minds to the contract. 2. True intention is not expressed in the instrument by reason of mistake, accident, relative simulation, fraud, or inequitable conduct (FIRMA) 3. Clear and convincing proof of mistake, accident, relative simulation, fraud, or inequitable conduct Instances When There Can Be No Reformation: 1. Simple, unconditional donations inter vivos; 2. Wills; 3. When the agreement is void; 4. When one of the contracting parties has brought an action to enforce the instrument. Requisites of Rescissible Contracts: 1. Must be rescissible; 2. No other means to obtain reparation for the damages suffered by party asking for rescission; 3. Persons demanding rescission must be able to return whatever he may be obliged to restore is rescission is granted; 4. Object of the contract must not have passed legally to the possession of a third person acting in good faith; 5. Action must be brought within the prescriptive period of 4 years.  The remedy of reformation if an instrument is grounded on the principle of equity where, in order to express the true intention of the contracting parties, an instrument already executed is allowed by law to be reformed. The right of reformation is necessarily exercised with great caution and zealous care. Moreover, the reformation of an instrument must be brought within the period prescribed by law; otherwise it will be barred by the mere lapse of time. (Benir and Gormida vs. Judge Leanda and Leyte Gulf Traders, Inc. GR 128991, April 12, 2000. D.  It is the legal possibility of bringing the action, which determines the starting point for the computation of the four-year prescriptive period as provided in the law. (Khe Hong Cheng v. CA GR 144169, March 28, 2001) RESCISSIBLE CONTRACTS A rescissible contract is one which is valid because it contains all of the essential requisites prescribed by law, but which is defective because of contracting parties or to third persons, as a consequence of which it may be rescinded by means of proper action for rescission. 1. Rescission – a remedy granted by law to the contracting parties and even to third persons, to secure the reparation of damages caused to them by a contract, even if the same should be valid, by means of restoration of things to their condition prior to the celebration of the contract. What Contracts are Rescissible 1. Those entered into by guardians where the ward suffers lesion of more than ¼ of the value of the things which are objects thereof; 2. Those agreed upon in representations of absentees, of the latter suffer lesion by more than ¼ of the value of the things which are subject thereof; 3. Those undertaken in fraud of creditors when the latter cannot in any manner claim what are due to them. 4. Those which refer to things under litigation if they have been entered into by the defendant without the knowledge and approval of the litigants and the court. 5. All other contracts especially declared by law to be subject to rescission; and 6. Payments made in a state of insolvency on account of obligations not yet enforceable. 2. 3. Rescission in Article 1191 It is principal action 1. retaliatory in character. The only ground is 2. non-performance of one’s obligations/s or what is incumbent upon him. It applies only to 3. reciprocal obligation. 4. Only a party to the 4. contract fulfillment or seek the rescission of the contract. 5. Court may fix a period 5. or grant extension of time for the fulfillment of the obligation. 6. Its purpose is to cancel the contract. 6. Rescission in Article 1381 It is subsidiary remedy. There are 5 grounds to rescind. Nonperformance by the other party is not important. It applies to both unilateral and reciprocal obligations. Even 1 3rd person who is prejudiced by the contract may demand the rescission of the contract. Court cannot grant extension of time for fulfillment of the obligation. Its purpose is to seek reparation for the damage or injury caused, thus allowing partial rescission of the contract.  Under Art. 1191 of the Civil Code, the right to resolve reciprocal obligations is deemed implied in case one of the obligors shall fail to comply with what is incumbent upon him but right mist me invoked judicially. The same article also provides “The court shall decree the resolution demanded, unless there should be ground which justify the allowance of a terms, for the performance of the obligation. (Escueta vs. Pando, 76 Phil 256)  Consequently, even if the right to rescind is made available to the injured party (Mateos vs. Lopez, 6 Phil. 206; Bosque vs. Chipco, 14 Phil 95), the obligation is not ipso facto erased by the failure of the other party to comply with what is incumbent upon him. The party entitled to rescind should apply to the court for a decree of rescission (De Larena v. Villanueva 53 Phil 923). The right cannot be exercised solely on the party’s own judgment that the other committed a breach of obligation (Tan vs. CA, 175 SCRA 656). The operative act which produces the resolution of the contract is the decree of the court and not the mere act of the vendor (Ocejo, Perez and Co. vs. International Bank, 37 Phil 631). Since a judicial or notarial act is required by law for a valid rescission to take place, the letter written by respondent declaring his intention to rescind did not operate to validly rescind the contract (Iringan vs. CA, et al. GR 129107, Sept. 26, 2001). Badges of Fraud: 1. Consideration of the conveyance is inadequate or fictitious; 2. Transfer was made by a debtor after a suit has been begun and while it is pending against him; 3. Sale upon credit by an insolvent debtor; 4. Evidence of indebtedness or complete insolvency; 5. Transfer of all his property by a debtor when he is financially embarrassed or insolvent; 6. Transfer made between father and son, where there is present any of the above circumstances; 7. Failure of the vendee to take exclusive possession of all the property. E. VOIDABLE CONTRACTS Kinds of Voidable Contracts: 1. Those where one of the parties in incapable of giving consent to a contract; 2. Those where the consent is vitiated by mistake, violence, intimidation, undue influence or fraud. Remedy: Annulment of contract, which must be commenced 4 years from: 1. The time the incapacity ceases; 2. The time the violence, intimidation or undue influence ends; 3. The time the mistake or fraud is discovered.  Discovery of fraud must be reckoned to have taken place from the time the document was registered in the office of the register of deeds. Registration constitutes constructive notice to the whole world. (Carantes vs. Cam, 76 SCRA 514) Ratification of Voidable Contracts: Requisites: 1. There must be knowledge of the reason which renders the contract voidable; 2. Such reason must have ceased; and 3. The injured party must have executed an act which expressly or impliedly conveys an intention to waive his right. How may a Voidable Contract be Convalidated: 1. Prescription of the action for annulment; 2. Ratification or confirmation; and 3. Loss of the thing which is the object of the contract through the fraud or fault of the person who is entitled to institute the action for annulment of the contract. F. UNENFORCEABLE CONTRACTS Those which cannot be enforced by proper action in court unless they are ratified. What Contracts are Unenforceable: 1. Entered into in the same of another person by one who has been given no authority or legal representation, or has acted beyond his power; 2. Both parties are incapable of giving consent’ and 3. Do not comply with the Statute of Frauds.  STATUTE OF FRAUDS  Statute of Frauds requires certain classes of contracts to be in writing to be enforceable. The statute does not deprive the parties of the right to contract with respect to the matters involved; it merely regulates the formalities of the contract to render it enforceable.  The purpose is to prevent fraud and perjury in the enforcement of the obligation. Making satisfies the statute. The application of such statute presupposes the existence of a perfected contract.  The contracts/agreements under the Statute of Frauds require that the same be evidenced by some note, memorandum of writing, subscribed by the party charged or by his agent, otherwise, the said contracts shall be unenforceable.  The statute of frauds applies only yo executory contracts, not to those that are partially or completely fulfilled. Agreements within the Statute of Frauds: (Exclusive Enumeration) 1. Agreements not to be performed within one year from the making thereof; 2. Special promise to answer for the debt, default or miscarriage of another; Note: The promise referred to here is a collateral promise; and NOT the original promise of the debtor to his own creditor. 3. Agreement in consideration of marriage other than a mutual promise to marry; 4. Agreement for the sale of goods, etc. at a price not less than P500.00; 5. Contracts of lease for a period longer than one year; 6. Agreements for the sale of real property of interest therein; and 7. Representation as to the credit of a third person. G. VOID OR INEXISTENT CONTRACTS VOID CONTRACTS Void contracts are those were all of the requisites of a contract are present but the cause, object, or purpose is contrary to law, morals, good customs, public order or public policy, or contract itself is prohibited or declared void by law. Kinds of Void Contracts: 1. Those whose cause, object or purpose is contrary to law, morals, good customs, public order or public policy; 2. Those whose object is outside the commerce of man; 3. Those which contemplate an impossible service; 4. Those where the intention of the parties relative to the principal object of the contract cannot be ascertained; and 5. Those expressly prohibited or declared void by law. INEXISTENT CONTRACTS  Those where one or some or all of the requisites essential for the validity of a contract are absolutely lacking. Kinds of Inexistent Contracts: 1. Those which are absolutely simulated or fictitious; and 2. Those whose cause or object did not exist at the time of the transaction.  PRINCIPLE OF IN PARI DELICTO: The principle of in pari delicto is applicable only to void contracts and NOT as to inexistent contracts. General Rule: When the defect of a void contract consists in the illegality of the cause or object of the contract and both of the parties are at fault or in pari delicto, the law refuses them every remedy and leaves them where they are. Exceptions: 1. Payment of usurious interest. 2. Payment of money or delivery of property for an illegal purpose, where the party who paid or delivered repudiates the contract before the purpose has been accomplished, or before any damage has been caused to a 3rd person. 3. Payment of money or delivery of property made by an incapacitated person. 4. 5. 6. 7. 8. Agreement or contract which is not illegal per se & the prohibition is designed for the protection of the plaintiff. Payment of any amount in excess of the maximum price of any article or commodity fixed by law or regulation by competent authority. Contract whereby a laborer undertake to work longer than the maximum number of hours fixed by law. Contract whereby a laborer accepts a wage lower than the minimum number of hours fixed by law. One who lost in gambling because of fraudulent schemes practiced on him is allowed to recover his losses [(Art. 315, 3(b), RPC] even if gambling is a prohibited one. Rules When Only One of the Parties is at Fault: 1. Executory Contracts – neither of the contracting parties can demand for the fulfillment of any obligation from the contract not may be compelled to comply with such obligation. 2. Executed Contracts: a. Guilty Party is barred from recovering what he has given to the other party and is barred from recovering what he has given to the other party by reason of the contract. b. Innocent Party may demand for the return of what he has given. COMPARATIVE TABLE ON VOID, VOIDABLE, RESCISSIBLE and UNENFORCEABLE VOID Defect is caused by lack of essential elements or illegality. VOIDABLE Defect is caused by vice of consent. RESCISSIBLE Defect is caused by injury/damage either to one of the parties of to a 3rd person. Do not, as a general rule produce any legal effect. Action for the declaration or nullity or inexistence or defense of nullity or inexistence does not prescribe. Valid and enforceable until they are annulled by a competent court. Action for annulment or defense of annulability may prescribes. Valid and enforceable until they are rescinded by a competent court. Action for rescission may prescribe. Not cured by prescription Cannot be ratified. Cured by prescription Cured by prescription Can be ratified. Need not be ratified. Assailed not only by a contracting party but even by a third person whose interest us directly affected. Assailed only by a contracting party. Assailed not only by a contracting party but even by a third person who is prejudiced or damaged by the contract. UNENFORCEABLE Defect is caused by lack of form, authority, or capacity of both parties not cured by prescription. Cannot be enforced by a proper action in court. Corresponding action for recovery, if there was total or partial performance of the unenforceable contract under No. 1 or 3 of Article 1403 may prescribe. Not cured by prescription Can be ratified. Assailed only by a contracting party. Assailed directly or collaterally. Assailed directly or collaterally. NATURAL OBLIGATIONS Assailed directly only. Assailed directly or collaterally. Ans: No, because when a right to sue upon a civil obligation has lapsed by extinctive prescription, the obligor who voluntarily performs the contract cannot recover what he has delivered or the value of the service he has rendered. (Art. 1424, NCC; DBP vs. Adil, G.R. No. L-48889, May 11, 1988). Civil obligations give a right of action to compel their performance. Natural obligations, not being based on positive law but on equity and natural law, do not grant a right of action to enforce their performance, but after voluntary fulfillment by the obligor, they authorize the retention of what has been delivered or rendered by reason thereof. (Art. 1423, NCC). Basic distinctions between civil and natural obligations: 1. Civil obligations derive their binding force from positive law; while natural obligations derive their binding force from equity and justice; 2. Civil obligations can be enforced by court action; while natural obligations cannot be enforced by court action but depends exclusively upon the good conscience of the debtor. Problem: X contracted a loan with the DBP in 1965 but failed to pay, hence, in 1966, the obligation became due and demandable. In 1987, the DBP unearthed his obligation and demanded payment. Upon receipt of the demand letter, X paid the obligation together with its interest. Advised that the action has already prescribed, he sued DBP for reimbursement of whatever he had paid. Will the action prosper? Why? Problem: Suppose in the problem above, there was payment of X’s obligation in 1986 by a friend, A, without his knowledge and consent. Can A, the friend who made the payment, ask for reimbursement from X? Can A recover from X? Why? Ans: No. Under the law, when without the knowledge or against the will of the debtor, a third person pays a debt which the obligor is not legally bound to pay because the action thereon has prescribed, but the debtor voluntarily reimburses the third person, the obligor cannot recover what he has paid. (Art. 1425, NCC). Problem: X, the father of Y, was indebted to Z in the amount of PIM during his lifetime. He died without paying it. Y inherited from X properties worth only P400,000.00. Y paid Z the amount of PlM one month after X's death. Can Y ask for the refund of what he paid to Z? Why? Ans: No. Under the law, when a testate or intestate heir voluntarily pays a debt of the decedent exceeding the value of the property which he received by will or by the law of intestacy from the estate of the deceased, the payment is valid and cannot be rescinded by the payer. (Art. 1429, NCC). 2. Has the intent, or at least expectation that his conduct shall at least influence the other party; and 3. Has knowledge, actual or constructive, of the real facts. Problem: B. On the Party Claiming the Estoppel: 1. Has lack of knowledge and of the means of knowledge of the facts in question; 2. Has relied, in good faith, on the conduct or statement of the party to be estopped; 3. Has acted or refrained from acting based in such conduct or statement as to change the position or status of the party claiming the estoppels, to his injury, detriment or prejudiced. Suppose in the problem above X executed a will but it was declared void and the heirs paid a legacy to a friend of his father, can Y revoke it or ask for a refund? Why? Ans: No, because when a will is declared void because it has not been executed in accordance with the formalities required by law, but one of the intestate heirs, after the settlement of the debts of the deceased, pays a legacy in compliance with a clause in the defective will, the payment is effective and irrevocable. (Art. 1430, NCC). ESTOPPEL Estoppel is a condition or state by virtue of which an admission or representation is rendered conclusive upon the person making it and cannot be denied or disproved as against the person relying thereon. Kinds Of Estoppel: 1. 2. 3. 4. Estoppel In Pais Technical Estoppel Estoppel by Record Estoppel by Judgment 1. Estoppel in Pais (by conduct) a. Estoppel by silence b. Estoppel by acceptance of benefits Essential Elements of Estoppel in Pais A. On the party to be Estopped: 1. Commits conduct amounting to false representation or concealment of material facts or at least calculated to convey the impression that facts are inconsistent with those which the party subsequently attempts to assert; 2. Technical Estoppel a. Estoppel by deed – a party to a deed and his privies are precluded from asserting as against the other party and his privies any right or title in designation of the deed, or from denying any material fact asserted therein. b. Estoppel by record – a party and his privies are precluded from denying the truth of matters set forth in a record whether judicial or legislative. 3. Estoppel by Judgment – the party to a case is precluded from denying the facts adjudicated by a court of competent jurisdiction. 4. Estoppel by Laches – one which arises when a party, knowing his rights as against another, takes no step or delays in enforcing then until the condition of the latter, who has no knowledge or notices that the former would assert such rights, has become so changed that he cannot without injury or prejudiced, be restores to his former state. Laches or “Stale Demands” Failure or neglect, for an unreasonable and unexplained length of time, to do that which, by exercising due diligence, could or should have been done earlier; it is negligence or omission to assert a right within reasonable time, warranting a presumption that the party entitled to assert it either has abandoned it or declined to assert it. Elements of Laches: 1. Conduct on the part of the defendant, or of one under whom he claims, giving rise to the situation of which complainant seeks remedy. 2. Delay in asserting the complainant’s rights, the complainant having had knowledge or notice, or defendant’s conduct and having been afforded an opportunity to institute a suit; 3. Lack of knowledge or notice in the part of the defendant that the complainant would assert the right on which he bases his suit; and 4. Injury or prejudiced to the defendant in the event relief is accorded to the complainant, or the suit is not held to be barred. (Miguel v. Catalino, 26 SCRA 234) a mere money claim. It is not converted to a mere money claim. It is not even a contract to sell because in a contract to sell, the payment of the purchase price is a positive suspensive condition. The vendor’s obligation to convey the title does not become effective in case of failure to pay. (Cheng v. Gonato, 300 SCRA 722) A. NATURE AND FORM OF CONTRACT  ELEMENTS: 1. Essential Elements – those without which there can be no valid sale: Laches Concerned with effect of delay. Question of inequity of permitting the claim to be enforced. Not statutory. Applies in equity. Not based on a fixed time. Prescription Concerned with fact of delay. Question or mater of time. Statutory. Applies at law. Based on a fixed time.  Estoppel by laches, which is a certain of equity, laches cannot interfere with the running of prescription. Laches may not be strictly applied between near relatives; under the facts and circumstances of the case even an extremely liberal application of laches would bar the filing of the case. (Capitle, et al. v. Vda. De Gaban, et al., GR No. 146890). a. b. c. Consent or meeting of minds Determinate subject matter Price certain in money or its equivalent 2. Natural Elements – inherent in the contract, and which in the absence of any contrary provision, are deemed to exist in the contract: i. Warranty against eviction ii. Warranty against hidden defects 3. Accidental Elements – may be present or absent depending on the stipulation of the parties.  Characteristics: 1. Principal 2. Consensual 3. Bilateral 4. Nominate 5. Commutative; some cases aleatory (emptio spei) 6. Onerous in CONTRACT TO SELL SALES A nominate contract whereby one of the contracting parties obligates himself to transfer the ownership of and to deliver a determinate thing and other to pay therefore a price certain in money or its equivalent. (Art. 1458, NCC)  A contract of sale, which is subject to probate court approval, is a conditional sale, and not a contract to sell if the condition is not satisfies the obligation to deliver remains. It is not converted to * A bilateral contract whereby the prospective seller, while expressly reserving the ownership of the subject property despite delivery thereof to the prospective buyer binds himself to sell the said property exclusively to the prospective buyer upon fulfillment of the condition agreed upon, that is full payment of the purchased price. Contract of Sale Contract to Sell 1. Transfer of Ownership Title passes to the Ownership is reserved buyer upon delivery of to the seller and is not the thing said. to pass until full payment. 2. As to Perfection of Sale Meeting of the minds. Upon full payment. 3. As to Condition Full payment is a Full payment is a negative resolutory positive suspensive condition. condition. 4. Effect of Non-Payment Injured party can file No contract of sale action for specific perfected, rescission is performance or not necessary. rescission with damages.  In a contract to sell real property on installments, the full payment of the purchase piece is a positive suspensive condition, the failure of which is not considered breach, casual or serious but simply an event that prevents the obligation of the vendor to convey title from acquiring any obligatory force. The transfer of ownership and title would occur after full payment of the installments prevents the obligation of the seller to convey the property from arising. (Leaño v. CA, GR No. 129018, Nov. 15, 2001)  A deed of sale in which the stated consideration had not in fact been paid, is null and void, and produces no effect whatsoever where the same is without cause or consideration in that the purchase price which appears thereon as paid has in fact never been paid by the purchaser to the vendor. (Yu Bun Guan v. Ong, GR No. 144735, Oct. 18, 2001) Sale of a thing having Sale of Hope. a potential existence. 2. Existence of Object Sale is subject to the Sale produces effect condition that the even if the thing does thing will exist. If it not come into does not, there is no existence. contract. 3. Uncertainty The uncertainty is The uncertainty is with with regard to the regard the existence quantity and quality of of the thing. the thing. 4. Object of the Sale Object is a future Object is a present thing. thing, which is the hope or expectancy. Sale No pre-existing credit. Consideration on the part of the seller is the price; on the part of the buyer is the acquisition of the object. Greater freedom in determining the price. Buyer still has to pay the price.  OBJECT OF SALE Requisites: 1. Things: a. Deteminate or determinable (Arts. 1458, 1460) b. Lawful (Arts. 1347, 1409 [1, 4]) c. Should not be impossible (Art. 1348) 2. Rights – must be transmissible Exceptions: * Future inheritance * Service Goods which may be Objects of Sale a. Existing goods – goods owned or possessed by the seller. b. Future goods – goods to be manufactured, raised or acquired by the seller after the perfection of the contract. Emptio Rei Emptio Spei Speratae 1. Subject Matter Sale The thing transferred is one which would have been the subject of sale to some other person, even if the order had not been given. The primary objective of the contract is a sale of the manufactured item; it is a sale of goods even though the item is manufactured by labor furnished by the seller and upon previous order of the customer. DATION IN PAYMENT Obligations are extinguished. Consideration of the debtor is the extinguishments of the debt; on the part of the creditor, it is the acquisition of the object offered in lieu of the original credit. Less freedom in the determining the price. The payment is received by the debtor before the contract is perfected. Contract for Piece of Work The thing transferred is one not in existence and which never would have existed but for the order of the party desiring to acquire it. The services dominate the contract even though there is a sale of goods involved. Within the Statute of Frauds Not within the Statute of Frauds. General Rule: Mere inadequacy of the price does not affect validity of the sale Sale Buyer receives the goods as owner. Agency to Sell Agent receives the goods as goods of the principal who retains his ownership over them. Agents deliver the price which in turn he got from his buyer. Agent can return the goods in case he is unable to sell the same to a third person. Agent makes no warranty for which he assumes personal liability as long as he acts within his authority and in the name of the seller. Agent in dealing with the thing received, must act and is bound according to the instructions of the principal. Exceptions: a. Low price indicates vice of consent, sale may be annulled; b. Price is so low as to be “shocking to conscience,” sale may be set aside Buyer pays the price. Seller warrants the thing sold. Seller warrants the thing sold. Buyer can deal with the thing sold as he pleases being the owner. BARTER  One of the parties binds himself to give one thing in consideration of the other’s promise to give another thing.  The only point of difference between contract of sale and barter in the element which is present in sale but not in barter, namely: price certain money or its equivalent.  PRICE  The sum stipulated as the equivalent of the thing sold and also every incident taken into consideration for the fixing of the price, put to the debt of the vendee and agreed to by him.  Characteristics of Price: 1. Certainty; 2. Real, not fictitious; 3. In some cases, must not be grossly inferior to the value of the thing sold. Effect of Gross Inadequacy of Price: 1. Voluntary Sales 2. Involuntary Sales General Rule: mere inadequacy of the price is not a sufficient ground for the cancellation of the sale. Exception: when the price is so low as to be shocking to the moral conscience, sale will be set aside.  PERFECTION OF SALE General Rule: it is perfected at the moment there is meeting of the minds upon a determinate thing (object), and a certain price (consideration), even if neither is delivered. Exception: When the sale is subject to a suspensive condition by virtue of law or stipulation  Sale is a consensual contract; hence, delivery and payment are not essential for its perfection.  TRANSFER OF OWNERSHIP General Rule: While the contract of sale is consensual, ownership of the thing sold is acquired only upon its delivery, actual or constructive, to the buyer. (Daus v. Sps. De Leon, 16 June 2003) Exceptions: 1. Contrary stipulation or Pactum reservati dominli (contractual reservation of title) – a stipulation, usually in sales by installment, whereby, despite delivery of the property sold, ownership remains with the seller until full payment of the price is made. 2. Contract to sell 3. Contract of insurance – a perfected contract of sale, even without delivery, vests in the vendee an equitable title, an existing interest over the goods sufficient to be the subject of insurance. Effect of Promise Treated under Art. 1479 Civil Code: 1. Accepted unilateral promise to sell or buy a. Only one makes the promise, this promise is accepted by the other. b. Does not bind the promissory even if accepted and may be withdrawn anytime.   Pending notice of its withdrawn, the accepted promise partakes the nature of an offer to sell which if accepted, results in a perfected contract of sale. (Sanchez v. Rigos 45 SCRA 368)  If the promise is supported by a consideration distinct and separate from the price (option money), its acceptance will give rise to perfected contract. 2. Bilateral promise to buy and sell  One party accepts the other’s promise to buy and the latter, the former promise to sell a determinate thing for a price certain.  Reciprocally demandable.      Policitation Unaccepted unilateral promise to buy and sell. Even if accepted by the other party, it does not bind the promissory and may withdrawn anytime before knowledge of acceptance of offer. Option Contract A contract granting a person the privilege to buy a certain object at anytime within the agreed period at the fixed price. Right of First Refusal An innovative juridical relationship. If such right is incorporated in a contract. It is enforceable by specific performance. The Statute of Frauds does not contemplate cases involving a right of first refusal because the application of such statute presupposes the existence of a perfected contract. A right of first refusal is not by any means a perfected contract of sale of real property. It is a contractual grant, not of the sale of the real property involved, but of the right of first refusal over the property sought to be sold. Thus, a right of first refusal need not be written to be enforceable and may be proven by oral evidence. A right of first refusal is not among those listed as enforceable under the statute of frauds. Furthermore, the application of Article 1403, par. 2(e) of the New Civil Code presupposes the existence of a perfected, albeit unwritten, contract of sale a right of first refusal is of by any means perfected contract of sale of real property. At best, it is a contractual grant, not of the real property involved, but of the right of first refusal over the property sought to be sold. it is thus evidence that the statute of frauds does not contemplated cases involving a right of refusal. As such, a right of first refusal need not be written to be enforceable and may be proven by oral evidence (Rosencor Dev’t. Corp. v. Inquing, GR No. 140479, March 8, 2001).  In Guzman Bocaling and Co. Inc, v. Bonnavie 206 SCRA 668, it was said that such contract of sale is not voidable but recissible. Under Art. 1380 to 1381 (3) of the Civil Code, a contract otherwise valid may nonetheless be subsequently rescinded by reason of injury to their persons, like creditors. The status of creditors could be validly accorded parties for they had substantial interests that were prejudiced by the sale of the subject property to another without recognizing their right of first priority under the Contract of Lease.  It is true that the acquisition by a third person of the property subject of the contract is an obstacle to the action for its rescission where it is shown that such third person is in lawful possession of the subject of the contract and that he did not act in bad faith. However, thus rule is not applicable in cases where a party is considered a third party in relation to the Contract of Sale nor may its possession of the subject property be regarded as required lawfully in good faith. (Equitorial Realty & Dev’t., Inc. v. Mayfair Theater Inc. 264 SCRA 483).  The rule is applicable even if the right of first refusal is embodied in mortgage contract. (Litonjua v. L&R Corp., 320 SCRA 405). Pactum Reservatu Domini A stipulation stating that despite delivery, the ownership of the thing shall remain with the seller until the buyer has fully paid the price. Assignment of Credit A contract by virtue of which one person transfer to another his rights and actions against a third person in consideration of the price certain in money or its equivalent. Earnest Money A partial payment of the purchase price and considered as proof of the perfection of the sale. It shall be deducted from the total price. Earnest Money Option Money Title passes to the buyer upon delivery of the thing sold. Ownership is reserved to the seller and is not to pass until full payment. In case if nonpayment, there can be action for specific performance In case of nonpayment, an action for specific performance or for rescission can be filed by the injured party. Part of the purchase price When given, the buyer is bound to pay the balance Given when there is already a sale Money given as a distinct consideration for an option contract. The would-be-buyer is not required to buy. Applies to sale not yet perfected. B. LOSS OF THE OBJECT OF SALE C. 1. Before Perfection – seller bears the loss 2. At the time of Perfection – contract is void and inexistent. Seller bears the loss. 3. After the Perfection but Before Delivery – buyer bears the loss an exception to the rule of Res Perit Domino. 4. After Delivery – buyer bears the loss. EFFECT OF LOSS AT THE TIME OF SALE a. Thing entirely lost at the time of perfection Contract is void and inexistent. b. Thing only partially lost; Vendee may elect between withdrawing from the contract or demanding the remaining part, paying its proportionate price.  EQUITABE MORTGAGE (Art. 1602) Requisites: 1. Price of the sale with right to repurchase is usually inadequate; 2. When the vendor remains in possession as lessee or otherwise; 3. When upon or after the expiration of the period, to repurchase another instrument extending the period of redemption of granting a new period is executed; 4. The purchase retains for him a part of the purchase price; 5. When the vendor binds himself to pay the taxes on the things sold; and 6. The real intention of the parties is that the transaction shall secure the payment of a debt or the performance and obligation. C. FORMALITIES OF CONTRACT OF SALE General Rule: Sale is a consensual contract and is perfected by mere consent of the parties. Exceptions: In order to be performed within a year from the date thereof. 1. Sale of personal property at a price not less than P500. 2. Sale of real property or an interest therein. 3. Sale of property not to be performed within a year from the date thereof. 4. “Applicable statute” requires that the contract of sale be in a certain form. D. CAPACITY TO BUY OR SELL General Rule: All persons who can bind themselves also have legal capacity to but sell. Exceptions: 1. Absolute Incapacity (minor, demented persons, imbeciles, deaf and numb, prodigals, civil interdictees) – party cannot bind themselves in any case. 2. Relative Incapacity – incapacity exists only with reference to certain persons or a certain class of property. RELATIVE INCAPACITY A. Husband and Wife (Art. 1490)  The husband and wife cannot sell property to each other except: 1. Separation of property was agreed upon the spouses 2. There has been a judicial separation of property under Art. 134 and 165 of the Family Code B. Incapacity by Reason of Relation to Property  The following persons cannot acquire property by purchase, even at a public auction, either in person or through the mediation of another. 1. Guardian, with respect to the property of his ward; 2. Agents, with respect to the property whose administration or sale may have been entrusted to them, unless the consent of the principal has been given; 3. Pubic officers and employees, with respect to the properties of the government, its political subdivisions, or GOCCs, that are entrusted to them; 4. Executor or administrator, with respect to the property of the estate under administration; 5. Person specially disqualified by law; 6. Judges, justices, prosecuting attorneys, clerk of courts, etc., with respect to the property in custodia legis. Effect of Violation: 1. With respect to nos. 1, 2, and 3, the sale is voidable. Reason: Only private rights, which are subject to ratification, are violated. 2. With respect to nos. 4, 5 and 6, the sale is null and void. Reason: Violation of public policy cannot be subject to ratification. c. Should he be in default, from the time of judicial or extra-judicial demand for the payment of the price.  DELIVERY Not only a necessary condition for the enjoyment of the thing, but also the mode of transferring ownership. Kinds: Actual or Real – placing the thing under the control and possession of the buyer. Legal or Constructive – delivery if represented by other signs or acts indicative thereof. a. Legal Formalities – delivery by the execution of a public instrument (Boy v. CA GR 125088, April 14, 2004)  E. 1. 2. 3. 4. OBLIGATIONS OF THE VENDOR Deliver the thing sold; Warranties; Transfer of Ownership; Take care of the thing, pending delivery, with proper diligence; and 5. Pay for the expenses of the deed of sale unless there is a stipulation to the contrary.  F. OBLIGATIONS OF THE VENDEE A. Principal Obligations 1. To accept delivery; and 2. To pay the price of the thing sold in legal tender unless another mode has been agreed upon. B. Other Obligations 1. To take care of the goods without the obligation to return where the goods are delivered to the buyer and he rightfully refuses to accept; 2. To be liable as depositary if he voluntarily constituted himself as such; and 3. To pay interest for the period between delivery of the thing and the payment of the price in the following cases: a. Should it have been stipulated b. Should the thing sold and delivered produce fruits or income  Notwithstanding the presence of illegal occupants on the subject property, transfer of ownership by symbolic delivery can still be effected through the execution of the deed of conveyance. (Art. 1498, NCC) It is well-settled rule that the key word is control not possession of the subject properly. The rule is true especially if the deed of conveyance does not stipulate or inter that the buyers could not exercise control over the said property, delivery can be effected through the mere execution of said deed. (Power Commercial and Industrial Corporation v. CA, 274 SCRA 597) Under the law, when the sale is made through a public instrument, the execution thereof shall be equivalent to the delivery of the object of the contract, if, from the deed, the contrary does not appear or cannot be inferred. Possession is also transferred along with ownership thereof to the petitioners by virtue of the deed of conveyance. (Ong Ching v. 239 SCRA 741: Article 1498, NCC) It was also said that since the execution of the deed of conveyance is deemed equivalent to delivery, prior physical delivery or possession is not legally required. (Dulay Enterprise Inc. v. CA 225 SCRA 678: Garcia v. CA 312 SCRA 180) b. Traditio Symbolica – to effect delivery, the c. parties makes use of a token or symbol to represent the thing delivered. Traditio Longa Manu – seller pointing out to the buyer the things, which are, transferred which at the time must be in sight. d. Tradition Brevi Manu – buyer already had the property in his possession for any other reason than ownership. 1. Quasi-tradition – delivery of rights, credits or incorporeal property, made by: a. Placing titles of ownership in the hands of the buyer b. Allowing buyer to make use of rights DISTINCTION BETWEEN SALE/RETURN & SALE ON TRIAL 1. 2. 3. 2. Tradition by Operation of law 4. Constructive delivery requires three things before ownership may be transferred: 1. The seller must have control over the thing. 2. The buyer must be put under control 3. There must be the intention to deliver the thing for purposes of ownership When is the vendor not bound to deliver the thing sold: 1. If the vendee has not paid him the price. 2. If no period for payment has been fixed in the contract. 3. Even if a period for payment has been fixed in the contract, if the vendee has lost the right to make use of the same.   Sale Or Return Property is sold, but the buyer, who becomes the owner of the property on delivery, has the option to return the same to the seller instead of paying the price. Sale On Trial, Approval, or Satisfaction A contract in the nature of an option to purchase is the goods prove to be satisfactory, the approval of the buyer being a condition precedent. Rules: 1. Title remains in the seller 2. Risk of loss remains with seller except when the buyer is at fault or has agreed to bear the loss 3. Buyer must give goods a trial, except where it is evident that is cannot perform the work. Sale or Return Subject to a 1. resolutory condition. Depends entirely on 2. the will of the buyer Ownership passes to 3. the buyer on delivery and subsequent return reverts ownership in the seller Risk of loss or injury 4. rests upon the buyer Sale on Trial Subject to a suspensive condition. Depends on the character or quality of the goods. Ownership remains in the seller until buyer signifies his approval or acceptance to the seller Risk of loss remains with the seller Instances where Seller is still the Owner despite Delivery: 1. Sale on trial, approval or satisfaction 2. Contrary intention appears by the term of the contract; 3. Implied reservation of ownership (Art. 1503) a. If under the bill of lading, the goods are deliverable to seller or agent or their order; b. If the bill of lading, although stating that the goods are to be delivered to the buyer or his agent, is kept by the seller or his agent; c. When the buyer, although the goods are deliverable to order of buyer, and although the bill of lading is given to him, does not honor the bill of exchange sent along with it. PLACE OR DELIVERY (In Order of Priority) 1. That was agreed upon; 2. Place determined by usage of trade; 3. Seller’s place; 4. Seller’s residence; or 5. In case of specific goods where they can be found. Time of Delivery: 1. Stipulated time; or 2. In the absence thereof, within a reasonable time. DELIVERY TO THE CARRIER General Rule: Where the seller is authorized or required to send the goods to the buyer, delivery to the carrier is delivery to the buyer. Exceptions: 1. When a contrary intention appears 2. Implied reservation of ownership under pars. 1, 2, 3 of Art. 1503 6. When the seller has a voidable title which has not been avoided at the time of the sale (Art. 1506)  PAYMENT OF THE PURCHASE PRICE General Rule: The seller is not bound to deliver the thing sold unless the purchase price has been paid. Exception: The seller is bound to deliver even if the price has not been paid, if a period of payment has been fixed.  Kinds of Delivery to the Carrier  C.I.F. (cost, insurance, freight) – signify that the price fixed covers not only the costs of the goods, but the expense of the freight and the insurance to be paid by the seller. a. F.O.B (free on board) – goods are to be delivered free of expense to the buyer to the point where they are F.O.B., either at the point of shipment or the point of destination, determines when the ownership passes. C.O.D. (collect on delivery) – the carrier acts for the seller in collecting the purchase price, which the buyer must pay to obtain possession of the goods.  SALE OF GOODS BY A NON-OWNER General Rule: Buyer acquired no title even if in good faith and for value under the maxim Nemo dat quid non habet (“You cannot give what you don’t have”) Exceptions: 1. Owner is estopped or precluded by his conduct 2. When sale is made by the registered owner or apparent owner in accordance with recording or registration laws 3. Sales sanctioned by judicial or statutory authority 4. Purchases in a merchant’s store, fairs or markets 5. When a person who is not the owner sells and delivers a thing, subsequently acquires title thereto. b. c. ◘   ◘   SALE OF REAL PROPERTY BY UNIT Entire area stated in the contract must be delivered When the entire area could not be delivered, vendee may: If the lack in area is at least 1/10 than that stated or stipulated If the deficiency in quality specified in the contract exceeds 1/10 of the price agreed upon If the vendee would not have bought the immovable had he known for its smaller area of inferior quality irrespective of the extent of lack of area or quality. SALE FOR A LUMP SUM (A Cuerpo Cierto) Vendor is obligated to deliver all the land included within the boundaries, regardless of whether the real area should be greater or smaller. Ordinary, there can be no rescission or reduction or increase whether the area be greater or lesser, unless there is gross mistake. NEGOTIABLE DOCUMENT OF TITLE A document of title in which it is stated that the goods referred to therein will be delivered to the bearer, or the order of any person named such document. The document is Negotiable if: 1) The goods are deliverable to the bearer; or 2) The goods are deliverable to the order of a certain person ◘ DOUBLE SALES Requisites: 1. 2. 3. Two or more valid sales; Same subject matter; Bought from same or immediate seller; and 4. Two or more buyers who are at odds over the rightful ownership of the subject matter must represent conflicting interest. Rule: Primus Tempore, Portior Jure (First in Time, Strong in Right) Rules on Ownership in Double Sales: 1. Personal Property – to the first possessor in good faith;  Doctrine of Innocent Purchaser It is true that a person dealing with registered lands need not go beyond the certificate of title, it is likewise a well-settled rule that a purchaser or mortgagee cannot close his eyes to facts which should put a reasonable man on his guard, and the claim that he acted in good faith under the belief that there was no defect in the title of the vendor or mortgagor. His mere refusal to face up to the fact that such defect exist, or his willful closing of his eyes to the possibility of the existence of a defect in the vendor’s or mortgagor’s title, will not make him an innocent purchaser for value, it if afterwards develops that the title was in fact defective and it appears that he had such notice of the defect as would have led to its discovery has he acted with the measure of precaustin which may be required of a prudent man in a like situation (Crisostomo v. CA, 197 SCRA 833; Spouses Uy v. CA, et al., G.R. No. 109197, June 21, 2001) 2. Real Property a. To the person who first recorded it, in the registry of property in good faith. b. If not inscripted, to the first possessor in good faith. c. If one of the above, to the person with the oldest title, in good faith. (Occeba v. Esponila et al., G.R. No. 156973, June 4, 2004) tendency of such affirmation or promise is to induce the buyer to purchase the same and if the buyer purchases the thing relying thereon. Note: A mere expression of opinion, no matter how positively asserted, does not import a warranty unless the seller is an expert and his opinion was relied upon by the buyer. 2) Implied – that which the law derives by implication or inference from the nature of the transaction or the relative situation or circumstances of the parties; irrespective of any intention of the seller to create it. a) Warranty against eviction b) Warranty against hidden defects c) warranty as to the fitness and merchantability Kinds of Implied Warranties: 1. Warranty against Eviction – warranty in which the seller guarantees that he has the right to sell the thing sold and to transfer ownership to the buyer who shall not be disturbed in his legal and peaceful possession thereof. Elements: a) Vendee is deprived of the thing purchased; b) Deprivation is by virtue of the final judgment; c) Judgment is based on the prior right of the sale or an act imputable to the vendor; d) Vendor was summoned in the suit of eviction at the instance of the vendee; e) No waiver of warranty by the vendee. Remedies of the Vendee: 1) Total eviction a. Value of the thing at the time of the eviction. b. Income or fruits if ordered to deliver them to the party who won the suit. c. Cost of the suit. d. Expenses of the contract. e. Damages and interests if the sale was in bad faith. 2) Partial Eviction a. To enforce vendor’s liability for eviction; or b. Rescind the contract ◘ WARRANTY Statement or representation made by the seller of goods, contemporaneously and as a part of the contract of sale, having reference to the character, quality, or title, of the goods, and by which he promises or undertakes to insure that certain facts are or shall be as he then represents. Kinds of Warranties: 1) Express – any affirmation of fact or any promise by the seller relating to the thung if the natural Types: a. The seller of the goods who has not been paid or to whom the price has not been tendered. b. The seller of the goods, in case a bill of exchange or other negotiable instrument has been received as conditional payment, and the condition on which it was received has been broken by reason of the dishonor of the instrument, insolvency of the buyer or otherwise. 2. Warranty Against Hidden Defects Elements: a. Defects must be serious and important; b. Must be hidden; c. It must exist at the time of the sale; d. Vendee must give notice of the defect to the vendor within reasonable time; and e. No prescription (6 months from delivery of the thing or 40 days in case of animals. Remedies: 1. Possessory lien over the goods; or 2. Right of stoppage in transit after he has parted with the possession of the goods and the buyer becomes insolvent 3. Special Right of resale 4. Special Right to rescind the sale 5. Action for the price 6. Action for damages Remedies of the Vendee: 1. 2. Accion redhibitoria (rescission) Accion quanti minoris (reduction of price). ◘ REMEDIES FOR BREACH OF CONTRACT A. Remedies of the Seller 1. Action for payment of the price (Art. 1595, NCC) 2. Action for damages for non-acceptance for the goods (Art. 1596, NCC) 3. Action for rescission (Art. 1597, NCC) B. Remedies of the Buyer 1. Action for specific performance (Art. 1598, NCC) 2. action for rescission or damages for breach of warranty (Art. 1599, NCC) ◘ REMEDIES FOR THE SELLER FOR BREACH OF CONTRACT A. REMEDIES FOR SELLER IN CASE OF MOVABLES 1. Ordinary Remedies a. Movables in General – failure of the vendee to appear to received delivery or having appeared, failure to tender the price at the same time, unless a longer period for its payment has been stipulated.  action to rescind the sale (Art. 1593, NCC) b. Sale of Goods  Action for the price (Art. 1595, NCC)  Action for damages (Art. 1596, NCC) UNPAID SELLER 2. Article 1484 or RECTO LAW [ Remedies of Vendor in Sale of Personal Property by Installments] 1. Contract of sale 2. Personal property 3. Payable in installments 4. In the case of the second and third remedies, that there has been a failure to pay two or more installments  RECTO Law does not apply to a sale: 1. Payable on straight terms (party in cash and party in one term) 2. Of real property Remedies under Recto Law: 1) Specific performance in case that buyer fails to pay. 2) Rescission of the sale in case of default of 2 or more installments. 3) Foreclose the chattel mortgage on the thing sold in case of default of 2 or more installments. In this case, he shall have no further action for deficiency judgment. 4) Retain the installments paid provided that the forfeiture is unconscionable. A. REMEDIES OF SELLER IN IMMOVABLES 1. Ordinary Remedies a. In case of anticipatory breach – CASE OF (Art. 1591, NCC) b. Failure to pay the purchase price Rescission upon judicial or notarial demand for rescission (Article 15921, NCC) The vendee may pay, even after the expiration of the period, as long as no demand for rescission has been made upon him Note: Article 1592 does not apply to: 1) sale on installment of real estate; 2) contract to sell; 3) conditional sale; and 4) cases covered by RA 6552: Installment Buyer Protection Act. Realty 2. R.A. No. 6552 or MACEDA LAW An act to Provide Protection to buyers of Real Estate on Installment Payments  Law governing sale or financing of real estate on installment payments Requisites: 1. Transaction or contracts involving the sale or financing of real estate on installment payments, including residential condominium apartments; and 2. Buyer defaults in payment of succeeding installments.  RIGHTS OF THE BUYER under Maceda Law: A. If Buyer has paid at least two (2) years of installments 1) The buyer must pay, without additional interest, the unpaid installments due within the total be one (1) month grace period for every one (1) year of installment payments made Note:. This right shall be exercised by the buyer ONLY once in every 5 years of the life f the contract and its extensions. 2) Actual cancellation can only take place after 30 days from receipt by the buyer of the notice of cancellation of demand for rescission by a notarial act and upon full payment of the cash surrender value to the buyer (Olympia Housing vs. Panastatic, GR 140468 16 January 2003) reinstate the contract by updating the account during the grace period and before actual cancellation of the contract 4) The buyer shall have the right to pay in advance any installment or thefull-unpaid balance of the purchase price any time without interest and to have such full payment of the purchase price annotated in the certificate of title covering the property. B. If Buyer has paid less than 2 years of installments. 1) The seller shall give the buyer a grace period of NOT less than 60 days from the date the installment became due. If the buyer fails to pay the installments due at the expiration of the grace period, the seller may cancel the contract after 30 days from receipt by the buyer of the notice of cancellation or the demand for rescission of contract by a notarial act. 2) Same No. 3 and 4 paragraph A above 3) Installment became due. If the buyer fails to pay the installments due at the expiration of the grace period, the seller may cancel the contract after 30 days from receipt by the buyer of the notice of cancellation or the demand for rescission of contract by a notarial act. 4) Same No. 3 and 4 paragraph A above Note: Down payments, deposits or options on the contract shall be included in the computation of the total number of installment payments made POSSESSORY LIEN When Exercised: 1. Goods have been sold without any stipulation as to credit; 2. Goods have been sold on credit, but the term of credit has expired; and 3. Buyer becomes insolvent. When Lost: Note: This right the seller shall refund to the buyer the cash surrender value of the payments on the property equivalent to 50% of the total payments made. After five (5) years but not to exceed 90% of the total payments made. 3) The buyer shall have the right to sell his rights or assign the same to another person OR to 1. Delivery of the goods to an agent or bailee of the buyer without reserving ownership or right of possession; 2. Buyer lawfully obtains possession of the goods by waiver of the lien; and 3. By waiver. STOPPAGE OF GOODS IN TRANSITU: 2. Requisites: 1. 2. 3. 4. Unpaid seller; Insolvent buyer; Goods must be in transit; Seller must either actually take possession of the goods sold or give notice to his claim to the carrier or other person in possession; 5. Seller must surrender the negotiable document of title, it any issued by the carrier or bailee; and 6. Seller must bear the expenses of the delivery of the goods after the exercise of the right. RESCISSION Types: 1. Special Right to Surrender Under Art. 1534 – if the seller has either the right of lien OR a right to stop the goods in transitu AND under either of 2 situations: a. Where the right to rescind on default has been expressly reserved b. Where the buyer has been in default for an unreasonable time 2. Under Art/ 1597 (“technical rescission”)  Where the goods have not been delivered to the buyer, and the buyer has repudiated the contract of sale, or has manifested his inability to perform his obligations thereunder, the seller may totally rescind the contract of sale by giving notice of his election so to do to the buyer ACTION FOR THE PRICE When may be exercised: 1. Where the ownership has passed to the buyer AND he wrongfully neglects OR refuses to pay for the price 2. Where the price is payable on a day certain AND he wrongfully neglects OR refuses to pay for the price, irrespective of the delivery or transfer of title 3. Where the goods cannot readily be resold for a reasonable price AND the buyer wrongfully refuses to accept them even before the ownership of the goods has passed, if Art. 1596 is inapplicable ACTION FOR DAMAGES When may be exercised: 1. In case of wrongful neglect or refusal by the buyer to accept or pay for the thing sold (Art. 1596[1], NCC) 3. In an executory contract, where the ownership in the goods has not passed, and the seller cannot maintain an action to recover the price (Art. 1595, NCC) If the goods are not yet identified at the time of the contract or subsequently ◘ REMEDIES OF THE BUYER FOR BREACH OR CONTRACT 1. Action for specific performance  Where the seller has broken the contract to deliver specific or ascertained goods  The judgment or decree may be unconditional, or upon such terms and conditions as to damages, payment of the price and otherwise as the court may deem just (Art. 1598) 2. Remedies of buyer for breach of warranty by seller (Art. 1599): a. Recoupment – accept the goods and set up the seller’s breach to reduce or extinguish the price b. Accept the goods and maintain an action for damages for breach of warranty c. Refuse to accept the goods and maintain an action for damages for breach of warranty d. Rescind the contract by returning ot offering the return of the goods, and recover the price of any part thereof NOTE: These are alternative remedies. When Rescission By buyer Not Allowed: 1. If the buyer accepted the goods knowing of the breach of warranty without protest 2. If he fails to notify the seller within a reasonable time of his election to rescind 3. If he fails to return or offer to return the goods in substantially as good condition as they were in at the time of the transfer of ownership to him. Note: These are alternative remedies. G. EXTINGUISHMENT OF SALE Same causes as in all other obligations Conventional redemption Legal redemption ◘ CONVENTIONAL REDEMPTION  The vendor reserves to himself the right to reacquire the property sold. It occurs in sales with pacto de retro. It must be stipulated in the contract. Period for Exercise of the Right of Redemption: 1. By agreement – the period agreed but not to exceed 10 years. 2. No agreement as to period – 4 years from date of the contract. Note: HOWEVER the vendor may still exercise the right to repurchase within 30 days from the time the final judgment was rendered in a civil action on the basis that the contract was a true sale with the right of repurchase. ◘ LEGAL REDEMPTION  The right to be subrogated upon the terms and conditions stipulated in the contract, in the place of one who acquires a thing by purchase or donation in payment or by any other transaction whereby ownership is transferred by onerous title. WHEN CONVENTIONAL REDEMPTION IS DEEMED TO BE AN EQUITABLE MORTGAGE 1. Price of sale is unusually inadequate 2. Vendor remains in possession 3. Period of redemption is extended after expiration 4. Purchaser retains part of the purchase price 5. Vendor binds himself to pay the taxes of the thing sold. 6. Any other case where the parties really intended that the transaction shall secure the payment of the debt or the performance of any other obligation. (Art. 1602) Instances of Redemption: a. b. c. d. e. Under the Civil Code (legal redemption) Sale of the co-owner by his share to a stranger (Art. 1620, NCC) When a credit or other incorporeal right in litigation is sold (Art. 1634, NCC) Sale of an heir of his hereditary rights to a stranger (Art. 1088, NCC) Sale of adjacent rural lands not exceeding 1 hectare (Art. 1621, NCC) f. Sale of adjacent small urban lands bought merely for speculation (Art. 1622, NCC) Under Special Laws 1. Equity of redemption in case of judicial foreclosures 2. A right of redemption in cases of extra-judicial foreclosures. EQUITABLE MORTGAGE  One which lacks the proper formalities, form of words, or other requisites prescribed by law for a mortgage, but shows the intention of the parties to make the property subject of the contract as security for a debt and contains nothing impossible or contrary to law (Cachola vs. CA, 208 SCRA 496). When can there be Presumption as to Equitable Mortgage? 1. Parties must have entered into a contract denominated as a contract of sale 2. The intention of the parties was to secure an existing debt by way of mortgage Note: In the cases referred to in Arts. 1602 and 1604, the apparent vendor may ask for the reformation of the instrument. Remedy of Reformation: To correct the instrument so as to make it express the true intent of the parties.  This refers to cases involving a transaction where one of the parties contests or denies that the true agreement is one of sale with right to repurchase; not to cases where the transaction is conclusively a pacto de retro sale. Example: Where a buyer a retro honestly believed that he entered merely into an Equitable Mortgage, not a pacto de retro transaction, and because of such belief he had not redeemed within the proper period.  Tender of payment is sufficient to compel redemption, but is not in itself a payment that relieves the vendor from his liability to pay the redemption price (Paez vs. Magno, GR L-793, April 27, 1949). H. ASSIGNMENT OF CREDITS An agreement by virtue of which the owner of a credit, known as the assignor, by a legal cause, such a sale, dacion en pago, exchange or donation, and without the consent of the debtor, transfers his credit and accessory rights to another, known as the assignee, who acquired the power to enforce it to the same extent as the assignor could enforce it against the debtor.   It is perfected by mere consent (Arts. 1475 and 1624). What the law requires an assignment of credit is not the consent of the debtor but merely notice to him as the assignment takes effect only from the time he has knowledge thereof. (Art. 1626) An assignment of a credit, right or action shall produce no effect as against third persons, unless it appears in a public instrument is recorded in the Registry of Property in case the assignment involves real property.  A creditor may validly assign his credit and its accessories without the debtor’s consent (NIDC v. De Los Angeles, 40 SCRA 289) 1. Death of the predecessor; 2. Existence and capacity of the successor; 3. Provision of the law or will granting the right of succession; 4. Acceptance by the successor; 5. Successor did not predecease the predecessor Kinds of Succession 1. Testamentary 2. Intestate 3. Mixed Heir – A person called to the succession either by the provision of a will or by operation of law (Art. 782, NCC) Devisee/Legatee – Persons to whom gifts or real and personal property are respectively given by virtues of a will (Art. 782, NCC) DEVISEE or LEGATEES Always called to succeed to individual items of property Called to succeed by means of a will HEIRS Called to succeed to an indeterminate or aliquot portion of the decendent’s hereditary estate. Called to succeed either by a will or by operation of law SUCCESSION SUCCESSION A mode of acquisition by virtue of which the property rights and obligation to the extent of the value of the inheritance of a person, are transmitted through his death to another or others by his will or by operation at law (Art. 774 NCC). An heir may sell his shares of the estate even before partition and even without the consent of the others heirs because his hereditary share has already been transmitted to him from the moment of the death of the predecessor (De Borja vs. De Borja, 46 SCRA 577) Requistites: Instances Where the Distinction between Heirs and Devisees/Legatees are important 1. Preterition The effect is to annul entirely the institution of heirs, but legacies and devisees shall be valid in so far as they are not inofficious 2. Defective disinheritance The effect is to annul the institution of heirs to the extent that the legitimes of the disinherited heir is prejudiced, but legacies and devisees shall be valid insofar as they are not inofficious. 3. After-acquired properties As a rule, are not included, unless it should expressly appear in the will itself that such was the testator’s intention. This rule is applicable only to legacies and devisees and not to institution of heirs. TESTAMENTARY SUCCESSION INHERITANCE – inheritance refers to the university or entirely of the property, rights and obligations of a person who died. Succession refers to the legal mode by which this inheritance is transmitted to the persons entitled to it. A. WILLS IN GENERAL Wills – 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. Elements of a Will 1. Written instrument 2. Duly executed and attested 3. By a competent person 4. Voluntary disposition of property of a person 5. In favor of another competent person 6. To take effect after the maker’s death 7. Meantime being revocable. INTERPRETATION OF WILLS * The testator’s intent (animus testandi), as well as giving effect to such intent, is primodial. It is sometimes said that the supreme law in succession is the intent of the testator. All rules of construction are designed to ascertain and give effect to that intention. It is only when the intention of the testator is contrary to law, morals, or public policy that it cannot be given effect. B. TESTAMENTARY CAPACITY AND INTENT CHARACTERISTICS OF A WILL 1. Personal Act Matters that cannot be left Discretion of Third Persons to the a. Duration or efficacy of the designation of heirs, devisees of legatees b. Determination of the portions which they are to take, when referred to by name. (Art. 785, NCC); and c. Determination of whether or not the testamentary disposition is to be operative (Art. 787, NCC) Matters that the Testator may Entrust to a Third Person: a. Distribution of a specific property or sums of money that he may leave in general to specified classes or causes (Art. 786) b. Designation of the persons, institutions or establishments to which such property or sums are to be given or applied. (Art. 786) 2. 3. 4. 5. 6. 7. Unilateral Formal or solemn Free and voluntary Ambulatory or revocable Individual, not joint Mortis causa Inheritance Include: 1. Property, rights and obligations not extinguished by his death. 2. All which have accrued thereto since the opening of succession. (Art. 781) Requisites: 1. At least 18 years of age 2. Of sound mind at the time of execution of the will, wherein he knows: a. The nature of the estate to be disposed of; b. The proper objects of his bounty; and c. The character of the testamentary act. * The law presumes that the testator is of sound mind, unless: a. One month or less, before making his will, he was publicly known to be insane; and b. was under guardianship at the time of making his will. C. FORMS OF WILLS 1. Notarial will – executed in accordance with the formalities prescribed in Arts. 804 to 808 of the Civil Code. 2. Holographic will – a will be entirely written, dated and signed by the hand of the testator HIMSELF without the necessity of any witness. Ordinarily, when a number of erasures, corrections and interlineations made by the testator in a holographic will have not been noted under his signature, x x x the will is not thereby invalidated as a whole, but at most only as respects the particular and erased, corrected and interlined. (Kalaw vs. Revolva, 132 SCRA 257) Thus, unless the authenticated alternatives, cancellations or insertions were made in the date of the holographic will or on testator’s signature, their presence does not invalidate the will itself. The lack of authentication will only result in disallowance of such changes. (Ajero vs. CA, GR 106720, Sept. 15, 1994) ◘ FORMALITIES OF WILLS Common Formalities of Wills: 1. Must be written; 2. In a language or dialect known to the testator. Special Formalities of NOTARIAL WILLS: 1. Subscribed at the end thereof by testator himself or by testator’s name written by person in his presence and express direction. (Subscription) 2. Attested and subscribed by 3 or more credible witnesses in the presence of the testator and of one another. (Attestation and Subscription by 3 witnesses) 3. Signature of testator and his witnesses on the left margin of each and every page. (Marginal Signatures) 4. Pages numbered correlatively in letters placed on the upper part of each page. (Page Numberings) 5. Contain an attestation clause. * As a rule, if the attestation clause does not state that the will was signed by the testator in the presence of the witnesses, it is void unless if such statement is made in some other part of the will. 6. Acknowledged before a notary public by the testator and his witnesses. An indispensable requisite for the validity of the will. (Acknowledgement) name under his express direction, in the presence of the instrumental witnesses; and 3. Witnesses signed the will in the presence of the testator and of one another. (Art. 805) “In the Presence”  Implies contiguity with an uninterrupted view between the testator and the witnesses  Testator need not actually see the witnesses provided he could have seen them if he desired to do so, even though it would be necessary for him to move slightly to do so. Purpose of Requiring a Witness to Attest and Subscribe to a Will: 1. Identification of the instrument 2. Protection of the testator from fraud and deception 3. The ascertainment of the testamentary capacity of the testator.  If a witness to the will merely turned his back, the signing is still considered in his presence. What is important is that, the witnesses and the testator had the opportunity to have seen the signing of the document (Jaboneta vs. Gustillo, 5 Phil 241). ADDITIONAL FORMALITIES OF NOTARIAL WILLS IN SPECIAL CASES a. Deaf or Deaf-Mute Testator: 1) Personally read the will, if able to do so; or 2) Designate two persons to read and communicate to him, the contents thereof. (Art. 807) b. Blind Testator (Art. 808)  Will shall be read to him twice; once, by one of the subscribing witnesses, and again, by the notary public before whom the will is acknowledged (Alvarado vs. Gaviola, GR 74695, September 14, 1993). ATTESTATION CLAUSE A memorandum or record of facts wherein the witnesses certify that the will has been executed before them, and that it has been executed in accordance Special Formalities of HOLOGRAPHIC Wills (Art. 810) 1. Written by the hand of the testator; 2. Dated by the hand of the testator; 3. Signed by the hand of the testator; Contents of Attestation Clause 1. Number of pages of will; 2. Fact that the testator signed the will or caused some other person to write his In the probate of the holographic will it shall be necessary that at least one witness who knows the handwriting and signature of the testator explicitly declare that the will and the signature are in the handwriting of the testator. If the will is centered, at least three of each witness shall be required. In the absence of any competent witness and if the court deems it necessary, expert testimony maybe resorted to. (Heirs of Matilde Montinola-Samson vs. CA, GR 76648, February 26, 1988) Law Which Governs Formal Validity of Wills: (See table under Conflicts of Laws) The validity of a will as to its form depends upon the observance of the law in force at the time it is made (Art. 795). Effects of insertion on the Validity of a Holographic Will 1) If made after the execution of the will, but without the consent of the testator, such insertion is considered as not written the validity of the will cannot be defeated by the malice or caprice of third persons 2) If the insertion after the execution of the will was with the consent of the testator, the will remains valid but the insertion is void. 3) If the insertion after the execution is validated by the testator by his signature thereon, then the insertion becomes part of the will, and the entire will becomes void, because of failure to comply with the requirement that it must be wholly written by the testator 4) If the insertion made by a third person is made contemporaneous to the execution of the will, then the will is void because it is not written entirely by the testator Doctrine of Liberal Interpretation  In the absence of bad faith, forgery, or fraud, or undue and improper pressure and influence, defects and imperfections in the form of attestation or in the language used therein shall not render the will invalid if it is proved that the will was in fact executed and attested in substantial compliance with Article 805. (Art. 809). D. WITNESS TO THE WILLS Requirements for Witnesses to Wills 1. Domiciled in the Philippines; 2. Able to read and write; 3. Not blind, deaf or dumb; 4. At least 18 years of age; 5. Has not been convicted of falsification of a document, perjury, or false testimony; 6. Of sound mind.  The notary public cannot be considered as a witness since he could not have acknowledged before himself his having signed the will. He cannot split his personality into two so that one will appear before the other to acknowledge his participation in the marking of the will. To permit such a situation to obtain would be sanctioning sheer absurdity (Cruz vs. Villasor, 54 SCRA 31) E. CODICILS REFERENCE AND INCORPORATION BY CODICIL  Is a supplement or addition to a will, made after an execution of a will annexed to be taken as a part thereof, by which any disposition made in the original will is explained, added to or altered. In order that it may be effective, it shall be executed as in the case of a will. (Art. 825)  Has the effect of republishing the will of modified by the codicil. Requisites for the Validity of Incorporation by Reference Must be in existence at the time of the execution of the will; Will must be clearly described and identify the same stating among other things, the number of pages thereof; It is be identified by clear and satisfactory proof; and It is be signed by the testator and the witnesses on each and every page. JOINT WILLS A single testamentary instrument which contains the wills of two or more persons, jointly executed by them, either for their reciprocal benefit of for the benefit of for the benefit of the third person. * This is prohibited under Art. 818. F. REVOCATION OF WILLS TESTAMENTARY DISPOSITIONS AND REVOCATION OF WILLS A. By Implication of law: 1. Legal separation 2. Preterition 3. Bringing action for the recovery of credit 4. Transformation, alienation or loss of bequeathed property 5. Unworthiness 6. Marriage in bad faith 7. Void/annulled marriage B. By some will, codicil or other writing. Doctrine of Presumed Revocation Whenever it is established that the testator has in his possession or had access to the will, but upon his death it cannot be found or located the presumption arises that it must have been revoked by him by an overt act. (Art. 830)  Doctrine of Conditional or Relative Revocation If testator revokes a will with a present intention of making a new one immediately as a substitute, and the new will is not made, or, if made, fails to effect for any reason, it will be presumed that the testator preferred the old will to intestacy. C. By burning, Tearing, Canceling or Obliterating with Intent to revoke the will. Requisites: 1. Testamentary capacity: In order that a will may be considered as revoked the testator at the time of performing the act must have testamentary capacity. The same degree of mental capacity to make a will is necessary to revoke; 2. Intention to revoke; 3. Actual physical act of destruction; and 4. Performed by testator himself or by some other person in his presence and under his express direction. Laws Which Govern Revocation 1. If the revocation takes place in the Philippines, whether the testator is domiciled in the Philippines or in some other country, it is valid when it is in accordance with the laws of the Philippines 2. If the revocation takes place outside the Philippines, by a testator who is domiciled in the Philippines, it is valid when it is in accordance with the laws of the Philippines 3. Revocation done outside the Philippines, by a testator who does not have his domicile in this country, is valid when it is done according to the: a. law of the place where the will was made; or b. law of the place in which the testator had his domiciled at the time of revocation G. REPUBLICATION AND REVIVAL OF WILLS REPUBLICATION – Act of the testator whereby he reproduces in a subsequent will the dispositions contained in the previous will that is void as to its form. Requisites of Republication 1. To republish a will void as to its form, all the dispositions must be reproduced or copied in the new or subsequent will; and 2. To republish a will valid as to its form, but already revoked, the execution of a codicil which makes reference to the revoked will is sufficient. Effects of Republication by Virtue of a Codicil 1. The codicil revived the previous will 2. The old will is republished as of the date of the codicil 3. A will republished by a codicil is governed by a statute enacted subsequent to the execution of the will, but which was operative when the codicil was executed. REVIVAL – Restoration to validity of a previously revoked will by operation of law. Principle of Instanter Express revocation of the first will renders it void because the revocatory clause of the second will, not being testamentary in the character, operates to revoke the previous will instantly upon execution of the will containing it. H. ALLOWANCE WILLS AND DISALLOWANCE OF Questions Determinable Probate Court: PROBATE To probate a will means to prove before some officer or tribunal: a. The instrument to be probated is the last will and testament of the deceased person; b. That it has been executed, attested and published as required by law; and c. That the testator was of sound and disposing mind. Ground Wills Pending the filing of administration proceedings, the heirs without doubt have legal personality to bring suit in behalf of the estate of the decedent in accordance with the provision of Article 777.  Even if administration proceedings have already been commenced, the heirs may still bring the suit if an administrator has not yet been appointed. Even if there is an appointed administrator, jurisprudence recognizes two exceptions, viz: 1 if the executor or administrator is unwilling or refuses to bring suit: and 2. When the administrator is alleged to have participated in the act complained of and he is made a party defendant (Rioferion, et. All vs. CA et. al, January 13, 2004) for the Disallowance of Formalities required by law have not been complied with; Testator acted by mistake or did not intend that the instrument he signed should be his will at the time of affixing his signature thereto. It was procured by undue and improper pressure and influence, on the part of the beneficiary or of some other person; Testator was insane or mentally incapable of making a will, at the time of its execution; Will was executed through force or under duress, or the influence of fear, or threats; Signature of the testator was procured by fraud. As a general rule, courts in probate proceedings are limited only to passing upon the extrinsic validity of the will sought to the probated and the compliance with the requisites or solemnities prescribed by law. (Nufable vs. Nufable, 309 SCRA 692)  the 1. Due execution of the will. 2. Identity of the will; and 3. Testamentary capacity of the testator Prescriptive Period to Probate a Will? The statute of limitations is not applicable to the probate of wills.  by  I. INSTITUTION OF HEIRS  An act of virtue of which a testator designates in his will the person or persons who are to succeed him in his property and transmissible rights and obligations. (Art. 840)  A will shall be valid even though it should not contain an institution of heir, or such institution should not compromise the entire estate, and even though the person instituted should not accept the inheritance or should be incapacitated to succeed. (Art. 841) should not proceed with the probate of the will (because it is already void).  If there are clear provisions for legacies and devises (not just universal institution without designating the amount or property), these provisions are valid provided they are not (not annulled as in the law) automatically without need of court order) inofficious – reducible if need be. If the heir was given a share, even if very small or minimal, there is no Preterition. All he has to do is ask for the completion of his share. (Art. 906, Reyes vs. Barreto-Datu, 19 SCRA 85) Requisites for a Valid Institution of Heir 1. The will must be valid; 2. Personally made by the testator; 3. Within the authority granted by law; 4. Heir designated must be capable of succeeding; 5. Heir must be certain or ascertainable; 6. No Preterition. PRESUMPTIONS 1. Presumption of Equality – Heirs instituted without designation of shares shall inherit in equal parts. 2. Presumption of Individuality – When the testator institutes some heirs individually and others collectively, those collectively designated shall be considered as individually instituted, unless it clearly appears that the intention of the testator was otherwise. 3. Presumption of Simultaneity – When the testator call to the succession a person and his children they are deemed to have been instituted simultaneously and not successively. Institution Based on False Cause General Rule: The statement of a false cause for the institution of an heir shall be deemed not written. Exception: If it appears from the face of the will that the testator would not have made the institution had he known the falsity of the cause. Requisites: Heir omitted must be a Compulsory heir in the direct line. Omission must be complete and total in character in such a way that the omitted heir does not and has not receive anything at all from the testator by any title whatsoever; and Compulsory heir omitted must survive the testator. K. SUBSTITUTION OF HEIRS 1. 2. 3. J. PRETERITION    Preterition is the Omission in the testator’s will of one, some or all of the compulsory heirs in the direct line, whether living at the time of the execution of the will or born after the death of the testator. (Art. 854) The institution is VOID (not really “annulled” as stated in the law), automatically without need of court order) If the only provision in the will is the institution of an heir/heirs totally preteriting one or some compulsory heirs, the entire will is void; hence, if there is a petition for probate of that will, the petition should be dismissed and the court 1. 2. 3. 4. 5. 6. The appointment of another heir so that he may enter into the inheritance in default of the heir originally instituted. Its purpose is to avoid intestacy. It is impossible only on the free portion and never on the legitimes. (Art. 857) Instances When Substitution is Extinguished When the substitute predeceases the testator When the substitute is incapacitated When the substitute renounces the inheritance When the institution of heir is annulled When the institution or the substitution is revoked by the testator When a will is void or disallowed or revoked KINDS OF SUBSTITUTION 1. Simple – testator designates one or more persons to substitute the heir/s in case such heir/s die before him or should not wish or should be incapacitated to inherit. 2. Brief – two or more persons are designated to substitute for only one heir. 3. Compendious – only one person is designated to substitute for two or more heirs. 4. Reciprocal – two or more persons are not only instituted but are also designated mutually as substitutes for each other. 5. Fideicommissary – takes place when the fiduciary or first heir instituted is entrusted with the obligation to preserve and to transmit to the second heir the whole or part of the inheritance, provided such substitution does not go beyond one degree from the heir originally instituted and provided further and the second heir are living at the time of the death of the testator. Causes When Simple or Common Substitution May Take Place: 1. Instituted heir dies before the testator. 2. He repudiates the inheritance 3. He is incapacitated to succeed. Requisites for a VALID FIDEICOMMISSARY SUBSTITUTION: 1. First heir primarily called to the enjoyment of the estate; 2. Second heir; 3. Obligation imposed upon first heir to preserve the estate and transmit it to the second heir. Limitations: 1. Substitution must not go beyond one degree from the heir originally instituted. 2. Fiduciary and the Fideicommissary must be living at the time of the death of the testator. 3. Substitution must not be burden the legitime 4. Substitution must be made expressly Rights of Fiduciary – all the rights of a usufructuary until the moment of delivery to the fideicommissary. Obligations of Fiduciary: 1. Preserve the property or inheritance; 2. Transmit said property or inheritance to the second heir or fideicommissary. CONDITIONAL TESTAMENTARY SUBSTITUTION  Effectivity is subordinate to the fulfillment or non-fulfillment of a future and uncertain event.  If a condition is so vaguely worded that even after applying rules on construction and interpretation, it is still meaningless, contradictory, or cannot be understood, the condition will be regarded as an impossible condition and should therefore be disregarded. (6 Sanchez Roman 607)  An absolute prohibition to contract a first or subsequent marriage shall be considered as not written unless such condition has been imposed on the widow or widower by the deceased spouse, or by the latter’s ascendants or descendants (Art. 874) DISPOSITION CAPTATORIA – Disposition made upon the condition that the heir shall make some provision in his will in favor of the testator or of any other person shall be void. (Art. 875, NCC) Institution Modal The statement of the object of the institution, or the application of the property left by the testator, or the charge imposed by him. (Art. 882, NCC) CELESTINO BALUS vs. SATURNINO BALUS (GR No. 168970, January 15, 2010, 610 SCRA 178) FACTS: Rufo, the father of Celestino and Saturnino, mortgaged a parcel of land he owns as a security for a loan with the Rural Bank. For his failure to pay his loan, the mortgaged property was foreclosed and was subsequently sold to the Bank as the sole bidder. The property was not redeemed within the period allowed by law and a new title was issued in the name of the bank. Later, Celestino and Saturnino executed an Extrajudicial Settlement where they intended to redeem the property mortgaged by their father with the Bank. Saturnine bought the subject property from the bank and thereafter, he filed a complaint for recovery of possession against Celestino. ISSUE: Whether there ever a co-ownership between Celestino and Saturnino over the subject property at any given point of time. HELD: NONE. At the time of the execution of the Extra-judicial Settlement, the subject property formed part of the estate of their deceased father. The rights to a person’ successions are transmitted from the moment of his death. In addition, the inheritance of a person consists of the property and transmissible rights and obligations existing at the time of his death, as well as those which have accrued thereto since the opening of the succession. Since Rufo lost ownership of the subject property during his lifetime, it only follows that at the time of his death, the disputed parcel of land no longer formed part of his estate. L. LEGITIME That part of the testator’s property which he cannot dispose of because the law has reserved it for certain heirs, who are, therefore, called compulsory heirs. (Art. 886, NCC) ◘ COMPULSORY HEIRS In general, compulsory heirs are those for whom the law has reserved a portion of the testator’s estate which is known as the legitime. (Art. 887, NCC) 1. 2. 3. 4. 5. Legitimate children and descendants, with respect to their legitimate parent and ascendants; In default of the foregoing, legitimate parents and ascendants, with respect to their legitimate children and descendants; The widow or widower; Acknowledged natural children and natural children by legal fiction; Other legitimate children referred to in Art. 287. Kinds of Illegitimate Children under the New Civil Code 1. Acknowledged Natural Children  Includes all natural children who may have been acknowledged either voluntarily or by a final judgment of a competent court.  A natural child who has not been acknowledged is not a compulsory heir. 2. Natural Children by Legal Fiction  All those children born or conceived of void marriages as well as those conceived of viodable marriages after the decree of annulment. 3. Acknowledged Illegitimate Children  Children born outside of wedlock of parents whom, at the time the conception of the former was disqualified by some impediment to marry each other. NOTE: Art. 176 (sent. 2) of the Family Code amended Art. 895 of the NCC by doing away with any distintion between the different kinds of illehgtimate children for purposes determining their legitime/inheritance. It is now uniform: ½ of the legitime of a legitimate child, unless there are many IC which would result to impairing the LC’s legitime since the disposable portion would be insufficient to cover the legtimes of all the IC – in which case the legitimes of the IC would be reduced pro rata without preference among them. Kinds of Compulsory Heirs 1. Primary – always entitled to their legitimate 2. Secondary – may be excluded by other compulsory heirs 3. Concurring – those who succeed together with the primary or the secondary compulsory heirs (i.e widow or widower, illegitimate children and descendants [legitimate or illegitimate]) Rules: 1. Direct descending line a. Rule of preference between lines b. Rules of proximity c. Right of representation ad infinitum or disinheritance (LC: LD only; IC; both LD and ID) d. If all the LC repudiate their legitimes, the next generation of LD succeed in their own right 2. Direct ascending line a. rule of division by lines b. rule of equal division 3. Non-impairment of legitimes If the testator is a legitimate person Legitimate children and If the testator is an illegitimate person Legitimate children descendants (LCD) In default of the foregoing, legitimate parents and ascendants (LPA) Surviving spouse (SS) Illegitimate children and descendants (ICD) and descendants (LCD) Illegitimate children and descendants (ICD) Illegitimate children and descendants (ICD) Surviving spouse (SS) STEPS IN DETERMINING THE LEGITIMES OF COMPULSORY HEIRS a. Determination of the gross value of the estate at the time of the death of the testator; b. Determination of all debts and charges which are chargeable against the estate; c. Determination of the net value of the estate by deducting all the debts and charges from the gross value of the estate; d. Collation or addition of the value of all donations inter vivos to the net value of the estate; e. Determination of the amount of the legitime from the total thus found; f. Imputation of the value of all donations inter vivos made to compulsory heirs against their legitime and of the value of all donations inter vivos made to strangers against the disposable free portion and restoration to the hereditary estate if the donation is inofficious; and g. Distribution of the residue of the estate in accordance with the will of the testator. TABLE OF LEGITIMES PYabao Notes Legend: LC – Legitimate Children IC – Illegitimate Children SS – Surviving Spouse IP – Illegitimate Parents LPA – Legitimate Parents/ Ascendants CH – Compulsory Heirs No NCC Arts HEIRS LEGITIMES FREE PORTION 1 888 LC alone - 1/2 1/2 2 894 899 4 889 - 1/3 1/3 1/2 1/4 1/8 1/2 1/3 3 IC SS LPA IC SS LPA alone 5 903 IP alone - 1/2 1/2 6 896 892 IC (1) LP -1/2 -1/4 1/4 7 892 IC (2) SS -1/2 -1/4 1/4 8 892 IC (2 or more) SS 9 893 LPA SS FP depends -1/2 -Equal to 1 on SS’s share LC share -1/2 1/4 -1/4 10 901 IC alone -1/2 1/2 11 903 IP SS -1/4 -1/4 1/2 12 903 IC IP -1/2 -0 1/2 895& LC -1/2 Depends on the no. of IC. Maybe there is FP or there is share of 1none left. 13 Amended by FC 176(2) IC Note: Can’t be reduced. -1/2 LC (Note: If the other half Note: May be of estate – disposable reduced if the portion- is not other half is not enough for all the IC enough for all following the 1:2 the IC. formula, such portion shall be divided equally by all IC.) 1/8 1/2 14 900 SS alone -1/2 - ordinary -1/3 - in articulo mortis, testator dies within 3 mos. from date of marriage (no live-in or with live-in relationship of less than 5 years - In articulo mortis, testator dies within 3 - 1/2 mos. from date of marriage but living as husband and wife for more than 5 years already NOTE: In case of articulo mortis marriage, if testator dies after 3 months from date of marriage, the ordinary rule applies, hence the legitime of SS is ½ (with or w/o live-in relationship) NOTE: In case of legal separation, the SS may inherit if it was the deceased who had given cause for the same; if it is otherwise, the SS cannot inherit. (892) -1/2 -2/3 15 897 LC 898 892 895 SS -1/2 of estate Depends on the number of (Note: Can’t be IC. reduced) Maybe there is -1/4 if 1 LC still FP or or Same as there is NONE left. one share of one LC (Note: Can’t be reduced) -1/2 share of each LC -1/2 NOTE: Legitime of IC may be reduced if NOTE: When IC are they are many. so many that the remaining estate shall not be enough to all IC if the 1:2 formula is followed -- in which case, the remaining portion (after giving the LC and SS their legitimes) shall be divided equally among all the IC. IC 16 FC AC- Adopted Equal to one As may be applicable 189 Child LC (3) NOTE: Although the FC mentions the Adopted Child remaining an intestate heir of his parents and other blood relatives, Tolentino opines the AC can’t be deprived of his legitime which is an integral part of a child’s intestate share. Hence, an AC inherits from two sources: from his adoptive parents and from his parents & other blood relatives. However, an AC does not have any right by intestacy from any relative of the adopting parents, whether ascending or descending line – his relationship is limited to the adopter. LEGITIMES IN THE ESTATE OF ADOPTER (Generally, apply the same rules above) No. 1 LAW - RA 8552 17-18 NCC 888 2 3 4 5 HEIRS LEGITIME Adopted Child - 1/2 (AC) alone - RA AC 8552 17-18 - SS NCC 893 (1) - 1/2 FREE PORTION 6 1/2 - RA AC 8552 (or AC/LC) 17-18 NCC 895 IC - 1/4 - 1/2 - RA AC/LC 8552 17-18 - SS NCC 897 898 892 895 IC - 1/2 - RA AC/LC 8552 17-18 NCC 888 1/2 to be 1/2 divided by the total number of AC and LC - Same as one (1) share of one AC/LC - 1/4 or if many equal to 1 AC/LC There is FP, but it depends on SS’s share. Depends on the no. of IC. Maybe there is FP or there is none left. - Half of the share of 1 AC/LC Depends on (Note: Can’t be the number reduced) of IC. (Thereafter - 1/2 of 1 there may AC or may not (Note: May be be any FP reduced. If the remaining portion left.) of estate is not enough for all the IC, such portion shall be divided equally by all IC.) 1/4 - RA AC/LC 8552 (2 or more) 17-18 NCC 892 SS - 1/2 7 - RA 8552 17-18 -NCC 889 9 LPA alone - 1/2 1/2 - RA LPA 8552 SS 17-18 NCC 893 - 1/2 - 1/4 1/4 10 - RA 8552 17-18 - NCC 899 - 1/2 - 1/8 - 1/4 1/8 11 - RA SS 8552 IC 17-18 NCC 894 - 1/3 - 1/3 1/3 12 - RA IC alone 8552 17-18 - NOTE: The presence of NCC 901 -1/2 1/2 - RA IP alone 8552 17-18 NCC 903 - 1/2 1/2 LPA SS IC illegitimate children (primary CH) excludes the illegitimate parents (secondary CH) 13 14 - RA 8552 17-18 - NCC 903 IP SS - 1/4 - 1/4 1/2 ESTATE OF ADOPTED (Generally, apply the same rules above) No. LAW HEIRS LEGITIME FREE PORTION 1 888 LC alone - 1/2 1/2 2 892 1/4 3 892 LC - 1/2 SS - 1/4 LC (2 or more) - 1/2 4 897 898 892 895 SS There is FP. Depends on the no. of - Equal to the LC share of 1 LC LC SS - 1/2 - 1/4 or if IC Depends on the no. of many equal to IC. Maybe there is FP 1 LC - 1/2 of the or maybe there is none share of 1 left. AC/ LC; if the remaining part of estate is not enough for all IC, then divide that portion eually among the IC. COLLATION Fictitious mathematical process of adding the value of the thing donated to the net value of the hereditary estate (Art. 908 and Arts. 1061-1077) Act of charging or imputing such value against the legitime of the value against the legitime of the compulsory heir to whom the thing was donated (Arts. 10611077) Act of changing or imputing such value against the legitime of the compulsory heir to whom the thing was donated. Actual act of restoring to the hereditary estate that part of donation which is inofficious in order not to impair the legitime of compulsory heirs. The purpose of collation is to attain equality among the compulsory heirs insofar as possible for its is presumed that the intention of the testator or predecessor-in-interest in making a donation or gratuitous transfer to a force heir is to give him something in advance on account of his share in the estate, and the predecessor’s will is to treat all his heirs equally, in the absence of any expression to the contrary. (Vizconde vs. CA, GR 118449, February 11, 1669)   RESERVA TRONCAL  The reservation by virtue of which an ascendant who inherits from his descendant any property which the latter may have acquired by gratuitous title from another ascendant, or a brother or sister, is obliged to reserve such property as he may have acquired by operation of law for the benefit or relatives who are within the third degree and who belong to the line from which said property came (Art. 891) Purpose: 1. To reserve certain property in favor of certain persons; 2. To prevent persons outside a family from acquiring, by some chance or accident, property which otherwise would have remained with the said family; 3. To maintain a separation between paternal and maternal lines. Requisites: 1. The property should have been acquired by operation of law by an ascendant (reservista) from his descendant (propositus) upon the death of the latter. 2. The property should have been previously acquired by gratuitous title by the descendant (propositus) from another ascendant or from a brother or sister (originator). 3. The descendant (propositus) should have died without any legitimate issue in the direct descending line who could inherit from him. Facts: ‘’A’’ died intestate leaving a considerable fortune. His widow “B” gave birth to a son three months after “A’s” death. The child died two days after it was born. The widow “B” died two days after the child. The inheritance left by “A” is claimed by the legitimate mother of “B”, and a legitimate brother of “A”. there are no other relatives/ Issue: Who is entitled to the inheritance? Ruling: Upon “A’s” death, his fortune was inherited by his widow (1/2) and by his son (1/2) by intestate succession. The son inherited because at the time of his father’s death, he was already conceived, and a conceived child is already considered born for all purposes favorable to it. Upon the death of the son, without issue, the mother inherited by operation of law, his halfshare. On this half-share, there is a reseva troncal, the requisites thereof all being present – and therefore, on the widow “B’s” death, said one-half should properly go to the legitimate brother of A, who is a relative within the 3 rd degree counted from propositus. Said half is indeed not part of the estate of “B”. Personal Elements 1. Origin – also called Originator, the ascendant, or brother or sister from whom the propositus had acquired the property by gratuitous title (e.g. donation, remission, testate or intestate succession); 2. Propositus – the descendant who died and from whose death the reservista in turn has acquired the property by operation of law (e.g. by way of legitime or intestate succession). The so-called “arbiter of the fate of the reserve troncal.” 3. Reservista – also called Reservor, the ascendant, not belonging to the line from which the property came and for whose benefit the reservation is constituted. They must be related by blood not only to the propositus but also to the originator. 4. Reservatarios or Reservees Causes for Extinguishment of the Reserva Troncal Note: All personal elements must be joined. 1. Death of the reservatarios; 2. Death of the reservista; 3. Loss of the reservable properties, provided the reservor had no fault or negligence; 4. Prescription of the right of reservetarios, when the reservista holds the property adversely against them in the concept of an absolute owner; 5. Registration under the Torrens System as free from reservation; 6. Renunciation or waiver by all the reserves after the death of the reservoir. Qualification of the RESERVATARIOS: 1. Belong to the line from where the property originally came. 2. Related by blood to the propositus and to the brother/sister/other ascendant who gratuitously gave the property to propositus. 3. Within the 3rd degree. 4. Survive the reservista. 5. Reservatorio need not to be capable of succeeding the reservista, since he does not inherit from the latter, but from propositus. Requisites for the Property Involved to become Reservable: 1. Acquired by the propositus by lucrative title. 2. Comes to the propositus from another ascendant or sister or brother. 3. Passes to the ascendant by operation of law. Cabardo vs. Villanueva 44 Phil.186  The reservista may dispose of the reservable property by aits intervivos. This is logical because he acquires the ownership of the reservable property upon the death of the descendantpropositus, subject to the resolutory condition that there must exist at the time of his death relatives of the descendants ho are within the third degree and who belong to the line from which the property came. He can, therefore, alienate or encumber the property of he so desires but he will only alienate or encumber what he has and nothing more. As a consequence, the alquirer will only receive a limited and reservable title, therefore, after the death of the reservistam the reservatorios may then rescind the alienation or encumbrance, because the resolutory condition to which the reserve is subject has already been fulfilled. (Lunsod vs. Ortega 46 Phil. 664)   The reservista cannot dispose of the reservable property by acts mortis causa. The reason is crystal clear – upon the death of said ascendantreservista, the reservable property does not belong to his or her estate because the resolutory condition to which the reserve is subject has already been fulfilled, therefore the reservatorios or reservees nearest the descendant – propositus have already become automatically and by operation of law owners of the reservable property. (Gonzales vs. Legarda, 104 SCRA 479) The right of representatives on the part of the reservatorios applies to relatives who are within the third degree mentioned by law, as in the case of the deceased person from when the reservable property come. Therefore, relatives of the fourth degree and the succeeding degrees can never be considered as reservatarios, will the law does not recognize them as such. The reason for the rules is that, the reserve being an exceptional case, its applications should be limited to what is strictly needed to accomplish the purpose of the law. (Toico de Papa vs. Camacho, L-28032, Sept. 24, 1986) DISINHERITANCE A testamentary disposition by which a person is deprived of, or exclude from, the inheritance to which he has a right. Requisites for a valid Disinheritance 1. Effected through a valid will; 2. For a cause; 3. Legal cause must be specified in the will itself; 4. Cause must be certain and true; 5. Unconditional; and 6. Total. Effects of Valid Disinheritance 1. 2. 3. 1. 2. 3. 4. Deprivation of the disinherited compulsory heir who is disinherited of any participation in the inheritance includes the legitime. Children and descendants of the person disinherited shall take his or her place and shall preserve the rights of compulsory heirs with respect to the legitime. Disinherited parent shall not have the usufruct or administration of the property, which constitutes the legitime. Implications of Disinheritance Since disinheritance must be made in a will, there is no disinheritance in legal succession. Only compulsory heirs can be disinherited, for they alone are entitled to the legitime. Since compulsory heirs maybe disinherited only for lawful causes, it is clear that the courts may properly inquire into the validity of the disinheritance. A disinheritance excludes the heir not only from the legitime but also from the free portion. IMPERFECT DISINHERITANCE – express attempt of the testator in depriving a compulsory heir of his legitime without the requisite formalities prescribed by law. The effect is partial annulment of the institution of heirs. Effects: 1. If testator had made disposition of the entire estate: annulment of the testamentary dispositions only in so far as they prejudiced the legitime of the person disinherited; does not affect the dispositions of the testator with respect to the free portion. 2. If testator did not dispose of the free portion: compulsory heir is given all that he is entitled to receive as if the disinheritance has not been made, without prejudiced to lawful dispositions made by the testator in favor of others/ 3. Devise, legacies and other testamentary dispositions shall be valid to such extent s will not impair the legitime. Imperfect disinheritance Persons disinherited may be any compulsory heir. Attempt to deprive the heir of legitime is always express. Attempt to deprive the heir of his legitime is Preterition Person omitted must be a compulsory heir. The attempt to deprive legitime is always implied. Attempt may or may not be intentional. always intentional. Partial annulment of institution of heirs. 3. By fraud, violence, intimidation, or undue influence, causes the testator to make a will or to change one already made; 4. Has given cause for legal separation; 5. Has given a ground for loss of parental authority; and 6. Unjustifiable refusal to support the children or other spouse. Total annulment. GROUNDS FOR DISINHERITANCE OF: A. Children and Descendants 1. Leads a dishonorable life; 2. Accused the testator of a crime of which the law prescribes imprisonment for 6 years or more and accusation has been found to be groundless; 3. Convicted of adultery / concubinage with the spouse of the testator; 4. Conviction of a crime which carries with it the penalty of civil interdiction; 5. By fraud, violence, intimidation, or undue influence causes the testator to make a will or to change one already made; 6. Attempt against the life of the testator, his/her spouse, ascendants / descendants; 7. Refusal without justifiable cause to support the parent or ascendant; 8. Maltreatment of the testator by word or deed. B. Parent or Ascendants 1. Abandoned their children or induced their daughters to live a corrupt or immoral life, or attempted against their virtue; 2. Convicted of an attempt against the life of the testator, his/her spouse, descendants / ascendants. 3. Accused testator of a crime for which the law prescribes imprisonment for 6 years or more and accusation has been found to be false; 4. Convicted of adultery / concubinage with the spouse of the testator; 5. By fraud, violence, intimidation or undue influence causes the testator to make a will or to change one already made; 6. Loss of parental authority; 7. Refusal without justifiable cause to support the children/ descendants; 8. Attempt by one of the parents against the life of the other, unless there has been reconciliation between them. C. Spouse: 1. Convicted of an attempt against the life of testator, his/her spouse, descendants / ascendants. 2. Accused of testator of a crime for which the law prescribes imprisonment for 6 years or more and accusation has been found to be false; N. LEGACIES AND DEVISES  A legacy is a gift of personal property given in a will, while a devise is a gift of real property given in a will. A legacy is “bequeathed”. Order of Preference of Legacies and Devises under ARTICLE 950: 1. Remuneratory legacies or devises; 2. Preferred legacies or devises; 3. Legacies for support; 4. Legacies for education; 5. Legacies or devises of a specific, determinate thing which forms part of the estate; and 6. All others pro rata (Art. 950) Application of the Order Preference: 1. When there are no compulsory heirs and the entire estate is distributed by the testator as legacies or devises; or 2. When there are compulsory heirs, but their legitimes has already been provided for by the testator and there are no donations inter vivos. Order of Preference of Legacies and Devises under ARTICLE 911: 1. Legitime of compulsory heirs 2. Donations inter vivos 3. Preferential legacies or devises 4. All other legacies or devises pro rata Note: When the question of reduction is exclusively among legatees and devisees themselves, Article 950 governs; but when there is a conflict between compulsory heirs and devisees and legatees, Article 911 applies. GROUNDS FOR REVOCATION OF LEGACIES AND DEVISEES 1. Testator transforms the thing bequeathed in such a manner that it does not retain either the form or the denomination it had. 2. Testator by any title or for any cause alienates the thing bequeathed, or any part thereof, it being understood that in the later case the legacy/devise shall be without effect only with respect to the part alienated. 3. Thing bequeathed is totally lost during the lifetime of the testator, or after his death without the heirs fault. 4. Other causes: nullity of the will; noncompliance with suspensive conditions affecting the bequests. VALID AND EFFECT OF LEGACY & DEVISE NATURE Thing owned in part by testator VALIDITY / EFFECT General Rule: Conveys only interest or part owned by testator a. b. Thing owned by another. Exceptions: If testator otherwise provides – He may convey more than what he owns – the state should try to acquire the part or interest owned by other parties. If other parties are unwilling to alienate, the estate should give the legatee/devisee the monetary equivalent. He may convey less than what he owns. General Rule: If testator ordered acquisition of the thing – the order should be complied with. If the owner is unwilling to part with the thing, the legatee/devisee should be given the monetary equivalent. If testator erroneously believed that the thing belonged to him – legacy/devisee is void. Exception: If the testator acquire the thing onerously or gratuitously after making of the disposition, disposition is validated. If testator knew that the thing did not belong to him but did not order its acquisition – code is silent but disposition should be considered valid there is an implied order to acquire and doubts must be resolved in favor of intestacy. Thing already owned to the legatee/devisee. 1) If testator erroneously believed that he owned the thing – legacy/devise is void. 2) If testator was not in error – i. if thing was acquired onerously by legatee/devisee – legatee/devisee is entitled to be reimbursed; ii. if thing was acquired gratuitously by legatee/devisee – nothing is due; iii. if thing was owned by testator at time will was made and legatee/devisee acquired the thing from him thereafter – law is silent. Legacy/Devise to remove an encumbrance over a thing belonging to testator Legacy/Devise of a thing pledged or mortgaged. Valid, if the encumbrance can be removed for a consideration. encumbrance must be removed by paying the debt unless the testator II. LEGAL ORThe intended otherwise. INTESTATE SUCCESSION - That which take place by operation of law in default of a will. A. CAUSES OF INTESTACY 1. If a person dies without a will 2. If a person dies with a void will 3. If a person dies with a will which has subsequently lost its validity; 4. When the will does not institute an heir to, or dispose of all the property belonging to the testator. In such case, legal succession shall take place of which the testator has not disposed; 5. If the suspensive condition attached to the institution of heir does not happen or is not fulfilled. 6. If the heir dies before the testator; 7. If the heir repudiates the inheritance, there being no substitution, and no right of accretion takes place. 8. When the heir instituted is incapable of succeeding, except in cases provided in this Code. Exceptions: 1. Inheritance is divided between paternal and maternal grandparents. 2. Inheritance is divided among brothers and sisters, some of the full blood, other of the half blood. 3. In cases where the right of representation takes place. 4. Rule of Barrier Between the Legitimate Family and Illegitimate (Iron Curtain Rule) – illegitimate family cannot inherit ab intestato from the legitimate family and vice-versa. 5. Rule of Double Share for Full Blood Collaterals – when full and half-blood brothers and sisters, nephews and nieces survive, the former shall take a portion in the inheritance double that of the latter. ◘ RULES ON INTESTATE SUCCESSION 1. Rules of Preference Between Lines – those in the direct descending line shall exclude in the succession and collateral lines, and those in the direct ascending line shall, in turn, exclude those in the collateral line. 2. Rule of Proximity – the relatives nearest in degree to the decedent shall exclude the more distant ones, except when there is right to representation. 3. Rule of Equal Division – relatives of the same degree shall inherit in equal shares. B. RELATIONSHIP 1. 2. 3. 4. Number of generations determines proximity. Each generation forms a degree. A series of degrees forms a lines. A line may be direct or collateral. A direct line is that constituted by the series of degrees 5. 6. 7. among ascendants and descendants (ascending and descending) A collateral line is that constitutes by the series of degrees among persons who are not descendants or descendants, but who come from a common ancestor. Full blood: same father and mother; half blood: only one of either parent is the same. In adoption, the legal filiation is personal and exists only between the adopter and the adopted. The adopted is deemed a legitimate child of the adopter (AP), but still remains as an intestate heir of his natural parents and other blood relatives. C. RIGHT OF REPRESENTATION A right created by fiction of law by virtue of which the representatives is raised to the place and the degree of the person represented, and acquired the rights which the latter would have if he were living or if he could have inherited.  The widow of a husband who predeceased his mother cannot inherit from the latter (her mother-in-law) because the widow is not an intestate heir of her mother-in-law, either by her own right or by right of representative. d. e. Illegitimate children represent their illegitimate parents who already died in the estate of their grandparents. [Art. 989] Nephews and nieces inherit together with their uncles and aunts, in representation of their deceased parents who are the brothers/sisters of their said uncles or aunts. [Art. 1005] D. ORDER OF INTESTATE SUCCESSION Regular Order of Succession 1. Legitimate children or descendants (LCD) 2. Legitimate parents or ascendants (LPA) 3. Illegitimate children and descendants (ICD) 4. Surviving Spouse (SS) 5. Brothers and sisters, nephews, nieces (BS/NN) 6. Collateral relatives within the 5th degree (CR5) 7. State   A son-in-law is not a compulsory heir of the father-in-law. Nothing in Art. 887, NCC shows that he is an heir, so he may not be permitted or allowed to intervene as he has no personality as interest in the said proceeding. (Vizconde vs. CA, GR 118449, February 11, 1998) When Right of Representation Takes Place 1. Testamentary Succession: a. Compulsory heir in the direct descending line: i. Predeceased the testator and is survived by his children or descendants. ii. Excluded from the inheritance due to incapacity or unworthiness and he has descendants. iii. Disinherited and who has children or descendants. Representation covers only the legitime. b. A devisee or legatee who died after the death of the testator may be represented by his heirs. (Art. 954) Irregular Order of Succession 1. Legitimate children or descendants (LCD); 2. Illegitimate children or descendants (ICD); 3. Illegitimate parents (IP); 4. Surviving spouse (SS); 5. Brothers and sisters, nephews and nieces (BS/NN) and 6. State. 2. Intestate Succession: a. Legal heir in the direct descending line had predeceased the descendant and is survived by his children or descendants (Arts. 981 and 982) b. Legal heir in the direct descending line is excluded from the inheritance by reason of incapacity or unworthiness. (Art. 1035) c. Brothers or sisters had predeceased the decedent and they had children or descendants.[Art. 975] 2. LPA, ICD, and SS Order of Concurrence 1. LCD, ICD, and SS 3. ICD and SS 4. SS and IP 5. BS/NN and SS 6. C5 (alone) 7. State (alone) Notes:  Even if there is an order of intestate succession, the Compulsory Heirs are never excluded. The Civil Code follows the concurrence theory, not the exclusion theory.  Right of Representation in the collateral line occurs only in intestate succession, never in testamentary succession because a voluntary heir cannot be represented (collateral relatives are not compulsory heirs).  The intestate are either equal to or greater than the legitime. General Rule: Grandchildren always inherit by Right of Representation, provided representation is proper. Exception: Whenever all the children repudiate, the grandchildren, inherit in their own right because Right of Representation would not be proper. Nephews and nieces inherit either by Right of Representation or in their own right. a. Right of Representation: when they concur with aunts and uncles. b. In their own right: when they do not concur with aunts and uncles.  Illegitimate Children or Descendants of LEGITIMATES cannot represent because of the barrier, but both the Legitimate Children or Descendants and Illegitimate Children or Descendants of ILLEGITIMATES can.    There can be reserve troncal in intestate succession. A renouncer can represent, but cannot be represented. A person who cannot represent a near relative cannot also represent a relative farther in degree. E. MIXED SUCCESSION OR PARTIAL INTESTACY  Succession that is effected partly by will and partly by operation of law. 1. The law of legitimes must be brought into operation in partial intestacy, because of 2. 3. 4. testamentary dispositions can affect only the disposable free portion but never the legitimes. If among the concurring intestate heirs there are compulsory heirs, whose legal or intestate portions exceed their respective legitimes, then the amount of the testamentary disposition must be deducted from the disposable free portion, to be borne by all the intestate heirs in the proportions that they are entitled to receive from such disposable free portion as intestate heirs. If the intestate share of a compulsory heir is equal to his legitime, then the amount of the testamentary disposition must be deducted only from the intestate shares of the others, in the proportions stated above. If the testamentary dispositions consume the entire disposable free portion, then the intestate heirs who are compulsory heirs will get only their legitimes, and those who are not compulsory heirs will get nothing. TABLE OF INTESTATE SHARES PYabao Notes [NOTE: Take note of the Rules of Proximity, Exclusion, Concurrence, Preference in Lines, etc.] No. NCC Arts. 0 962 1 2 979 980 FC 176 HEIRS Any class alone - Whole estate LC alone - Whole estate; divide equally if there are several LC - IC 3 996 SHARES IN THE ESTATE LC SS 1/2 (to be satisfied first which should not be less than their legitime of ½ of the estate) - Generally, each IC gets 1/2 of the share of 1 LC (Provided the total shares of LC should not be less than their legitime which is 1/2 of the estate – depending on the numberof LC and IC – in which case divide the other ½ among the IC pro rata without distinction) - The share of SS is equal to 1 LC. Thus, divide the whole estate by the total number of LC and SS. 4 999 FC 176 LC SS IC - LC’ s share must not be less than 1/2 SS considered as 1 LC. The Illegitimate Child’s share is equal to 1/2 of the share of 1 LC NOTE: But if there are many IC and the legitimes of the LC and SS are reduced, the sharing is: Determine first the legitime of LC, which is 1/2 of the estate Then SS’s share, which is equal to the share of 1 LC The remaining portion is to be divided among all the IC (See Paras: discussion # 3 in Art. 999. See also Tolentino, De Leon, Pineda, Balane and Mison) 5 6 985 LP alone - Whole estate; divide equally if both are alive LA (GP) alone - Whole estate; divide equally if both are alive, and 987 7 991 8 997 9 1000 LP IC observing in proper cases the rule of equal division by line (paternal & maternal, if surviving). NOTE: There is no representation in the ascending line. - 1/2 - 1/2 NOTE: If decedent is an illegitimate Person, his natural parents (IP) are excluded by presence of illegitimate child. (cf. 903, 2nd sentence) NOTE: In case of partial intestacy where there is legacy or devise, the Legacy or devise shall be charged against the share of the IC, provided the legitime of the IC (1/4) shall not be reduced (Please see Paras: discussion # 2 in Art. 991 & #2 in Art. 1000 on partial intestacy, by analogy. See also Tolentino, Pineda, De Leon, Balane & Mison) - LPA - SS - 1/2 - 1/2* NOTE: In case of partial intestacy where there is legacy or devise, the Legacy or devise shall be charged against the share of the SS, provided the legitime of the SS (1/4) shall not be reduced. (Please see Paras: discussion # 2 in Art. 1000 on partial intestacy. See also Tolentino, Pineda, De Leon & Mison) LPA SS IC - 1/2 - 1/4* - 1/4 * NOTE: In case of partial intestacy where there is Legacy or Devise, the Legacy or Devise shall be charged against the share of the SS, provided the legitime of the SS (1/8) shall not be reduced. (Please see Paras: discussion # 2 in Art. 1000 on partial intestacy. See also Tolentino, Pineda, De Leon & Mison) FC 176 (NOTE: Apply by analogy to # 34, specially in case of partial intestacy) 10 988 IC alone  11 998 FC 176 IC SS - 1/2* - 1/2 * 12 994, 995 SS alone - 13 Only by analogy with 997, in relation to 993, 994, & 903 on their legitimes SS IP - 1/2* - 1/2* Whole estate; divide equally if there are several Whole estate 14 1001 SS Legitimate Brothers, Sisters / Nephews, Nieces (BSNN) Note: These are collateral relatives within 2nd and/or 3rd degree. (994 par 2, 1001) - 1/2 - 1/2 * NOTE: If all brothers and sisters are alive, to be divided equally per capita -- nieces & nephews excluded. If one or more brothers/sisters predeceased/ disinherited/ incapacitated, the corresponding nieces/nephews will inherit by representation per stirpes that share which was supposed to that bro/sis. If one or some bros/sis repudiated, no representation is allowed and the nephews and nieces cannot inherit. But if all bros/sis repudiated, all nieces and nephews will inherit in their own right directly from the deceased – not from their repudiating parents - per capita or equally.) If there are half blood, they will get 1/2 of the share of the full blood. 15. 992 ID (Illeg. Descendant Of a LC - ID of a LC cannot represent the latter or inherit ab intestato from the LC and LR of his father (LC) because the Barrier or Bar Rule or Iron Curtain Rule or BARRIER BETWEEN LEGITIMATE AND ILLEGITIMATE FAMILIES Applies. This prevents him (IC) from inheriting ab intestato from the legitimate children and relatives of his father or mother; nor shall such children or relatives inherit in the same manner from the illegitimate child. (Art. 992) LD (Leg. Descendants) of LC - LD of a LC can represent the latter, and can inherit ab intestate by representation per stirpes, or in their own right per capita from the LC or LR of his legitimate father (LC) in accordance with applicable rules; BUT such LC or LRC cannot inherit from the IC of their legitimate father. (Art. 992) - LD and ID of an IC can inherit by representation per stirpes, or in their own right per capita in accordance with applicable rules Suntay III vs. Conjuangco-Suntay, 621 SCRA 142 NOTE: Legitimate and illegitimate descendants (LD & ID) of an IC can represent the latter – Reason: The Bar Rule or Iron Curtain Rule DOES NOT APPLY BETWEEN TWO ILLEGITIMATE FAMILIES – the law is very explicit on the use of the words ID of a LC 16 994 - Surviving Spouse (SS) of an illegitimate child (decedent) Illegitimate Brothers, - 1/2 1/2 * observing the following rules: Sisters / Nephews, Nieces – whether legitimate or illegitimate children of Brothers and Sisters (BSNN) Note: These illegitimate BSNN are collateral relatives within 3rd degree. Note: The Bar Rule or Iron Curtain Rule DOES NOT APPLY BETWEEN TWO ILLEGITIMATE FAMILIES – the law is very explicit on the use of the words ID of a LC Rule # 1: If all brothers and sisters are alive, to be divided equally per capita -- nieces & nephews excluded Rule #2: If one or more brothers./sisters predeceased/ disinherited/ incapacitated, the corresponding nieces/nephews will concur with their uncles/aunts (ie., bro/sis of the nieces’/nephews’ parents), and the nieces/nephews will inherit by representation per stirpes that share which was supposed to go that bro/sis. Rule #3: If one or some bros/sis repudiated, no representation is allowed and the nephews and nieces cannot inherit – accretion takes place. But if all bros/sis repudiated, all nieces and nephews will inherit in their own right directly from the deceased – not from their repudiating parents - per capita or equally. (Art. 969) 17 993 IP alone - Whole estate; divide equally if both are alive 18 993 cf: 979, 983 & 988 IP LC or IC - IP are excluded Children will inherit accordingly as legitimate or illegitimate (by analogy with Nos. 1, 2 & 10) BS (Leg. Brothers & Sisters) alone - The whole estate, to be divided Equally If there are half blood, they will get ½ of the share of the full blood (2:1 rate) 19 1004 & 1006 20 1005 & 1008 - BSNN (Leg. Brothers &Sisters, Nephews & Nieces) alone - Note: The nearer excludes the farther, hence the nieces/nephews are excluded if all bros/sis concur (1) If all brothers and sisters are alive, to be divided equally per capita – while nieces & nephews are excluded by principle of the nearer excludes the farther. - (970) (972) In proper cases of representation, the nephews/nieces (per stirpes) will inherit together with bros/sis (per capita) Whole estate, observing the following rules: (2) If one or more brothers./sisters predeceased/disinherited/ incapacitated, the corresponding nieces/nephews will inherit by representation per stirpes that share which was supposed to go to that bro/sis. (Arts. 970, 972) 21 (975) (3) But if all bros/sis of decedent do not survive (by predecease), all nieces and nephews will inherit in their own right directly from the deceased – not from their repudiating parents - per capita or equally, not per stirpes. (Art. 975) (977) (4) If one or some bros/sis repudiated, no representation is allowed and the nephews and nieces cannot inherit. The bros/sisters inherit in their own right and by accretion (Art. 977) (969) (977) (5) But if all bros/sis repudiated, all nieces and nephews will inherit in their own right directly from the deceased – not from their repudiating parents -- per capita or equally, not per stirpes. (Art. 969, ref Art. 977 last sentence.) (1006) (6) If there are half blood, they will get ½ of the share of the full blood. (Art. 1006) cf. 965 975 last sentence - Nephews & Nieces (inheriting in their own right) inferred from 1009 Note: Applying the principle of the nearer excludes the farther; the nieces/ nephews are nearer and more direct to the common bloodline of the parents of both the decedent and his bros/sis – who are the parents of the nieces/nephews inheriting in their own right, per capita – than the decedent’s uncles/aunts Illegitimate Brothers & Sisters alone 22 Cf. 1004 &1006 23 By analogy only with 1005 & 1008 - Illegitimate Brothers, Sisters, Nephews & Nieces alone (of an illegitimate decedent Brother/Sister) Observe these rules: 1. the nearer excludes the farther, hence the nieces/nephews are excluded if all bros/sis concur 2. in proper cases of representation, the nephews/nieces will - The whole estate for nephews and nieces, to be divided equally; - if full blood and half blood concur, one half blood will get 1/2 of the share of one full blood (2:1 ratio) - if all are half blood, the estate will be divided equally NOTE: Hence, Uncles and Aunts of decedent are excluded (Bacayo v. Borromeo, 145 SCRA 986 in 1986) - Whole estate, observing 2:1 proportion of full-blood and half- blood fraternity (by analogy with No.19) - Whole estate, as in No. 20 by analogy NOTE: If the decedent BS is Legitimate, then the illegitimate BSNN cannot inherit because of the Barrier (992) inherit with bros/sis Nephews & Nieces alone (3rd civil degree) 24 975 & 1008 - 25 1009 & 1010 OCR (Other Collateral Relatives from the 3rd Uncles & Aunts, but not BSNN -, 4th & to 5th civil degree NB: This applies if decedent is legitimate and the OCR are also legitimate. This does not apply if decedent is illegitimate, in which case the 40 & 50 collateral relatives are excluded, as implied by Art. 994 par. 2, and De Guzman v. Sevilla, 47 Phil 991. - Whole estate, per capita, but observing the 2:1 proportion for the full blood and half blood - Whole estate, per capita, observing the rule: the nearer in degree excluding the more remote. NB: The rule: the nearer excludes the farther (but without distinction as to collateral lines & full blood relations) still applies; Hence, the 40 is preferred before the 50 (without representation); in the absence of the 40, then the 50 will inherit (also without representation). [Ofelia Hernando Bagunu vs. Pastora Piedad, GR 140975, Dec. 8, 2000] NB: All the heirs in the same degree can concur and inherit without distinction of lines or preference among them by reason of the relationship by the whole blood (1009). NB: Representation does not apply in OCR (UA, 40 & 50 ) 26 1011 S - thru escheats proceedings under the Revised Rules of Court - 27 FC 189 (3) Adopted - Personal property assigned by RTC to the Philippine municipality or city where the decedent last resided Real property to the Philippine municipality or city where it is located If decedent never resided in the Philippines, the real or personal property will be assigned where it is situated His legitime is equal to that of a LC. ordinary rules for LC. Apply the NOTE: AC remains a compulsory heir of his natural/blood parents – Tolentino- aside from being an intestate heir of his parents and other blood relatives – FC 189(3) Although the FC mentions the Adopted Child remaining an intestate heir of his parents and other blood relatives, Tolentino opines the AC can’t be deprived of his legitime which is an integral part of a child’s intestate share. Hence, an AC inherits from two sources: from his adoptive parents and from his parents & other blood relatives. However, an AC does not have any right by intestacy from any relative of the adopting parents, whether ascending or descending line – his relationship is limited to the adopter. INTESTATE ESTATE OF ADOPTED 1 FC 190 (1) - 2 FC 190 (5) RA 8552 (18) Adopters or Adoptive Parents (AP) alone - Whole Legitimate or Illegitimate Parents or Ascendants alone - Whole Adopters or Adoptive Parents (AP) Legitimate or Illegitimate Parents or Ascendants ( LP or IP ) alone - 1/2 - 1/2 3 4 FC 190 (2) - Legitimate Children (LC) Illegitimate Children (IC) Surviving Spouse (SS) - LC’ s share must not be less than 1/2 SS is considered as 1 LC. The Illegitimate Child’s share is equal to 1/2 of the share of 1 LC, but the legitime of the LC must not be reduced (which may take place when there are many IC) 5 FC 190 (3) - Illegitimate Children (IC) Adopters (AP) - 1/2 1/2 6 FC 190 (3) RA 8552 (18) FC 190 (4) RA 8552 (18) - Surviving Spouse (SS) Adopters (AP) - 1/2 1/2 - Illegitimate Children (IC) Surviving Spouse (SS) Adopters (AP) - 1/3 1/3 1/3 7 7 FC 190 (6) - Collateral Relatives of adopted (up to the 5th civil degree) - Collateral relatives of adopted will get the whole estate – applying the ordinary rules in legal or intestate succession NOTE: Collateral Relatives of adopter are excluded for they are not legal heirs (by blood) of adopted. The relationship of adoption is between the adopter and adopted only (JBL Reyes, Paras & Tolentino) NOTE: Apply the ordinary rules in legal succession in all other combinations, if any. INTESTATE ESTATE OF ADOPTER 1 RA 8552 Arts 17-18 2 3 - Adopted Child (AC) - Whole estate 980 FC 176 RA 8552 Art. 17 - Adopted Child/Children (AC) - Surviving Spouse (SS) - 979 NOTE: Generally, the adopted child succeeds to the property of the adopter in the same manner as the legitimate child. The adopted has the same right as that of the legitimate child. Examples: * What if one AC, IC & SS concur? - Adopted has the same share as that of the legitimate child. Thus, by analogy, if he is alone, he will get the whole estate; if he survives with SS only, he will get 1/2 while the SS will get the other 1/2. * What if AC & IC concur? - Divide Estate by the total No. of AC and SS Reason: because the share of SS is equal to the share of One AC or LC - AC=1/2 , IC= 1/4 , SS= 1/4 also vary in certain situations) (but may 2:1 ratio (but may also vary in certain situations, if legitime of AC is reduced due the big number of IC) NOTE 1: The collateral relatives of the adopted cannot inherit from the adopter because they are not heirs by law. Apply the ordinary rules in legal succession in all other combinations, if any. Be careful with partial intestacy (where the will only provides for legacy or devise), most especially where the intestate share affected is that of the heir whose legitime is lower than his/her intestate share – such as in Arts. 983, 991, 996, 997, 998, 1000, 1001 per discussion by Paras, Tolentino, Dy, Pineda, De Leon, Balane and Mison). NOTE 2: Under Art. 189 (3) of the Family Code, the adopted shall remain as an intestate heir of his parents and other blood relatives TABLE OF EXCLUSION AND CONCURRENCE IN LEGAL SUCCESSION PYabao Notes LEGAL HEIRS Leg. Children - LC Illeg. Children - IC Leg. Parents - LP Illeg. Parents - IP Surv. Spouse - SS Nearer Collateral Relatives (NCR 2nd rd & 3 ) Brother, Sister, Nephew, Niece -BSNN NB: Be careful with the Barrier between legitimate & illegitimate families/ BSNN & OCR (992) EXCLUDE LP, S (State), CR (Collateral Relatives) IP, S, CR CONCUR WITH SS, IC EXCLUDED BY No one SS, LC, LP No one S, CR SS, IC LC S, CR SS LC, IC S OCR (other than BSNN – inferred in 994) S OCR (Uncles/Aunts, 4th and 5th degree) - implied by 994, 1001, 1004, 1005 and expressl y provided in 1009 & 1010 LC, IC, LP, IP, BSNN No one SS LC, IC, LP, IP NB: There is Representation here between the BSNN. Other Collateral Relatives up to the 5th degree - OCR  3rd 0 but not BSNN: Uncles & Aunts  4th & 5th DEGREES NB 1: Applies only if decedent is legitimate; not if illegitimate (Guzman v. Sevilla, 47Phil 991 & inferred from 994 par. 2. But 1009 & 1010 do not specify legitimate or illegitimate decedent (?) – it’s only presumed to be legitimate. State -S S OCR in remoter degrees (6th and beyond - 1010) NB 2: Review the orders of legal succession to the estates of legitimate and illegitimate persons No one All OCR in the same degree (3 0 Uncle/Aunt, 4th or 5th degree, without distinction of lines or preference among them by whole blood relations). LC, IC, LP, IP, SS, BSNN NB: No Representation here. No one Everyone NOTE: 1. In the absence of parents, ascendants inherit in proper cases. In the absence of children, other descendants inherit in proper cases. 2. Memorize the tables of legitimes and intestate shares. 3. The effects of legitimation shall retroact to the time of the child's birth (Art. 180FC). 4. The legitimation of children who died before the celebration of the marriage shall benefit their descendants (181FC). 5. The adoptee shall be considered the legitimate son/daughter of the adopter for all intents and purposes and as such is entitled to all the rights and obligations provided by law to legitimate children born to them without discrimination of any kind (17 RA8552). 6 In legal and intestate succession, the adopter and the adoptee shall have reciprocal rights of succession without distinction from legitimate filiation (18 RA8552). 7. Order of intestate succession to the estate of a legitimate person. 8. Order of intestate succession to the estate of an illegitimate person. 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14. Take note of the possible applications of the following rules (singly or in combination with one or more) in both testate and legal succession: Rule on Concurrence Rule on Exclusion (based on several grounds) Rule on Proximity (nearness or remoteness in direct and collateral lines Rule on Preferences in the direct line and collateral lines (in legal succession), and ISRAI Rule on Full-blood and Half-blood relations Rule on Per Capita sharing (by heads) Rule on Per Stirpes sharing (by groups, to be shared equally within the group) Rule on Inheriting in one’s own right Rule on Inheriting by representation (in direct line & among BSNN but does not to extend to 4 th & 5th OCR (Sarita vs. Candia 23 Phil. 443; Fuentes vs. Cruz, 36 OG No. 103, p. 1813) Order of intestate succession to the estate of a legitimate child (decedent) 978n Order of intestate succession to the estate of an illegitimate child (decedent) 978n No representation in legacy, devise and voluntary institution of strangers & even compulsory heirs. Rule on capacity to succeed by will or intestacy Rule on Incapacity (both in testate and legal succession): 2 groups – Absolute (2) & Relative: Possible undue influence (6) 1027 affecting legacy/devise/voluntary institution; Public Policy & Morality (3)1028, 739; & Unworthiness (8) 1032 affecting both legitime and 15. 16. 17. 18. 19. 20. 21. 22. 23. 24. 25. 26. 27. 28. 29. 30. 31. 32. legacy/devise/voluntary inst. Rule on Disinheritance (only in testate succession): 3 groups – Children/Descendants (8) 919, Rule on disinheritance of Parents/Ascendants (8) 920, & Spouses (6) 921 Rule on Predecease (both in testate and legal succession) Rule on Partial intestacy (mixed succession where the intestate share of the heir with lower legitime is reduced by legacy/devise/voluntary institution; Imperfect disinheritance; Ineffective disinheritance; Ineffective dispositions Rule on the Iron Barrier or absolute separation between legitimate and illegitimate families (992) -The illegitimate child have no right to inherit ab intestato from the legitimate children & relatives of his father, and vice versa. Rule on representation of illegitimates -- The illegitimates of legitimates cannot represent the latter because of the BARRIER, but the illegitimates (& legitimates) of an illegitimate can represent the latter. Rule on inofficious donation, legacy, devise and voluntary institution Rule on Acceptance (who can accept, kinds, form, when, irrevocable & can’t be impugned generally) Rule on Repudiation (effect of one/some or of all, how, form, when, irrevocable & can’t be impugned generally) Rule on Accretion (study also in relation to repudiation, substitution & representation) Rule on Reserva Troncal (be careful with rules of exclusion, direct line, proximity of reservees within 3rd degree from the origin of property or propositus, manner of acquiring property, & both in testate and legal succession) Rule on Collation (collationable and non-collationable donations/properties/sums) Rule on Preterition of compulsory heirs from inheritance (testate succession) , not just omission from will, & its effects on the will Rule on preterition of objects in the partition - 1103, or of compulsory heirs in the partition -1104 Rule on determining the Net Hereditary Estate (NHE) Rule on Partition/Distribution of estate (who, forms, period, imprescriptibility & prescription, executor & administrator) Rule on Legal redemption by co-heir Rule on Rescission/Annulment of Partition III. PROVISIONS COMMON TO TESTATE & INTESTATE SUCCESSION 1. Legitime: a. b. A. RIGHT OF ACCRETION  A rights based in the presumed will of the deceased that he prefers to give certain properties to certain individuals, rather than to his legal heirs Requisites of Accretion 1. Two or more persons be called to the same inheritance, or to the same portion thereof, pro indiviso; 2. One of the persons thus called die before the testator, or renounce the inheritance, or be incapacitated to receive it. SUMMARY OF RULES ON ACCRETION A. Testamentary Succession c. d. In case of predeceased of an heir, there is representation if there are children or descendants; if none, the others inherit in their own right. In case of incapacity of an heir, the results are the same as in predeceased (ie., . there is representation if there are children or descendants; if none, the others inherit in their own right). In case of disinheritance of an heir, the results are the same as in predeceased (ie., . there is representation if there are children or descendants; if none, the others inherit in their own right). In case of repudiation by an heir, the other heirs inherit in their own right. 2. Disposable Free Portion  Accretion takes place when requisites stated in Art. 1016 are present; but if such requisites are not present, the other heirs inherit in their own right. Intestate Succession 1. 2. 3. In case of predecease, there is representation if there are children or descendants; if none, the other heirs inherit in their own right In case of incapacity, the results are the same as in predeceased (ie., there is representation if there are children or descendants; if none, the other heirs inherit in their own right). In case of repudiation, there is always accretion (ie., there is representation if there are children or descendants; if none, the other heirs inherit in their own right). B. CAPACITY TO SUCCEED WILL OR INTESTACY 3. C. Based on Acts of Unworthiness 1. Parents who have Abandoned their children or induced their daughters to lead a corrupt or immoral life, or attempted against their virtue; 2. Person convicted of an Attempt against the life of the testator, his or her spouse, descendants, or ascendants; 3. Person who has Accused the testator of a crime for which the law prescribes imprisonment for six years or more, if the accusation has been found groundless; 4. Person convicted of Adultery or concubinage with the spouse of the testator; 5. Heir of full age who, having knowledge of the violent death of the testator, should Fail to report it to an officer of the law within a month, unless the authorities have already taken action; this prohibition shall not apply to cases wherein, according to law, there is no obligation to make an accusation; 6. Person who by fraud, violence, intimidation, or undue influence should cause the testator to make a will or to change one already made; 7. Person who Falsifies or forges a supposed will of the decedent. 8. Person who by the same means Prevents another from making a will, or from revoking one already made, or who supplants, conceals, or alters the latter’s will. (Art. 1032, NCC) BY Requisites: 1. The heir, legatee/devisee must be living or in existence at the moment the succession opens; and 2. He must not be incapacitated or disqualified by law to succeed. THE FOLLOWING ARE INCAPABLE SUCCEEDING: A. Based on Undue Influence or Interest 1. 2. 3. 4. 5. 6. OF Priest/Minister who heard the confession or gave spiritual aid to testator during his last illness. Individuals, associations, corporations, NOT remitted by law to inherit. Not by law to inherit. Guardian with respect to testamentary dispositions given by a ward in his favor. Relatives of such priest or minister of the gospel within the fourth degree, the church, order, chapter, community, organization, or institution to which such priest or minister may belong; Attesting witness to the execution of a will, the spouse, parents, or children; and Physician, surgeon, nurse, health officer or druggist who took care of the testator during his last illness; (Art. 1027, NCC) B. Based on Morality or Public Policy 1. Those made in favor of a person with whom the testator was guilty of adultery or concubinage at the time of the making of the will. 2. Those made in consideration of a crime of which both the testator and the beneficiary have been found guilty. Those made in favor of a public officer or his spouse, descendants and ascendants, by reason of his public office. (Article 739) PARDON – an act of the testator in condoning the cause of unworthiness and it must be in writing. C. ACCEPTANCE AND REPUDIATION Acceptance  Act by virtue of which an heir, legatee or devisee manifests his desire in accordance with the formalities prescribed by law to succeed to the inheritance legacy or devise. Repudiation  Act by virtue of which an heir, legatee or devise manifests his desire in accordance with the formalities prescribed by law  not to succeed to the inheritance, legacy or devise. 4. Note: If the heir should die without having accepted or repudiated the inheritance his right shall be transmitted to his heirs (Art. 1053, NCC) 5. Where Repudiation Made 1. Public instrument 2. Authentic instrument 3. Petition presented to the court having jurisdiction over the testamentary or intestate proceedings. 6. The acceptance or repudiation of an inheritance, once made, is irrevocable, and cannot be impugned, except when it was made through any of the causes that vitiate consent, or when an unknown will appears. (Art. 1056, NCC) D. COLLATION Person Obliged to Collate: General Rule: compulsory heirs Exceptions: a. b. When the testator should have so expressly provided; and When the compulsory heir should have repudiated his inheritance. When to Collate 1. Any property or right received by gratuitous title during the testator’s lifetime 2. All that they may have received from the decedent during his lifetime. 3. All that their parents would have brought to collation if alive. Properties Subject to Collation 1. 2. 3. Property received by heir by way of donation or gratuitous title (1061) In case of grandparent’s estate, the grandchildren shall bring into collation what their parents received (1064-a) & what they (the grandchildren) likewise received (1064-b) by donation or /gratuitous title from their grandparents Inofficious donations even if prohibited to be collated by decedent (1063, 1064) 7. 8. 1/2 of the property donated by parent to his child & child’s spouse jointly – ½ refers to the child’s share (1066) Inofficious sums provided by parent for the child’s career - but the value which the child would have spent if he had lived with his parents shall be deducted from the said sum (1068) Wedding gifts by parents to child exceeding 1/10 of the disposable portion of estate (1070) Sums paid by parent to satisfy child’s debts, election expenses, fines & similar expenses (1069) Fruits & interests of property to be collated reckoned from the death of decedent (1075) NOTE: If donation is by both parents and one parent dies, only 1/2 of the value shall be collated (1072) Properties Not Subject to Collation Absolutely no collation (all concepts): 1. Expenses for support, education (elementary and secondary only), medical attendance, even in extraordinary illness, apprenticeship, ordinary equipment, or customary gifts. (Art. 1067) 2. Wedding gifts by parents and ascendants consisting of jewelry, clothing, outfit except when they exceed 1/10 of the sum disposable by will. 3. Proceeds of life insurance - Southern Luzon Employees Assn. vs. Gulpan, Oct. 30, 1954 4. Donation expressly prohibited to be collated by the donor, except when it is inofficious (1063, 1064) 5. The parent can’t collate in the grandparent’s inheritance the latter’s donation to the grandchildren (1065) 6. Donation by parent to the child’s spouse (1066) 7. Expenses for support, education, medical attendance, even in extraordinary illnesses, apprenticeship, ordinary equipment or customary gifts (1067) 8. Expenses for child’s professional, vocational or other career, not impairing the legitime (1068) 9. Wedding gifts by parents to children (jewelry, clothing, outfit) not exceeding 1/10 of the sum disposable by will (1070) 10. Fruits & interests of property subject to collation for the period from date of donation until the death of decedent/donor (1075) E. PARTITION The separation, division and assignment of a thing held in common among those to whom it may belong. The thing itself may be divided, or its value (Art. 1079, NCC)  A partition may be rescind or annulled for the same causes as contracts (Art. 1097, NCC) Persons to Demand Partition 1. Decedent himself during his lifetime by an act inter vivos or by will; or 2. third person designated by the decedent; or 3. The heirs themselves; or 4. Competent court When Partition Cannot be Demanded 1. Expressly prohibited by the testator for a period not exceeding 20 years. 2. Co-heirs agreed that the estate shall not be divided for a period which shall exceed 10 years, renewable for another 10 years. 3. 4. Partition is prohibited by law. Partition the estate would render it unserviceable for the use for which it is intended. FOUR WAYS IN WHICH ESTATE OF DECEDENT MAY BE PARTITIONED 1. 2. 3. 4. By By By By extrajudicial settlement ordinary action for partition judicial summary settlement administration proceeding Partition Inter Vivos – it is one that merely allocates specific items or pieces of the property on the basis of the pro-indiviso shares fixed by law or given. PARTNERSHIP 1. Valid contract; 2. The parties have legal capacity to enter into the contract;  Aurbach vs. Sanitary Wares Manufacturing Corporation, 180 SCRA 130 [1989] although a corporation cannot enter into a partnership contract, it may however engage in a joint venture with others, A joint venture has been generally understood to mean an organization to temporary purpose. Partnership 1. By the contract of partnership two or more persons bind themselves to contribute money, property or industry to a common fund, with the intention of dividing the profits among themselves, 2. A partnership has a juridical personality which is separate and distinct from that of the partners. FORM OF PARTNERSHIP CONTRACT General Rule: No special form is required Exceptions: 1. Where immovable property or real rights are contributed, the partnership contract shall be reduced to writing in a public instrument (Art. 1771) and an inventory of the property contributed is made, signed by the parties and attached to the public instrument. (Art. 1773) 2. Where the contract is by its terms not be performed within a year from the making thereof, such partnership contract is covered by the statute of frauds and thus requires a written agreement to be enforceable. Where the contract of partnership has a capital of 3,000 pesos or more, in money or property, it shall appear in a public instrument and must be recorded in the office of the Securities and Exchange Commission. However, a partnership has a judicial personality even in case of failure to comply with this requirement. 3. There must be mutual contribution of money, property and industry to a common fund.  Putting up money to buy a sweepstakes ticket for the sole purpose of dividing equally the prize which they may win as they did in fact in the amount of P50,000. (Gatchalian vs. CIR 67 Phil 666 [1939]  Where the father sold his rights over 2 parcels of land to his 4 children so they can build their residences, but the latter after 1 year sold them and paid the capital gains, they should not be treated to have formed an unregistered partnership and taxed corporate income tax on the sale and on dividend income tax on their shares of the profits from the sale. 4. the object must be lawful; and 5. the primary purpose must be to obtain profits. Requisites of Partnership 1. intention to create a partnership 2. common fund obtained from the contributions 3. joint interest in the profits Essential Features of Partnership: Distinction Between Partnership & Co-ownership Partnership 1. Creation Always created by a contract, either express or implied. Partnership 2. juridical Personality Has a juridical personality separate and distinct from that of each partner. 3. Purpose Realization of profits. 4. Duration No limitation upon the duration is set by law. Co-ownership Generally created by law, but may even without a contract. Co-ownership 10. Form May be in any from except when real property is contributed (here a public instrument is required). No public instrument is needed even if real property is the object of the co-ownership. Has no juridical personality. Distinction Between Partnership & Corporation Common enjoyment of a thing or right; does not necessarily involve sharing of profits. An agreement to keep the thing undivided for more than 10 years is not allowed. 5. Transfer of Interest A partner may not A co-owner can dispose of his dispose of his share individual interest in without the consent of the partnership so as the others. to make the assignee a partner without unanimous consent. 6. Power to Act with Third Person In the absence of A co-owner cannot stipulation to the represent the cocontrary, a partner ownership. may bind the partnership. 7. Dissolution Death or incapacity of Death or incapacity or a partner results in the a co-owner does not dissolution of necessarily dissolves partnership. the co-ownership. 8. Agency or Representation As a rule, there is As a rule, there is no mutual agency. mutual representation (although it is enough for a co-owner to bring an action for ejectment against a stranger). 9. Profits May be stipulated Must always depend upon, upon proportionate shares and any stipulation to the contrary is VOID (Art. 485). Partnership Corporation 1. Creation Created by mere Created by law or by agreement of the operation of law. partners. 2. Number of Incorporators May be organized by Requires at least five at least two persons incorporators (except a corporation sole). 3. Commencement of Juridical Personality Acquires juridical Acquires juridical personality from the personality from the moment of execution date of issuance of the of the contract of certificate of partnership. incorporation by the Securities and Exchange Commission. 4. Powers Partnership may Corporation can exercise any power exercise only the authorized by the powers expressly partners (provided it granted by law or is not contrary to implied form those law, morals, good granted or incident to customs, public its existence. order, and public policy). 5. Management When management The power to do is not agreed upon, business and manage every partner is an its affairs is vested in partnership. the board of directors of trustees. 6. Effect of Mismanagement A partner as such The suit against a can sue a co-partner member of the board of who mismanages. directors of trustees who mismanages must be in the name of the corporation. 7. Right of Succession Partnership has no Corporation has right of right of succession succession. 8. Extent of Liability to Third Persons Partners are liable Stockholders are liable personality and only to the extent of the subsidiarily shares subscribed by (sometimes them. solidarily) for partnership debts to third persons. 9. Transferability of Interest Partner cannot Stockholder has transfer his interest generally the right to in the partnership so transfer his shares as to make the without prior consent of transferee a partner the other stockholders without the because corporation is unanimous consent not based on this of all the existing principle. partners because the partnership is based on the principle of delectus personarum. 10. Term of Existence Partnership may be Corporation may not be established for any formed for a term in period of time excess of 50 years in stipulated by the any one instance. partners. 11. Firm Name Limited partnership Corporation may adopt is required by law to any name provided it is ass the word “Ltd. To not the same as or its name. similar to any registered firm name. 12. Dissolution May be dissolved at Can only be dissolved any time by any or with the consent of the all the partners state. 13. Governing Law Governed by the Governed by the contract and the Civil Corporation Code Code  PARTNERSHIP VS. JOINT VENTURE The court defined a joint venture as an association of persons or companies jointly undertaking some commercial enterprise; generally all contribute assets and share risks. Its requisites are: 1. A community of interest in the performance of the subject matter; 2. A right to direct and govern the policy in connection therewith; 3. Duty to share profits and losses. (Kilosbayan, Incorporated vs. Gilngona, Jr 232 SCRA 110 [1994]) Rules to Determine Existence of Partnership (Art 1769) 1. General Rule: Persons who are not partners as to each other are not partners as to third persons. Exception: Partnership by estoppel 2. Co-ownership of a property does not itself establish a partnership, even though the coowners share in the profits delivered from the incident or joint ownership. 3. Sharing of gross returns alone does not indicate a partnership, whether or not the persons sharing them have a joint or common right or interest in any property from which the returns are derived. General Rule: Receipt of share in the profits is a strong presumptive evidence of partnership. Exceptions: No such inference will be drawn if such profits were received in payment: a. As a debt by installments or otherwise; b. As wages of an employee or rent to a landlord; c. As an annuity to a widow or representative of a deceased partner; d. As interest on a loan, though the amount of payment vary with the profits of the business; and e. As the consideration for the sale of a goodwill of a business or other property by installments or otherwise. CLASSIFICATION OF PARTNERSHIP 1. As to object: a) Universal partnership i. Universal partnership of all present property ii. Universal partnership of profits b) particular partnership 2. As to liability of partners: a) general partnership b) limited partnership 3. As to duration: a) partnership at will b) partnership with a fixed period 4. As to legality of existence. a) de jure partnership b) de facto partnership 5. As to representation to others: a) ordinary or real partnership b) ostensible or partnership by estoppel 6. 7. As a) b) As a) b) to publicity: secret partnership notorious or open partnership to purpose: commercial or trading professional or non-trading PARTICULAR PARTNERSHIP ◘ A particular partnership is one which has for its object determined things, their use and fruits, or a specific undertaking, or the exercise of a profession or vocation, GENERAL PARTNERSHIP ◘ UNIVERSAL PARTNERSHIP A universal partnership of all present property is one wherein the partners contribute all the property, which actually belong to them to a common fund, with the intention of dividing the same among themselves, as well as all the profits, which they may acquire therewith. ◘ In universal partnership of all present property, the property which belongs to each of the partners at the time of the constitution of the partnership, becomes the common property of all the partners, as well as the profits which they may acquire therewith. ◘ A stipulation for the common enjoymentt of any other profits may also be made; but the properties, which the partners may acquire subsequently by inheritance, legacy or donation, cannot be included in such stipulation, except the fruits thereof. ◘ Where the articles of partnership do not specify the nature of the universal partnership, whether it is one of “present property” or of “profits” only, it will be presumed that the parties intended merely a partnership of profits. Note: Future properties cannot be contributed. Thus, property subsequently acquired by (q) inheritance, (2) legacy or (3) donation cannot be included by stipulation except the fruits thereof. ◘ Movable or immovable property which each of the partners may possess at the time of the celebration of the contract shall continue to pertain exclusively to each, only the usufruct to the partnership. ◘ Note: Persons who are prohibited from giving each other any donation or advantage cannot enter in to a universal partnership. (Art. 739, Art. 87, Family Code) Profits acquired but their partners through chance (i.e. lottery) without employment of any physical or intellectual efforts are not included. A partnership consisting of general partners who are liable pro rata and subsidiarily and sometimes solidarily with their separate property for partnership debts. LIMITED PARTNERSHIP ◘ One formed by two or more persons having as members one or more general partners and one or more limited partners, the latter not being personally liable for the obligations of the partnership. PARTNERSHIP AT WILL ◘ A partnership wherein no time is specified and is not formed for a particular undertaking or venture and which may be terminated at anytime by mutual agreement of the partners, or by the will of anyone partner alone; or one for a fixed tremor particular undertaking but had been continued by the partners after termination of such term or particular undertaking without express agreement. PARTNERSHIP WITH A FIXED TERM ◘ A partnership wherein the term for which the partnership is to exist is fixed or agreed upon or one formed for a particular undertaking, and upon the expiration of the term or completion or the particular enterprise, the partnership is dissolved, unless continued by the partners. Other Kinds of Partnership 1. 2. 3. 4. De Jure Partnership – one that has complied with all the legal requirements for its establiahment. De facto Partnership – one which has failed to comply with all the legal requirements for its establishment. Ordinary or real partnership – one which actually exists among the partners and also as to third person. Ostensible partnership or partnership de facto – one which in reality is not a partnership, but is considered a partnership only in relation to those who, by their conduct or admission, are precluded to deny or disprove its existence. 5. 6. 7. 8. ◘ Secret partnership – one wherein the existence of certain persons as partners is not avowed or made known to the public by any of the partners. Open or notorious partnership – one whose existence is avowed or made known to the public by the members of the firm. Commercial or trading partnership – one formed for the transaction of business. Professional or non-trading partnership – one formed for the exercise of a profession. DISTINCTION BETWEEN CAPITALIST & INDUSTRIAL PARTNERS Capitalist Partner Industrial Partner 1. As to contribution Contributes money Contributes his industry or property. (mental or physical) 2. As to prohibition to engage in other business Cannot generally Cannot engage in any engage in the same business for himself. or similar enterprise as that of his firm. 3. As to profits 1. Shares in the Receives a just and profits according to equitable share. agreement thereon; 2. If none, pro rata to his contribution. 4. As to losses 1. First, the Exempted as to losses stipulation in the (as between partners); same or similar but is liable to third enterprise as that of persons, without his firm. prejudice to 2. If none, the reimbursement from the agreement as to capitalist partners. profits. 3. If none, pro rata to contribution. CLASSIFICATION OF PARTNERS 1. As to CONTRIBUTION: a) Capitalist partner – one who contributes money or property to the common fund. b) Industrial partner – one who contributes only his industry or personal service. 2. As to LIABILITY: a) General partner – one whose liability to third persons extends to his separate property, he may either be a capitalist or industrial partner. b) Limited partner – one whose liability to third person is limited toi his capital contribution. 3. As to MANAGEMENT: a) Managing partner – one who manages the business or affairs of the partnership; he may be appointed in the articles of partnership or after constitution of the partnership. b) Silent partnership – one who does not take any active part in the business although he may be known to be a partner. c) Liquidating partner- one who takes charge of the winding up of the partnership affairs upon dissolution. Miscellaneous: a) Ostensible partner – one who takes active part and known of the public as a partner in the business, whether or not he has actual interest in the firm. b) Secret partner- one who takes active part in the business by is not known to be a partner by outside parties nor held out as a partner by the other partners. c) Dormant partner – one who does not take active part in the business and is not known or held out as partner. ALTERATION THEMSELVES: ◘ OF PARTNERS AMONG I. Obligation with respect to contribution of property 1. 2. 3. 4. 5. promised; To contribute what had been To answer for eviction in case the partnership is deprived of determinate property contributed; To answer to the partnership for the fruits of the property the contribution of which was delayed, from the date they should have been contributed to the time of actual delivery; To preserve the property with the diligence of a good father of a family pending delivery to the partnership; and To indemnify the partners for any damages caused to it by the retention of the same or by delay in its contribution. II. Obligations with respect to contribution of money and money converted to personal use 1. 2. 3. 4. To contribute on the date due the amount he has undertaken to contribute to the partnership; To reimburse any amount he may have taken from the partnership coffers and converted to his own personal use; To pay the agreed or legal interest, if he fails to pay his contribution on time or in case he takes any amount from the common fund and converted to his own personal use; To indemnify the partnership for the damages caused to it by the delay in the contribution or the conversion of any sum for his personal benefit. III. Obligations Not to Engage in Other Business for Himself 1. Industrial partner – cannot engage in any business for himself unless the partnership expressly permits him to do so; and if he should do so, the capitalist partners may avail themselves of the benefits which he may have obtained in violation of this provision, with a right to damages in either case (Art. 1789, NCC)  It is not disputed that the provision against the industrial partner engaging in business for himself seeks to prevent any conflict of interest between the industrial partner and the partnership, and to insure faithful compliance by said partner with this prestation. (Evangelista & Co., v. Abad Santos, 51 SCRA 416, 1973) 2. Capitalist partner – the prohibition extends only to any operation only to any operation which is of the same kind of business in which the partnership is engage unless there is a stipulation to the contrary (Art. 1808) V. Obligations of Managing Partner who Collects Debt Where the person is separately indebted to the partnership and to the managing partner at the same time, any sum received by the managing partner shall be applied to the two credits in proportion to their amounts, except where he received it entirely for the account of the partnership. In which case the whole sum shall be applied to the partnership credit only. Requisites for the application of the rule: 1. There exists two debts, one where the collecting partner is the creditor, the other, where the partnership is creditor. 2. Both debts are demandable; 3. The partner who collects is authorized to manage and actually manages the partnership. VI. Obligations of Partner Who Receives Share in Partnership Credit A partner who receives, in whole or in part, his share in the partnership, when the others have not collected theirs, shall be obliged, if the debtor should thereafter become insolvent, to bring to the partnership capital what he received even though he may have given receipt got his share only. Requisites for application of rule: 1. A partner has received. In whole or in part, his share in the partnership credit; 2. The other partners have not collected their shares; 3. The partnership debtor has become insolvent. VII. Obligation of Partners for Damages to Partnership IV. Obligation to Contribute Additional Capital As a general rule, a capitalist partner is not bound to contribute to the partnership more than what he agreed to contribute but in case of an imminent loss of the business, he is under obligation to contribute an additional share to save the venture. If he refuses to contribute, he shall be obliged to sell his interest in the partnership to other partners. Every partner is responsible to the partnership for damages suffered by it through his fault. He cannot compensate them with the profits and benefits which he may have earned for the partnership by his industry. VIII. Duty to Render Information Partners shall render on demand true and full information of all things affecting the partnership to any partner or the legal representative of any deceased partner of any partner under legal disability. 1) Share of capitalist partner shall be in proportion to his capital contribution. 2) Industrial partner shall receive such share as may be just and equitable under the circumstances. IX. Obligation to account for any benefit and hold as trustee unauthorized personal profits 2. Distribution of losses a. Every partner must account to the partnership for any benefit, and hold as trustee for it any profits derived by him without the consent of the other partners from any transaction connected with the formation, conduct, liquidation of the partnership or form any use by him of his property. Rights of a Partner: 1. Property rights of a partner a. His rights in the specific partnership property; b. His interest in the partnership; and c. His right to participate in the management. 2. Right to reimbursement for amounts advanced to the partnership and to indemnification for risks in consequences of management. 3. Right to associate with another person in his share. 4. Right of access and inspection of partnership books. 5. Right to true and full information of all things affecting the partnership. 6. Right to a formal account of partnership affairs under certain circumstances. Note: The ten-year period to demand an accounting by a partner begins at the dissolution of the partnership. 7. Right to have partnership dissolved under certain conditions. ◘ RULES FOR DISTRIBUTION OF PROFITS AND LOSSES 1. Distribution of Profits a. b. According to their agreement (but not iniquitously to defeat Art. 1799) If none, b. c. According to their agreement as to losses (but not iniquitously to defeat Art. 1799) If none, according to their agreement as to profits. If none, in proportion to his capital contribution, but the purely industrial partner shall not be liable for the losses General Rule: A stipulation excluding a partner from any share in the profits or losses is VOID (Article 1799, NCC) Exception: Article 1797(2) excludes an industrial partner from losses. Thus, a stipulation excluding an industrial partner from losses is VALID, but he is NOT exempted from liability insofar as third persons are concerned. Note: In general, LIABILITY refers to responsibility towards third persons, and LOSSES refers to responsibility as among partners. CONTRACT OF SUB-PARTNERSHIP ◘ ◘ One formed between a member of a partnership and a third person for a division of profits owing him from the partnership enterprise. It is a partnership within a partnership distinct and separate from the main or principal partnership. Note: In the absence of unanimous consent of all the partners, a sub-partner does not become a member of the partnership. Hence, a subpartner does not acquire the rights of a partner nor is he liable for its debts. ◘ PROPERTY RIGHTS OF A PARTNER 1. Right to specific partnership property ◘ Contemplates tangible property ◘ The specific partnership property belongs to the partnership as a separate juridical personality. The partners have no actual interest in it until after dissolution. Equal right with other partners to possess specific partnership property for partnership purposes. ◘ Not assignable, except in connection with the assignment of rights of all partners in the same property. ◘ Not subject to attachment or execution, except on a claim against the partnership. ◘ Not subject to legal support. Note: Any immovable property or an interest therein may be acquired in the partnership name. The title so acquired may be conveyed only in the partnership name subject to the provisions of Article 1819 of the Civil Code. ◘ 2. Interest in the partnership ◘ Share in the profits and surplus ◘ A partner actually owns his respective share. Effects of Conveyance by a Partner of His interest in the Partnership: 1. Conveyance of his whole interest – partnership may either remain or be dissolved. 2. Assignee does not necessarily become a partner. 3. Assignee cannot interfere in the management or administration of the partnership business or affairs. 4. Assignee cannot demand information accounting and inspection of the partnership books. ◘ Remedies of Separate Judgment Creditor of a Partner Application for a charging order after securing judgment on his credit to subject the interest of the debtor partner with payment of unsatisfied amount of the judgment debt. Redemption of Interest Charged 1. General Partnership a. With separate property of a partner; or b. With the partnership property, with the consent of all the partners whose interests are not so charged or sold. 2. Limited Partnership (interest of limited partner) a. With separate property of any general partner but NOT with partnership property. 3. Right to participate in the management. ◘ MANAGEMENT OF PARTNERSHIP I. When the Manner of Management Has Been Provided for in the Partnership Agreement (Art. 800) A. When a managing partner has been appointed: 1. Appointment in the articles of partnershipa. Power is irrevocable without just or lawful cause 1) to remove him for JUST cause, vote of partners representing controlling interest is necessary. 2) to remove him without just cause or for an UNJUST cause, there must be unanimity including his own vote. b. Extent of Power 1) if he acts in good faith, he may do all acts of ADMINISTRATION, despite opposition of his partners. 2) if in bad faith, he cannot. 2. Appointment other than in the articles of partnershipa. b. Power to act may be revoked at any time, with or without just cause Extent of power as long as he remains manager, he can perform all acts of administration, but if others oppose and he persists, he can be removed. B. When two or more managing partners have been entrusted with the management of partnership 1. Without specification of their respective duties and without stipulation requiring unanimity of action. (Art. 1801) General Rule: Unanimous consent of all the managing partners shall be necessary for the validity of the acts and absence or inability of any managing partner cannot be alleged. Exception: When there is an imminent danger of grave or irreparable injury to the partnership, partner may act alone without the consent of the partner who is absent or under disability. 2. With specification that none of the managing partners shall act without the consent of the others (Art, 1802) General Rule: Concurrence of all managing partners is necessary – even if one is absent or disabled Exception: The absence or disability of one or some of the managing partners may be invoked (disregarded) if there is imminent danger of grace and irreparable injury to the partnership his co-partners, loss or injury is caused to any person, not being a partner in the partnership (Art. 1822) Where one partner, acting within the scope of his apparent authority receives money or property of a third person and misapplies it (Article 1823, NCC) II. When Manner of Management has Not Been Agreed Upon A. All partners shall be considered managers and agents B. Unanimous consent required for alteration of immovable property Where the partnership, in the course of its business, receives money or property and it misapplied by any partner while it is in the custody of the partnership. (Article 1823, NCC) Note: All partners are solidarily liable with the partnership for any penalty or damage arising from a partnership tort or breach of trust. ◘ OBLIGATIONS OF PARTNERS TO THIRD PERSONS (Arts. 1815-1827) I. Liability for Contractual Obligations 1. All partners, including industrial partners, are personally liable with all their property. Their individual liability is pro rata and subsidiary, unless otherwise stipulated. 2. Liability of partnership for acts of partners a. Acts for apparently carrying on in the usual way the business of the partnership General Rule: Acts binds the partnership Exception: Partnership is not bound if: 1) acting partner has not in fact no authority; and 2) the third person knows that the acting partner has no authority b. Acts of Strict Dominion or Ownership (Acts which are not apparently for carrying on in the usual way the business of the partnership) General Rule: Act does not bind the partnership. Exception: Partnership is bound if: 1) The act is authorized by all the partners; or 2) They have abandoned the business. c. Acts in contravention of a restriction on authority Rule: Partnership is not liable to third person having actual or presumptive knowledge of the restrictions. ◘ CRIMINAL LIABILITIES OF PARTNERSHIP General Rule: Partnership liability does not extend to criminal liability where the wrongdoing is regarded as individual in character. Exception: When the crime is statutory, especially when it involves a fine rather than imprisonment, criminal liability may be imposed. LIABILITY OF STOCKHOLDERS IN A DEFECTIVELY FORMED CORPORATION – WHEN NOT LIABLE AS A PARTNER WITH OTHER SUBCRIBERS General Rule: Persons who attempt but fails to form a corporation and carry out business under the corporate name occupy the position of partners inter se. Thus where persons associate themselves together under Articles to purchase property to carry on a business, and their organization is so defective as to come short of creating a corporation within the statute, they become in legal effect partners inter se. Exception: One who takes no part except to subscribe for stock in a proposed corporation, which was never legally formed, does not become a partner with other subscribers who engage in business under the name of the pretended corporation, so as to be liable as such in an action for settlement of the alleged partnership and contribution. (Pioneer Insurance & Surety Corp. v. CA, 175 SCRA 668[1989]) II. Liability arising from partner’s Torts (Art. 1822)or Breach of Trust (Art. 1823) Where, by any wrongful act or omission of any partners acting in the ordinary course of business of the partnership or with authority of ◘ Principle of Delectus Personae A rule inherent in every partnership wherein no one can become a member of the partnership without the consent of all the partners. Note: This element of delectus personae is true only in case of general partner, but NOT as regards a limited partner. MUTUAL AGENCY ◘ Partnership is a contract of “mutual agency”, each partner acting as a principal on his own behalf, and as an agent of his co-partners and the partnership. Requisites When a Partner Binds the Partnership 1. When he is expressly or impliedly authorized. 2. When he acts in behalf and in the name of the partnership. PARTNERSHIP BY ESTOPPEL Arises when a person, by words spoken or written o r by conduct, represents himself or consents to another representing him to anyone, as partner an existing partnership, or with one or more persons not actual partners; he is liable to any such person to whim such representation has been made, who has, on the faith of such representation given credit to the actual or apparent partnership. Art. 1825, NCC) Note: Art. 1825 does not create a partnership as between the alleged partners. A contract, express or implied is essential to the creation of partnership. The law considers them partners and the association as a partnership insofar as it is favorable to third persons. However, partnership liability is created only in favor of persons who on the faith of such representation given credit to the actual or apparent partnership. ◘ DISSOLUTION ◘ ◘ Change in the relation of the partners caused by any partner ceasing to be associated in carrying on the business. (Article 1828, NCC) It is the point in time when the partners cease to carry on the business together. It represents the demise of a partnership. WINDING UP ◘ ◘ Process of settling the business or affairs after dissolution. partnership TERMINATION Point in time when all partnership affairs are wound up or completed and is the end of the partnership life. CAUSES OF DISSOLUTION 1. Extrajudicial dissolution (Art. 1830, NCC) – the parties may agree to expand the grounds provided under Art. 1830 but NOT to delimit them. The causes enumerated are as follows: a. Without violation of the agreement between the partners. 1) By the termination of the definite term or particular undertaking specified in the agreement; 2) By the express will of any partner, who must act in good faith, when no definite term or particular undertaking is specified; 3) By the express will of all the partners who have not assigned their interest or suffered them to be charged for their separate debts, wither before or after the termination of any specified term or particular undertaking; 4) By the expulsion of any partner from the business bona fide in accordance with such power conferred by the agreement between the partners; b. In contravention of the agreement between the partners, where the circumstances do nor permit a dissolution under any other provision of this article by the express will of any partner at any time. c. By any event which makes it unlawful for the business of the partnership to be carried on or for the members to carry it on in partnership. d. When a specific thing, a partner had promised to contribute. Or where the partner only contributed the use or enjoyment of the thing and has reserved ownership thereof, its loss, before or after delivery dissolves the partnership. e. By the death of any partner; f. By the insolvency of any partner or the partnership; g. By the civil interdiction of any partner; 2. Judicial dissolution (Art. 1831, NCC) – when so decreed by the court, the presiding judge may place the partnership under receivership and direct an accounting to be made towards winding up the partnership affairs. a. b. On the application by or for any partner, the court shall decree dissolution whenever: 1) A partner has been declared insane in any judicial proceeding or is shown to be of unsound mind; 2) A partner becomes in any other way incapable of performing has part of the partnership contract; 3) A partner has been guilty of such conduct as tend to affect prejudicially the carrying on the business; 4) A partner willfully or persistently commits a breach of the partnership agreement, or otherwise so conducts himself in matters relating to the partnership business that it is not reasonably practicable to carry on the business in partnership with him; 5) The business of the partnership can only be carried on in a loss; 6) Other circumstances render dissolution equitable. On application of the purchaser of a partner’s interest under Article 1813 or 1814: 1) After the termination of the specified term or particular undertaking; 2) At any time if the partnership was a partnership at will when the interest was assigned or when the charging order was issued. 1. With respect to the partners (in so far as partners themselves are concerned) a. b. 2. With respect to persons not partners (third persons) a. When partnership is bound to third persons after dissolution 1) Act appropriate for winding up partnership affairs 2) Act appropriate for completing unfinished transactions 3) Completely NEW transaction which would bind the partnership if dissolution had not taken place provided: the other party is in good faith meaning: a) Previous creditor (had previously extended credit) AND he had NO KNOWLEDGE or NOTICE of the dissolution; or b) NOT a previous creditor AND the fact of dissolution had not been published in a newspaper of general circulation. b. When partnership is NOT bound to third persons after dissolution 1) Where partnership was dissolved because it was unlawful to carry on the business, except when the act is for winding up 2) Where the acting partner in the transaction has become insolvent 3) Where the partner is unauthorized to wind up, except if the transaction is with third person in good faith (under EFFECT OF DISSOLUTION A. As to Partner’s Authority to Act for the Partnership General Rule: Dissolution terminates all authority of any partner to act for the partnership Exceptions: 1. Acts necessary to wind up partnership affairs; or 2. Acts necessary to complete transactions begun but not then finished Note: Dissolution terminates the ACTUAL authority of a partner to undertake NEW business for the partnership. Qualifications to the General Rule: Dissolution is NOT by act, insolvency or death of a partner: General Rule applies. Hence, dissolution terminates the ACTUAL authority of a partner to undertake NEW business for the partnership Dissolution is by act, insolvency or death of a partner: General Rule: Each partner is liable to his co-partners for his share of any liability created by any partner acting for the partnership as if the partnership has not been dissolved Exceptions: 1) The cause of dissolution is the ACT of a partner and the acting partner had KNOWLEDGE of such dissolution. 2) The cause of dissolution is the DEATH or INSOLVENCY of a partner and the acting partner has KNOWLEDGE or NOTICE of such dissolution the same circumstances as defined above) 4) Where act is NOT appropriate for winding up partnership affairs or for completing unfinished transactions 5) Completely NEW transaction which would bind the partnership if dissolution had not taken place with third persons in bad faith. B. As to partner’s existing liability General Rule: Dissolution does not automatically discharged the existing liability of any partner Exception: A partner may be relieved from all existing liabilities upon dissolution ONLY by an agreement between: 1. Partner concerned 2. Other partners 3. Partnership creditors Note: The consent of the partnership creditors and the other partners to the Novation may be implied from their conduct. RIGHTS OF A PARTNER UPON DISSOLUTION 1. Where dissolution is NOT in contravention of the partnership agreement a. b. To have partnership property applied to discharge partnership liabilities To receive in cash his share of the surplus 2. Where dissolution is in contravention of the partnership agreement a. Rights of a partner who has not caused the dissolution wrongfully: 1) To have partnership property applied to discharge partnership liabilities 2) To receive in cash his share of the surplus 3) To be indemnified for damages caused by the partner guilty of the wrongful dissolution 4) To continue the business in the same name during the agreed term of the partnership, by themselves or jointly with others 5) To possess partnership property should they decide to continue the business b. Rights of a partner who has wrongfully caused the dissolution: 1) If the business is not continued by the other partners- a) To have partnership property applied to discharge partnership liabilities b) To receive in cash his share of the surplus less damages caused by his wrongful dissolution 2) If business is continueda) To have the value of his interest in the partnership at the time of the dissolution, surplus less damages caused by his co-partners, ascertained and paid in cash or secured by a bond approved by the court; and a. To be released from all existing liabilities Note: The value of the goodwill of the business is not considered in ascertaining the value of the interest of the guilty partners. Rights of a Partner Where Partnership Contract is Rescinded On the Ground of Fraud or Misinterpretation (Note: The following are the rights of the partner entitled to rescind) 1. Right of LIEN on, or RETENTION of, the surplus of partnership liabilities for any sum of money paid or contributed by him 2. Right of SUBROGATION in place of the partnership creditors after payment of partnership liabilities; and 3. Right of INDEMNIFICATION by the guilty partner against all debts and liabilities of the partnership MANNER OF WINDING UP 1. Extrajudicial – by the partners themselves without the intervention of the court. 2. Judicial – under the control and direction of the court upon proper cause shown by any partner, his legal representatives or his assignee. Persons Authorized to Wind Up 1. Partners designated by the agreement 2. In the absence of such agreement, all partners who have not wrongfully dissolve the partnership 3. Legal representative of last surviving partner 4. not insolvent ORDER OF PAYMENT IN WINDING UP 1. General Partnership (Art. 1839[2]) a. those owing to creditors other than partners b. those owing to partners other than for capital or profits c. those owing to partners in respect of capital d. those owing to partners in respect of profits 2. Limited Partnership (Art. 1863, NCC) a. those owing to creditor, except those to limited partners on account of their contribution, and to general partners b. those owing to limited partners in respect of their share of the profits and other compensation by way of income c. those owing to limited partners in respect to their capital contributions d. those owing to general partners other than for capital and profits e. those owing to general partners in respect to profits f. those owing to general partners in respect of capital Doctrine of Marshalling of Assets 1. Partnership creditors have preference in partnership assets 2. Separate or individual creditors have preference in separate or individual properties 3. Anything left from either goes to the other (Article 1839[8]) partners in order to evade liability for possible losses, while assuming their enjoyment of advantages to be derived from the relation. (Jo Chung Cang v. Pacific Commercial Co. 45 PHIL 142 [1923]). In other words if the parties intended a general partnership, they are general partners although their purpose is to avoid the creation of such a relation/ 5. Essential Requirements for Formation of Limited Partnership 1. A certificate or articles of limited partnership which states the matters enumerated in Art. 1844, which must be signed and sworn; 2. Such certificate must be filed for record in the Office of the Securities and Exchange Commission. Partner’s Lien ◘ Right of every partner to have the partnership property applied to discharge partnership liabilities AND to have the surplus assets, if any, distributed in cash to the respective partners, after deducting what may be due to the partnership from them as partners.  A strict compliance with the legal requirements is not necessary. It is sufficient that there is substantial compliance in good faith. If there is no substantial compliance, the partnership becomes a general partnership as far as the third persons are concerned, in which all the members are liable as general partners. (Jo Chung Cang v. Pacific Commercial Co., 45 Phil. 142 [1923]) LIMITED PARTNERSHIP ◘  One formed by two or more persons having as members one or more general partners and one or more limited partners, the latter not being personally liable for partnership debts. The Supreme Court declared a firm to be a general partnership in a case where it appears that the inclusion of “Ltd.” (Limited) in the firm was only a subterfuge resorted to by the Limited Partner / Partnership Characteristics of Limited Partnership 1. Limited partnership is formed by substantial compliance in good faith with the statutory requirements 2. One or more general partner control the business and are personally liable to creditor 3. One or more limited partners contribute to the capital and share in the profits but do not participate in the management of the business and are not personally liable for partnership obligations beyond the amount of their capital contributions 4. The limited partners may ask for the return of their capital contributions under the conditions prescribed by law The partnership debts are paid out of the common fund and the individual properties of the general partners. ◘ However, a firm, which fails to substantially comply with the formal requirements of a limited partnership, is a general partnership only as to its relations to third persons. If creditors deal with the firm as a limited partnership, or that the terms of the partnership were not sufficiently stated in the notice of its formation. (40 Am. Jur. 476) General Partner / Partnership a. b. 1. Extent of liability Limited partner’s liability extends only to his capital General partner is personally liable for partnership contribution. obligations. 2. Right to participate in the management of partnership Limited partner has no share in the management of General partners have an equal right in the a limited partnership and renders himself liable to management of the business (when the manner of partnership creditors as a general partner if he takes management has not been agreed upon) part in the control of the business. 3. Contribution Limited partner must contribute cash or property to General partner may contribute money, property or the partnership but not services. industry to the partnership. 4. Proper party to proceedings by or against the partnership Limited partner is not a proper party to proceedings General partner is the proper party to proceedings by by or against a partnership Unless: or against a partnership. He is also a general partner; or Where the object of the proceeding is to enforce a limited partner’s right against or liability to the partnership. 5. Transferability of interest Limited partner’s interest is freely assignable, with General partner’s interest in the partnership may not assignee acquiring all the rights of the limited be assigned as to make the assignee a new partner partner subject to certain qualifications. without the consent of the other partners, although he may associate a third person with him in his share. 6. Inclusion of partner’s name in the firm name As a general rule, name of a limited partner must Name of a general partner may appear in the firm not appear in the firm name. name. 7. Prohibition to engage in other business No such prohibition in the case of a limited partner General partner is prohibited from engaging in a who is considered a mere contributor to the business which is the SAME kind of business in which partnership. the partnership is engaged, if he is a capitalist partner, or in ANY of business for himself if he is an industrial partner. 8. Effect of retirement, death, insanity or insolvency Retirement, death, insanity or insolvency of a limited Retirement, death, insanity or insolvency of a general partner does not dissolve the partnership for his partner dissolves the partnership. executor or administrator shall have the rights of a limited partner for the purpose of selling his estate. 9. Creation Limited partnership is created by the members after General partnership, as a general rule, may be substantial compliance in good faith with the constituted in any form by contract or conduct of the requirements set forth by law. partnership. 10. Members of the partnership Composed of one or more general partners and one Composed only of general partners. or more limited partners. 11. Firm name Firm name must be followed by the word limited. No such requirement. 12. Rules governing dissolution and winding up Governed by Art. 1839. Governed by Art. 1863. Liability for False Statement in Certificate 1. Any partner to the certificate containing a false statement is liable to one who suffers loss by reliance on such certificate provided the following requisites are present: 2. He knew the statement to be false at the time he signed the certificate, or subsequently having sufficient time to cancel or amend it or file a petition for its cancellation or amendment, he failed to do so; 3. The person seeking to enforce liability has relied upon the false statement in transacting business with the partnership; 4. The person suffered a loss as a result of reliance upon such false statement. ◘ ◘ ◘ When the return of the contribution may be rightfully demanded: 1. On the dissolution of the partnership; 2. Upon the arrival of the date specified in the certificate for the return; 3. After he has given 6 months notice in writing to all other partners, if no time is specified in the certificate for the return of the contribution or for the dissolution of the partnership. c. The certificate is cancelled or so amended as to set forth the withdrawal or reduction. Management of Limited Partnership A general partner in a limited partnership is vested with the entire control of the firm’s business and has all the rights and powers and is subject to all the liabilities and restrictions of a partner in a general partnership. A general partner in a limited partnership however has no authority, without written consent or ratification of all limited partners, to: 1. Do any act in contravention of the certificate; 2. Do any act which would make it impossible to carry on the ordinary business of the partnership; 3. Confess judgment against the partnership; 4. Possess partnership property, or assign their rights in specific partnership property, for other that a partnership purpose; 5. Admit a person as a general partner; 6. Admit a person as a limited partner, unless the right to do so is given in the certificate; or 7. Continue the business with the partnership property on the death, retirement, insanity, civil interdiction or insolvency of a general partner, unless the right to do so is given in the certificate. LIABILITIES OF A LIMITED PARTNER 1. Liability for unpaid contribution a. For the difference between his contribution as actually made and that stated in the certificate as having been made; AND b. For any unpaid contribution which he has agreed in the certificate to make in the future at the time and the conditions stated in the certificate. 2. Liability as trustee a. Specific property stated in the certificate as contributed by him, but which was not contributed or which has been wrongfully returned; and b. Money or other property wrongfully paid or conveyed to him on account of his contribution. A limited partner is liable as a general partner for the firm’s obligations if he takes part or interferes in the management of the business. Rights of a Limited Partner 1. To have the partnership books kept at the principal place of business of the partnership 2. To inspect, at a reasonable hour, partnership books and copy any of them 3. To demand true and full information of the things affecting the partnership 4. To demand a formal account of the partnership affairs whenever circumstances render it just and reasonable 5. To ask for dissolution and winding up by decree of court 6. To receive a share in the profits or other compensation by way of income provided: that the partnership assets are in excess of partnership liabilities after such payment 7. To receive the return in his contribution provided: a. All the liabilities of the partnership have been paid OR sufficient to pay partnership liabilities; and b. The consent of all the members (general and limited partners) has been obtained. Exception: Waiver of Liabilities of Limited Partner These can be waived or compromised only by consent of all the members. ◘ 1. 2. Substituted Limited Partner A person admitted to all the rights of a limited partner who has died or has assigned his interest in the partnership General Rule: He has all the rights and powers, and is subject to all the restrictions and liabilities of his assignor. Exception: Those liabilities, which he was ignorant at the time, he became a limited partner and which could not be ascertained from the certificate. Requisites in Order that the Assignee Mat become a Substituted Limited Partner All the members must consent to the assignee becoming a substituted limited partner, OR the limited partner, being empowered by the certificate must give the assignee the right to become a limited partner. The certificate must be amended in accordance with Art. 1865 (set forth clearly to change in the certificate which it is desired to make and signed and sworn to by all members, and an amendment substituting a limited partner shall be 3. signed also by the member to be substituted or added, and when a limited partner is to be substituted, the amendment shall also be signed by the assigning limited partner. The certificate as amended must be registered in the Securities and Exchange Commission. A contract whereby a person (agent) binds himself to render some service or to do something in representation or on behalf of another (principal), with the consent or authority of the later. (Article 1868) Parties 1. Principal – one whom the agent represents and from he derives authority 2. Agent – one who acts for and represents another Allowable Transactions of a Limited Partner Being merely a contributor to the partnership is not prohibited from: a. granting loans to the partnership b. transacting other business with the partnership c. receiving a pro rata share of the partnership assets with the general creditors if he is NOT also a general partner DISTINCTION BETWEEN AGENCY & LEASE OF SERVICES Agency Principle of representation is applied. Extinguished at will of the principal. Agent exercise discretionary power to attain an end for which he was appointed. Preparatory Contract Agency to Sell Agent receives the goods as the goods of the principal. Agent delivers the proceeds of the sale. Agent can return the object in case he is unable to sell the same. Bound to act according to the instructions of his principal. NOTE: In transacting a business with the partnership as a non-member, the limited partner is considered a non-partner creditor Prohibited Transaction of a Limited Partner 1. receiving or holding as collateral security any partnership property; or 2. receiving any payment, conveyance, or release from liability if it will prejudice the partnership creditors NOTES:  Violation of the prohibition will give rise to the presumption that it has been made to defraud partnership creditors.  The prohibition is NOT ABSOLUTE, there is no such prohibition if the partnership assets are sufficient to discharge partnership liabilities to persons not claiming as general or limited partners.  AGENCY Lease of Services Principle of employment is applied. Concurrence of parties is necessary. Employee exercise ministerial functions only Principal Contract. Sale The buyer receives goods as owner. Buyer pays the price. The buyer, as a rule, cannot return the object sold. The buyer can deal with the thing as he places being the owner. Purpose of Agency The purpose of agency is to extend the personality of the principal through the facility of the agent. It enables the activity of man which is naturally limited in its exercise by the impositions of his physiological conditions to be legally extended by permitting him to be constructively present in many different places and to perform diverse juridical acts and carry on many different activities through another when physical presence is impossible or inadvisable at the same time. (11 Manresa 434) Contract of Agency ELEMENTS OF AGENCY A. Consent  Any person or entity having juridical capacity and capacity to act and not otherwise disqualified, may enter into an agency.  But as regards the party with whom the agent acts or a contract, the legal capacity of the principal rather than the agent, is of the greater import. B. Object  The services to be undertaken by the agent may cover all acts pertaining to a business of the principal (general agency) or one or more specific transaction (special agency)  The extent of the agent’s authority to act, whether it be a general or a special agency, depends on how the agency is couched. C. Cause  May be onerous or gratuitous but presumed for compensation a) couched in general terms – one which is created in general terms and is deemed to comprise only acts of administration; b) couched in specific terms – one authorizing only the performance of a specific act or acts. 5. As to its nature and effects a) ostensible or representative – one where the agent acts in the name and in representation of the principal. b) simple or commission – one where the agent acts in his own name but for the account of the principal. ACTS WHICH MAY BE DELEGATED TO AN AGENT General Rule: What a man may do in person, he may do thru another. Exceptions: 1. Personal acts – if personal performance is required the doing of an act by a person on behalf of another does not constitute performance by the latter. a) Voting during an election; b) Making a will; c) Making statements which are required to be done under oath; d) A member of the board of directors or trustees in a corporation cannot validly act as such by proxy e) An agent cannot delegate to a sub-agent the performance of acts which he has been appointed to perform in person. 2. Criminal acts or acts not allowed by lawthere could be no agency in the perpetration if a crime or unlawful act. a) An alien principal using an agent to acquire lands; b) Persons who, because of their position and relation with the persons under control, are prohibited from acquiring said property and cannot do so through an agent. Note: The agent may not be deprived of his right to compensation by an unjustified revocation of the agency. KINDS OF AGENCY 1. As to manner of creation a)Express – one where the agent has been actually authorized by the principal, either orally or in writing; a)Implied – one which is implied from the i. Acts of the principal – from his silence or lack of action, or his failure to repudiate the agency knowing that another person is acting on his behalf without authority. ii. Acts of the agent – when he carries out the agency, or from his silence or inaction according to the circumstances. 2. As to its character a) Gratuitous – one where the agent receives no compensation for his services. b) Compensated or onerous – one where the agent receives compensation for his services. 3. As to extent of business covered a) General – one which comprises all the business of the principal; b) Special – one which comprises one or more specific transactions. 4. As to authority conferred  FORMS OF AGENCY Agency may be express or implied from the acts of the principal, from his silence or lack of action, or his failure to repudiate the agency, knowing that another person is acting on his behalf without authority. (Article 1869, NCC) General Rule: There are not formal requirements governing the appointment of an agent. The agent’s authority may be oral or written. It may be in a public or private writing. Exception: When the law requires a specific form  The equality of an agent to execute a contract of sale of real estate must be conferred in writing and must give him specific authority, either to conduct the general business of the principal or to execute a binding containing terms and conditions which are the contract he did execute. (Dizon et al. vs. CA et al., GR 124741, January 26, 2003) Form of Acceptance by Agent Acceptance by the agent may also be express or implied from his silence or inaction according to the circumstances. KINDS OF IMPLIED ACCEPTANCE Where persons are present Acceptance may be implied if: a. principal delivers his power of attorney to the agent and b. agent receives it without any objection Where persons are absent General Rule: Acceptance cannot be implied from silence of the agent Exception: 1. principal transmits his power of attorney to the agent, who receives it without any objection; 2. principal entrusts to him by letter or telegram a power of attorney with respect to the business in which he is habitually engaged as an agent, and he did not reply to the letter or telegram Rule on Agency by Estoppel  On who clothes another with apparent authority as his agent, and holds him out toe the public as such, cannot be permitted to deny the authority of such person in good faith, and in the honest belief that he is what he appears to be. (Cuison v. CA, GR 88531, October 26, 1993) ◘ CLASSES AND KINDS OF AGENT 1. Universal Agent – one employed to do all acts that the principal may personally do, and which he can lawfully delegate to another the power of doing. 2. 3. General Agent – one employed to transact all the business of the principal, or all the business of a particular place, or in other words to do all acts, connected with a particular trade, business or employment. Special or Particular Agent – one authorized to act in one or more specific transactions, or to do one or more specific acts, or to act upon a particular occasion. General Agent Special Agent 1. Scope of Authority Usually authorized to Authorized to do only do all acts connected acts in pursuance of with the business or particular instructions employment in which or with restrictions he is engaged. necessarily implied from the acts to be done. 2. Continuity Conducts a series of Usually involves a transactions single transactions or involving a continuity a series of of service. transactions not involving continuity. 3. Extent by which agent may bind principal. Binds his principal by Cannot bind his an act within the principal in a manner scope of his authority beyond or outside although it may be the specific acts contrary to his which he is special instructions. authorized to perform on behalf of the principal. 4. Termination of Authority Apparent authority Mere revocation is does not terminate effective to terminate by the mere the authority as to revocation of his third persons authority without because the third notice to the third person has a duty to party. inquire. 5. Construction of Instruction of Principal Statement of Authority of agent principal with respect must be strictly to the agent’s pursued. authority would ordinarily regarded as advisory only. Special Power of Attorney (SPA) An instrument in writing by which one person, as principal, appoints another as his agent and confers upon him the authority to perform certain specified acts or kinds of acts on behalf of the principal. latter’s authority. In the principal to his agent outside the written power of attorney. (Siredy Enterprises, Inc. vs CA, et al. GR 129039, September 27, 2002) Instances Where SPA is Necessary 1. To make such payments as are not usually considered as acts of administration, 2. To effect Novation which put an end obligations already in existence at the time the agency was constituted; 3. To compromise, to submit questions to arbitration, to renounce the right to appeal from a judgment, to waive objections to the venue of the action or to abandon a prescription already acquired; 4. To waive any obligation gratuitously; 5. To enter into any contract by which the ownership of an immovable is transmitted or acquired either gratuitously or foe a valuable consideration; 6. To make gifts, except customary ones for charity or those made to employees in the business managed by the agents; 7. To loan or borrow money, unless the latter’s act be urgent and indispensable for the preservation of the things which are under administration; 8. To lease any real property to another person for more than one year; 9. To bind the principal to render some service without compensation; 10. To bind the principal in a contract of partnership 11. To obligate the principal as guarantor or surety; 12. To create or convey real rights over immovable property; 13. To accept or repudiate an inheritance; 14. To ratify or recognize obligations contracted before the agency; 15. Any other act of strict dominion. Note: A third person with whom the agent wishes to contact on behalf of the principal may require the presentation of the power of attorney or the instructions as regards the agency; except private or secret orders.  The scope of the agent’s authority is what appears in the written terms of the power of attorney. While third person are bound to inquire into the extent or scope of the agent’s authority, they are not required to go beyond the terms of the written power of attorney. Third persons cannot be adversely affected by an understanding between the principal and his agent as to the limits of the Notes:  SPA to sell does not include the power to mortgage; and vice versa.  SPA to mortgage includes the power to allow the extrajudicial foreclosure of the mortgaged property;  SPA to compromise does not authorize submission to arbitration  SPA for an agent to institute any action in court to eject all persons in the principal could take material possession thereof, and for this purpose, to appear at the pre-trial and enter into any stipulation of facts and/or compromise agreement but only insofar as this is protective of the rights and interest of the principal in the property, does not grant any power to the agent to sell the subject property nor a portion thereof. (Cosmic Lumber Corp. vs.CA 265 SCRA 168) Effect of Lack of Spa Where One Is Required: Unenforceable When principal Bound by Act of Agent 1. Agent must act within the scope of his authority; 2. Agent must act in behalf of the principal.  The limits of the agent’s authority shall not be considered exceeded should it have been performed in a manner more advantageous to the principal than that specified by him. When A Person Not Bound By Act of Another 1. Latter acts without or beyond the scope of his authority in the former’s name; and 2. Latter acts within the scope of his authority but in his own name (UNDISCLOSED PRINCIPAL), except when the transaction involves a thing belonging to the principal. In such case, the contract is deemed as entered between the principal and the third person.  EFFECTS OF AGENT’S ACTS 1. With Authority A. In Principal’s Name – valid; principal is bound; agent not personally liable unless he bound himself(article 1897) B. In His Own Name – apply article 1883; generally not binding on the principal; agent and stranger are the only parties, except regarding things belonging to the principal or when the principal ratifies the contract or derives benefit therefrom. 2. Without Authority A. In Principal’s Name – unauthorized and unenforceable but may be ratified; in which case, may be validated retroactively from the beginning (Article 1407) B. In His Own Name – valid, whether or not the subject matter belongs to the principal, provided that at the time of delivery, the “agent” can transfer legally the ownership of the thing otherwise, he will be held liable for breach of warranty against eviction; article 1883 does not apply 2. 3. 4. 5. 6. 7. 8. 9. Occasions When Principal Is Bound By Acts Of The Agent Beyond The Latter’s Powers General Rule: The principal is not bound by the acts of the agent beyond his limited powers. Exceptions: 1. Where the principal’s acts have contributed to deceive the third person in good faith; 2. Where the limitations upon the power created by him could not have been known by the third person; 3. Where the principal has placed in the hands of the agent instruments signed by him in blank 4. Where the principal has ratified the acts of the agent. By virtue of the existence of an emergency, the authority of an agent is correspondingly enlarged in order to cope with the exigencies or the necessities of the moment OBLIGATIONS OF AGENT TO PRINCIPAL General: 1. To act with utmost good faith and loyalty for furtherance of principal’s interests; 2. To obey all lawful orders and instructions of principal within the scope of the agency; and 3. To exercise reasonable care, skill and diligence. Specific: 1. To carry out accepted; the agency which he 11. 12. 13. 14. 15. DOCTRINE OF AGENCY BY NECESSITY  10. 16. 17. To answer for damages which through his performance the principal may suffer; To finish the business already begun on the death of the principal should delay entail any danger; To observe diligence of a good father of a family in the custody and preservation of the goods forwarded to him by the owner in case he declines an agency, until an agent is appointed; To advance the necessary funds should there be a stipulation to do so; To act in accordance with the instructions of the principal, and in default thereof, to do all that a good father of a family would do; Not to carry out the agency if its execution would manifestly result in loss or damage to the principal; To answer for damages if there being a conflict between his interest and those of the principal, he should prefer his own; Not to loan to himself if he has been authorized to lend money at interest; To render an account of his transactions and to deliver to the principal whatever he may have received by virtue of the agency; To distinguish goods by countermarks and designate the merchandise respectively belonging to each pri8ncipal, in the case of a commission agent who handles goods of the same kind and mark which belong to different owners; To be responsible in certain cases for the acts of the substitute appointed by him; To pay interest on funds he has applied to his own use; To inform the principal, where an authorized sale of credit has been made, of such sale; To bear the risk of collection, should he receive also on sale, a guarantee commission; To indemnify the principal for damages for his failure to collect the credits of his principal at the time that they become due; and To be responsible for fraud or negligence. General Rule: Knowledge of agent is knowledge of the principal. Exceptions: 1. Agent’s interest are adverse to those of the principal; 2. Agent’s duty is not to disclose the information (confidential information); 3. Where the person claiming the benefit of the rule colludes with the agent to defraud the principal. has SUB-AGENT A person to whom the agent delegates, as his agent, the performance of an act for the principal which the agent has been empowered to perform through his representative. If the commission agent received goods consigned to him, he is responsible for any damage or deterioration suffered by the same in the terms and conditions and as described in the consignment.  The commission agent who handles goods of the same kind and mark, which belong to different owners, shall distinguish them by countermarks, and designate the merchandise respectively belonging to each principal.  A commission agent can sell on credit only with the express or implied consent of the principal. If such sale is made without authority, the principal is given two alternatives: i. He may require payment in cash, in which case any interest or benefit from the sale on credit shall belong to the agent since the principal cannot be allowed to enrich himself at the agent’s expense; ii. He may ratify the sale on credit in which case it will have3 all the risks and advantages to him.  Instances When Agent Shall Be Responsible for the Acts of the Substitute: 1. When he was not given the power to appoint; or 2. When he is given such power but without designating the person and the person appointed was notoriously incompetent or insolvent. Note: In these two cases the principal may further bring an action against the substitute with respect to the obligations which the latter has contracted under the substitution. JOINT AGENTS a. Agents appointed by one or more principals under such circumstances as to induce the inference that it was the principal’s intent that all should act in conjunction in consummating the transaction for which they were appointed. b. Their responsibility is joint; except if solidarity has been expressly stipulated. c. If solidarity has been agreed upon, each agent is responsible for the: d. non-fulfillment of the agency e. fault or negligence of his fellow agents; except when the fellow agents acted beyond the scope of their authority. Agent May Incur Personal Liability: 1. When the agent expressly binds himself  The individual liability of the agent can be considered a further security in favor of the creditor and does not affect or preclude the liability of the principal; both are liable 2. When agent exceeds his authority 3. When agent by his acts prevents performance on the part of the principal 4. When a person acts as an agent without authority or without a principal 5. When a person who acts as an agent of an incapacitated principal unless the third party was aware of the incapacity at the time of the making of the contract Factor/Commission Agent  One engaged in the purchase and sale for a principal of personal property, which for this purpose, has to be placed in his possession and at his disposal.        If the commission agent is authorized to sell on credit, he shall inform the principal with a statement of the names of the buyers. Without such statement, the sale shall be deemed to be for cash as far as the principal is concerned. The commission agent who does not collect the credits of his principal at the time when they become due and demandable shall be liable for damages, unless he proves the exercise of due diligence for that purpose. BROKER A middleman or intermediary who, in behalf of others and for a commission or fee, negotiates contracts/transactions relating to real or personal property. Factorage Compensation of a factor or commission agent. Ordinary Commission Compensation for the sale of goods which are placed in his possession or at his disposal. Guaranty Commission Fee that is given in return for the risk, which the agent has to bear in the collection of credits. An agent with a del credere commission is liable to the principal if the buyer fails to pay or is incapable of paying.  OBLIGATIONS OF PRINCIPAL TO THE AGENT A. General  Duties and liabilities of the principal are primarily based upon the contract and the validity of the contract between them. B. Specific 1. To comply with all the obligations which the agent may have contracted within the scope of his authority and in the name of the principal; 2. To advance to the agent, should the latter so request, the sums necessary for the execution of the agency; 3. To reimburse the agent for what the latter has advanced (plus interest), even if the business was not successful, provided the agent was free from fault; 4. To indemnify the agent for all the damages, which the execution of the agency may have caused the later without fault or negligence on his part; Note: the agent may retain in pledge the things which are the object of the agency until the principal effects this reimbursement and pays the indemnity. 5. To pay the agent the compensation agreed upon, or if no compensation was specified, the reasonable value of the agent’s services. Rule on Liability of Principal for Tort of Agent: The principal is civilly liable to third persons for torts of an agent committed at the principal’s direction or in the course and within the scope of the agent’s authority. Reason for Liability: The rule is based upon the principle that he who does an act through another does it himself. Conditions for Ratification 1. Principal must have capacity and power to ratify 2. Principal must have had knowledge of material facts 3. Principal must ratify the acts in its entirety 4. Act must be capable of ratify of ratification 5. Act must be done in behalf of the principal  Principal by Estoppel Even when the agent has exceeded his authority, the principal is solidarily liable with the agent if the former allowed the latter to act as though he had full powers. Joint Principals a. Two or more persons who appoint an agent for a common transaction or undertaking; b. Liability: solidarily liable to the agent for all the consequences of the agency. Requisites of Solidary Liability: 1. There are two or more principals; 2. The principals have all concurred in the appointment of the same agent; and 3. The agent is appointed for a common transaction or undertaking. Rules on Double Sale by Principal and Agent 1. When two persons contract with regard to the same thing, one of them with the agent and the other with the principal, and the two contracts are incompatible with each other, that of prior date shall be preferred, without prejudiced to articles 1544 (double sale) 2. If the agent has acted in good faith, the principal shall be liable in damages to the third person whose contract must be rejected. If the agent is in bad faith, he alone shall be responsible. Instances When Principal is Not Liable for the Expenses Incurred by the Agent: 1. If the agent acted in contravention of the principal’s instructions, unless the latter should wish to avail himself of the benefit derived from the contract; 2. When the expenses were due to the fault of the agent; 3. When the agent incurred them with knowledge that an unfavorable result would ensure, if the principal was not aware thereof; 4. When it was stipulated that the expenses would be borne by the agent, or that the latter would be allowed only a certain sum.  MODES OF EXTINGUISHMENT OF AGENCY 1. Expiration of the period 2. Death, civil interdiction, insanity or insolvency of the principal or of the agent 3. Withdrawal of the agent  Agent may withdraw by giving notice to the principal, but must indemnify the principal for damages that he may suffer by reason of such withdrawal. 4. 5. 6. Accomplishment of the object or the purpose of the agency Revocation Dissolution of the firm or corporation, which entrusted or accepted the agency. Instances when death of principal does not terminate agency 1. If the agency has been constituted in the common interest of the principal and the agent 2. If it has been constituted in the interest of a third person who has accepted the stipulation in his favor Revocation of agency by principal General Rule: agency is revocable at will of the principal, regardless of the term of the agreement. Exceptions: 1. If a bilateral contact depends upon it; 2. If it is the means of fulfilling an obligation already contracted; 3. If a partner is appointed manager of a partnership and his termination is unjustifiable; and 4. If it is created not only for the interest of the principal but also for the interest of third persons, who have accepted the stipulation in their favor. Agency Coupled With an Interest a. An agency wherein the agent has acquired some interest of his own in the execution of the authority granted to him, in addition to his mere interest in the contract of employment with the resulting gains. b. The agency becomes merely a part of another obligation or agreement, or an incidental element thereof so it cannot be unilaterally revoked. Note: However, in Coleongco v. Claparals (10 SCRA 577), the SC made a sweeping statement that coupled with an interest or not, the authority (agency) can certainly be revoked for a just cause. Implied Revocation May Be Effected: 1. By the act of the principal in appointing another agent for the same business or transaction; 2. By the act of the principal in directly managing the business entrusted to the agent; or 3. By the act of the principal in subsequently granting a special power of attorney as regards the same business to another agent, where he had previously granted a general power of attorney to one agent. TRUST TRUST A legal relationship between one person having an equitable ownership in property and another owning the legal title to such property. CLASSIFICATION 1. Effectivity – from the viewpoint of whether they become effective after the death if the trustor or during his life, it may be either: a. Testamentary Trust b. Trusts Inter Vivos (sometimes called “living trusts”) 2. Creation – from the viewpoint of the creative force bringing them into existence, it may be either: a. Express trust – created by the intention of the trustor or of the parties b. Implied Trust – one which comes into being by operation of law. This may be either: 1) Resulting Trust – one which the intention to create a trust is presumed by law to exist from the transaction and facts of the case 2) Constructive trust – one imposed by law irrespective of and even contrary to the intention of the parties. It is designed to promote justice, frustrate fraud and prevent unjust enrichment. Persons Involved in the Creation of a Trust: 1. Trustor – the one who intentionally creates a trust 2. Trustee – the person who holds the legal title to the trust property for the benefit of another and with certain powers and subject to certain duties 3. Beneficiary or the cestui que trust – the one who has the equitable interest in the property and enjoys the benefit of administration by the trustee. He may be a natural person or a legal entity. The trustor may establish a trust with himself as the beneficiary (usual case) Elements of Express Trust 1. Competent trustor and trustee; 2. Ascertainable trust res; and 3. Sufficiently certain beneficiaries. Trust Property  The concept of a trust arises from or is the result of a fiduciary relation between the trustee and the cestui que trust as regards certain property – real, personal, funds or money, choses in action held by the trustee. (Pacheco v. Arro, 85 PHIL 505) Trust Always involves ownership, embracing a set of rights and duties fiduciary in character which may be created by a declaration without consideration Contract A legal obligation based on an undertaking supported by a consideration, which obligation may or may not be fiduciary in character. Trust An existing legal relationship and involves the separation of legal and equitable title Donation There is a transfer of property as well as the disposition of both legal and equitable ownership except in cases of gifts in trust. The done must comply with the legal requirements in accepting donations. The beneficiary of a trust may demand performance of the obligation without having formally accepted the benefit of the trust in public document, upon mere acquiescence in the formation of the trust and acceptance under the second paragraph of articles 1311 (stipulations pour autrui)  The trust property is owned by two or more persons at the same time, the relation between the two owners being such that one of them is under an obligation to use his ownership for the benefit of the other. PROOF OF TRUST General Rule: Trust whether express or implied may be proved by parol or oral evidence Exception: An express trusts over an immovable property or any interest therein. NECESSITY OF ACCEPTANCE TO THE CREATION AND VALIDITY OF TRUST RELATIONSHIP 1. Acceptance of the Trustee  The acceptance of the trustee is not necessary to its existence and validity since if he declines, the courts will appoint a trustee to fill the office that he declines.  But a trustee’s acceptance of the trust is necessary to charge him with the office of the trustee and the administration of the trust and to vest the legal title in him. 2. Acceptance of the beneficiary  The acceptance by the beneficiary is essential to the creation and validity of a trust. However, such acceptance is presumed if there is no proof to the contrary and the trust does not impose any onerous condition upon the beneficiary. Requisites for a Trustee to Claim Title by Prescription: 1. He has performed open and unequivocal acts of repudiation 2. Such positive acts of repudiation have been made known to the beneficiary or the cestui que trust 3. The evidence thereon should be clear and convincing and 4. The period fixed by law has expires (10 years from the time that the repudiation is made known to the beneficiary in cases of express trust or resulting trust while 10 years from the time a constructive trust arises). Resulting Trust 1. Intention to The intent of the parties to create a trust is presumed or implied by law from the nature of their transaction. 2. Prescriptive Period The 10 year Constructive Trust Create Trust: The trust is created irrespective of or even contrary to the intention of the parties to promote justice, frustrate fraud and to prevent unjust enrichment. The 10 year prescriptive 3. prescriptive period shall be counted from the time repudiation is made known to beneficiary. Examples: Illustrated in Arts. 1448, 1449, 1451, 1452, 1453 period shall be counted from the time that the constructive trust arises. Illustrated in Arts. 1450, 1454, 1455, 1456  In order that a trustee may sue or be sued alone, it is essential that his trust should be express, that is a trust created by the direct and positive acts of the parties, by some writing deed or will, or by proceedings in court. Rule 3, sec. 3 does not apply in cases of implied trust that is, a trust which may be inferred merely by the acts of the parties or from other circumstances. (PAL v. Heald Lumber Co.) Prescriptive Periods   2. As to proof of trust An express trust over An implied trust over an immovable property an immovable or any of any interest therein interest therein may be cannot be proved by proved by oral parol evidence evidence. 3. As regards repudiation of trust An express repudiation In constructive trusts, made known to the even if there is no beneficiary is repudiation, laches necessary in order that may bar an action to laches or acquisitive enforce an implied prescription may bar trust. an action to enforce an express trust. Exceptions: Donations made to a person but the beneficial interest is vested in another. The done is to trustee while the designated third person is the beneficiary. (Art. 1449, NCC). The 10-year prescriptive period in case of implied trust begins to run from the date the trustee repudiates the express trust. In the case Sps. Pascual, et al. vs. CA, et al. GR 115925, Aug. 15, 2003, it was held that repudiation takes place when the adverse party registers the land. Purchase with borrowed funds and the conveyance is made to lender to secure payment of debt. (Art. 1450) The 4-year prescriptive period under Art. 1391 applies only if the fraud does not give rise to an implied trust, and the action is to annul a voidable contract under Art. 1390. Legal title to property purchased taken in one coowner. (Art. 1452, NCC) Conveyance under a promise to hold for, or transfer to another. (Art. 1453) Trust Pursuit Rule Equity will pursue property that is wrongfully converted by the fiduciary, or otherwise compel restitution to the beneficiary. A trust will follow the property through all changes in its state and form, provided its product or proceeds are capable of identification. Implied Trust Are those, without being express, are deductible from the nature of the transaction as matters of intention, or which are superinduced on the transaction by operation of law, as matters of equity independently of the parties. Express trust 1. As to creation Created by the intention of the parties Implied trust Come into being operation of law. by Legal title to land inherited by heir placed in the name of another. (Art. 1451) Absolute conveyance to a person to secure performance of grantor’s obligation. (Art. 1454, NCC) Purchase of property with use of trust funds. (Art. 1455, NCC) Acquisition of property through mistake or fraud. (Art. 1456, NCC) Note: An action for reconveyance of a parcel of land based on an implied or constructive trust prescribes in ten years, the point of reference being the date of registration of the deed or the date of issuance of the certificate of title over the property. BUT, this rule applies only when the plaintiff (or person enforcing the trust) is not in possession of the property, since if a person claiming to be the owner thereof is in actual possession of the property, the right to seek reconveyance, which in effect seeks to quiet title to property, does not prescribe. Requisites Before Period or Prescription May Start in Regard to an Action Based on an Implied Trust: a) The trustee has performed unequivocal acts of repudiation amounting to an ouster of the cestui sque trust. b) Such positive acts of repudiation have been made know to the cestui quie trust; and c) Evidence thereon is clear and positive. (Vda. De Cabrera vs. Court of Appeals 267 SCRA 339 [1997]); Note: The enumeration is not exclusive. Other Examples of Implied Trust: 1. The registration of land under torrens in the name of one person do not bar evidence to show it was only held in trust for another. 2. Certificate of registration of vehicle placed in the name of a person although the price was not paid by him but by another. 3. One arising from the agent’s willful violation of the trust reposed in him by the principal by buying for himself the property he was supposed to buy for the principal who designated and appointed him to negotiate with the owner. 4. In consonance with the trust fund doctrine in Corporation Law, the assets of the corporation, as represented by the capital stock, are regarded as “trust fund” to be maintained unimpaired for the payment of corporate creditors. CREDIT TRANSACTIONS ____________________________________ Credit Transactions  All transactions or loan of goods, services, or money in the present with a promise to pay or deliver in the future. Types: 1. Secured Transaction or Contract of Real Security – supported by a collateral or an emcumbrance of property. 2. Unsecured Transaction or Contracts of Personal Security – supported only by a promise and deals with: A. Principal Contracts 1. Loan (commodatum and mutuum) 2. Deposit B. Accessory Contracts 1. Personal guaranty 2. Guaranty proper 3. Suretyship 4. Real Guaranty a. Real property 1) Real Mortgage 2) Antichresis b. Personal property 1) Pledge 2) Chattel mortgage 3) Preference and concurrence of credits BAILMENT The delivery of property of one person to another in trust for a specific purpose, with a contract, express or implied, that the trust shall be faithfully executed and the property returned or duly accounted for when the special purpose is accomplished or kept until the bailor claims it. Parties: 1. Bailor – the giver;one who delivers property. 2. Bailee – the recipient; one who receives the custody or possession of the thing thus delivered. LOAN   1.  2. A contract wherein one of the parties delivers to another, either something not consumable so that the latter may use the same for a certain time and return it or money or other consumable thing, upon the condition that the same amount of the same kind and quality shall be paid. (Art. 1933, NCC) A contract of loan is not consensual but real contract. It is perfected only upon deliver of the object of contract (Monte de Peidad v. Javier 35 OG 2176). Characteristics: Real Contract – delivery of the ting loaned is necessaryfor the perfection of the contract. An accepted promise to make a future loan is a consensual contract, and therefore binding upon the parties but it is only after delivery will the real contract of loan arise. (Art. 1934) Unilateral Contract – once the subject matter has been delivered, it creates obligations on the part of only one of the parties (i.e borrower) Loan Delivery by one party and the receipt of other party of a given sum of money or other consumable thing upon an agreement, express or implied, to repay the same. Interest taken at the expiration of the credit. Always on a double name paper (two signatures appear with both parties held liable for payment). LOAN Real contract Generally unilateral because only borrower has obligations. Credit Ability of a person to borrow money or things by virtue of the trust or confidence reposed by the lender that the borrower will pay what he promised. Interest is taken in advance. Always on a single name paper (i.e. promissory note with no indorse-ment other than the maker). SALE Consensual contract. Bilateral and reciprocal. KINDS OF LOAN: 1. Commodatum – contract where one of the contracting parties delivers to another a nonconsumable thing so that the other may use the same for a certain time, then return it after using the same. Kinds of Commodatum: a. Ordinary Commodatum (Art. 1933 b. Precarium – one whereby the bailor may demand the thing loaned at will (Art. 1947, NCC) 2. Mutuum or Simple Loan – contract where one of the contracting parties delivers to the other money or any other consumable thing subject to the condition that the same amount of the same kind and quality be paid and returned.  “Consumable goods may be the subject of commodatum if the purpose of the contract is not the consumption of the object, as when it is merely for exhibition.” Thus, if consumable goods are loaned only for purposes of exhibition, or when the intention of the parties is to lend consumable goods and to have the very same goods returned at the end of the period agreed upon, the loan is a commodatum and not a mutuum. (Producers Bank of the Phils. V. CA, Feb. 19, 2003, 397 SCRA 659). Commodatum Mutuum 1. Object Non-consumable Consumable 2. Cause Gratuitous Gratuitous or onerous 3. Purpose Use or temporary Consumption possession 4. Subject Matter Real or personal Only personal property property 5. Ownership of the thing Retained by the Passes to the debtor bailor 6. Thing to be returned The exact thing Equal amount of the loaned same kind and quality 7. Who bears the risk of loss? Bailor Bailee 8. When to return? In case of urgent Only after the need, even before expiration of the the expiration of the term term d. A. COMMODATUM (Art. 1935-1952) NATURE: Purpose: Bailee in commodatum acquires the temporary use of the thing but not its fruits (unless stipulated as an incidental part of the contract) (Art. 1935) Use must be temporary, otherwise the contract may be a deposit 2. Cause: Essentially gratuitous; it ceases to be a commodatum of any compensation is to be paid by the borrower who acquires the use, in such case there arises a lease contract. Similar to a donation in that it confers a benefit to the recipient. The presumption is that the bailor has loaned the thing for having no need therefore. 3. Subject Matter: General Rule: Non-consumable whether real or personal Exception: If the consumable goods are not for consumption as when they are merely for exhibition, consumable goods may be the subject of the commodatum. (Art. 1936, NCC) 4. Bailor need not be the owner of the thing owned (Art. 1938, NCC) since by the loan, ownership does not pass to the borrower. 5. Purely Personal (Art. 1939): a. Death of either party terminates the contract unless by stipulation, the commodatum is transmitted to the heirs of either or both parties. b. A mere lessee or usufructuary may lend but the borrower or bailee himself may not lend nor lease the thing loaned to him to a third person. (Art. 1932[2]) c. Use of the thing loaned may extend to members of the bailee’s household except: a. Contrary stipulation; b. Nature of the thing forbids such use 1. OBLIGATIONS OF THE BAILEE: (Arts. 1941 – 1945) 1. To pay for the ordinary expenses for the use and preservation of the thing loaned. (Art. 1941) 2. To be liable for the loss of the thing even if it should be through a fortuitous event in the following cases: a. When he keeps it longer than the period stipulated, or after the accomplishment for which the commodatum was intended; b. When he lends or leases it to third persons who are not members of his household c. When the thing loaned has been delivered with appraisal of its value; 3. 4. 5. When, being able to save either of thing borrowed or his own things, he chose to save the latter; or e. When the bailee devoted the thing for any purposes different from that for which it has been loaned (Art. 1942, NCC) To be liable for the deterioration of thing loaned, the ff: requisites must concur a. If expressly stipulated; b. If guilty of fault or negligence; or c. If he devotes the thing to any purpose different from that for which it has been loaned. To pay for extraordinary expenses arising from the actual use of the thing by the bailee, which shall be borne equally by both the bailor and the bailee, even though the bailee acted without fault, unless there is a stipulation to the contrary (Art. 1949 par. 2) To return the thing loaned General Rule: The bailee has no right to retain the thing loaned as security for claims he has against the bailor even for extraordinary expenses. Exception: for a claim for damages suffered because of the flaws of the thing loaned. Notes: a. However, the bailee’s right extends no further than retention of the thing loaned until he is reimbursed for the damages suffered to him. b. He cannot lawfully sell the ting to satisfy such damages without court’s approval. c. In case there are two or more bailees, their obligation shall be solidary. OBLIGATIONS FO THE BAILOR (Art. 1946 – Art. 1952): 1. To respect the duration of the loan General Rule: Allow the bailee the use of thing loaned for the duration of the period stipulated or until the accomplishment of the purpose for which the commodatum was instituted. Exceptions: a. In case of urgent need in which bailee may demand its return or temporary use; b. The bailor may demand immediate return of the thing if the bailee commits any act of ingratitude specified in Art. 765. 2. To refund to the bailee extraordinary expenses for the preservation of the thing loaned, provided that the bailee brings the same to the knowledge of the bailor before incurring them, except when they are so urgent that the reply to the notification cannot be awaited without danger. 3. To be liable to the bailee for damages for known hidden flaws. being iniquitous, unconscionable and exorbitant (Spouses Solangon v. Salazar, G.R. No. 125944, June 29, 2001). Requisites: 1. There is flaw or defect in the thing loaned; 2. The flaw or defect is hidden; 3. The bailor is aware thereof; 4. He does not advise the bailee of the same; and 5. The bailee suffers damages by reason of said flaw or defect.   If the above requisites concur, the bailee has the right of retention for damages. The bailor cannot exempt himself from the payment of expenses or damages by abandoning the thing of the bailee. B. Simple Loan/Mutuum Delivery of money or some consumable thing with a promise to pay an equivalent of the same kind and quality Simple Loan or Mutuum There is a transfer of ownership of the thing delivered (Art. 1953 – 1961) A contract whereby one party delivers to another, money or other consumable thing with the understanding that the same amount have the same kind and quality shall be paid. (Art. 1953) Rent Delivery of some non-consumable order that the other may use it during a certain period and return it to the former. There is no transfer of ownership of the thing delivered. FORM OF PAYMENT (Art. 1995): 1. if the thing loaned is money General Rule: payment must be made in the currency stipulated, if it is possible; otherwise it is payable in the currency which is legal tender in the Philippines Exception: In case of extraordinary inflation or deflation, the basis of payment shall be the value of the currency at the time of the creation of the obligation. 2. If what was leaned is a fungible thing other than money – the borrower is under obligation to pay the lender another thing of the same kind, quality and quantity. In case it is impossible to do so, the borrower shall pay its value at the time of the perfection of the loan.  The mere issuance of the checks does not result in the perfection of the contract of loan. The Civil Code provides that the delivery of bills, of exchange and mercantile documents, such as checks, shall produce the effect of payment only when they have been encashed (General vs. CA 218 SCRA 638). It is only after the checks have produced the effect of payment that the contract of loan may be deemed perfected.  CB cir. 905 cannot apply retroactively to a contract executed prior to its effectively. CB 905 did not repeal nor in anyway amend the Usury Law, but simply suspend the Latters effectively (Medel v. CA, 299 SCRA 481)  While the Usury Law ceiling on interest was lifted by C.B. Circular No. 905, nothing in the said circular grants lenders carte blanche authority to raise interests rates to levels which will either enslave their borrowers or lead to a hemorrhaging of their assets. In Medel v. CA (220 SCRA 481), it was said that the stipulated rate of interest at 5.5% per month on a loan amounting to P500,000.00 is usurious. While decreeing that the aforementioned interest was not usurious, it was held that the same must be equitably reduced for The obligation is “to pay” and not to return because the consumption of the thing loaned is the distinguishing character of the contract of mutuum from that of commodatum. No estafa is committed by a person who refuses to pay his debt or denies its existence.    INTEREST The compensation allowed by law or fixed by the parties for the loan or forbearance of money, goods or credits Requisites for Demandability: 1. Must be expressly stipulated Exceptions: a. Indemnity for damages b. Interest accruing from unpaid interest 2. Must be lawful 3. Must be in writing Requisites for Recovery of Interest: General Rule: Unpaid interest shall not earn interest. Exceptions: 1. When judicially demanded under Art. 2212 2. When there is an express stipulation Characteristics 1. Real Contract – contract is perfected by the delivery of the subject matter 2. Unilateral – only the depositary has an obligation 3. Bilateral – gives rise to obligations on the part of both the depository and depositor DEPOSIT 1. Purpose Principal purpose is safekeeping or custody 2. When to return Depositor can demand the return of the subject matter at will 3. Subject Matter Subject matter may be movable or immovable property 4. Relationship Relationship is that of lender (creditor) MUTUUM Principal purpose is consumption The latter must wait until the expiration of the period granted to the debtor. Subject matter is only money or other fungible thing Relationship is that of depositor and depositary. DEPOSIT Purpose safekeeping. May be gratuitous COMMODATUM Purpose is the transfer of the use. Essentially and always gratuitous Both movable and immovable may be the object. is Movable/corporeal things only in case of extrajudicial deposit. DEPOSIT A contract constituted from the moment a person receives a thing belonging to another with the obligation of safely keeping it and returning the same. If the safekeeping of the thing delivers is not the principal purpose of the contract, there is no deposit but some other contract (Art. 1962) and borrower (debtor) 5. compensation There can be compensation of credits. NO compensation of things deposited with each other (except by mutual agreement.) KINDS OF DEPOSIT: 1. Judicial (sequestration) – when an attachment or seizure of property in litigation is ordered. 2. Extra-judicial  The prevailing rule is that the relation between a bank renting out safety deposit boxes and its customer with respect to the contents of the box is that of a bailor and bailee, the bailment being for hire and manual benefit (CA Agro-industrial Development Corp. vs. Court of Appeals, Mar. 3, 1993, 219 SCRA 435) Judicial 1. Creation Will of the court 2. Purpose Security or to insure the right of a party to property or to recover in case of favorable judgment. 3. Subject Matter Movables or immovables, but generally immovables. 4. Cause Always onerous. Extra-Judicial Will of the parties or contract. Custody safekeeping. and Movables only. May be compensated or not, but generally gratuitous. 5. When must the thing be returned Upon order of the Upon demand of court or when depositor. litigation is ended. 6. In whose behalf it is held Person who has a Depositor or third right. person designated. EXTINGUISHMENT OF VOLUNTARY DEPOSIT (Art 1995) a. b. c. General Rule: contract of deposit is gratuitous (Art 1965) Exceptions: 1. When there is contrary stipulation; 2. Depositary is engaged in business of storing goods; or 3. Property saved from destruction without knowledge of the owner. General Obligations Depositor: of Depository loss or destruction of the thing deposited in case of gratuitous deposit, upon the death of either the depositor or the depositary other causes, such as return of the thing, novation, merger, expiration of the fulfillment of the resolutory condition etc (Art 1231) Necessary Deposits 1. made in compliance with a legal obligation; 2. made on the occasion of any calamity such as fire, storm, flood, pillage, shipwreck or other similar events(deposito miserable)’ or 3. made by the travelers in hotels and inns or b travelers with common carrier. And Depository Depositor 1. Keep the thing safely; 1. If gratuitous2. Not to use it, to reimburse generally; the necessary expenses 3. Keep the secret of the for preservation deposit 2. If onerous- to pay 4. Return the thing with the price agreed upon all its products, generally, to reimburse accessories upon the depository for loss demand even though imputable to the a specified period of depositor time has been fixed for such return Rule when there are two or More Depositors (Art 1965) 1. If thing deposited is divisible and depositors are not solidary. Each depositor can demand only his proportionate share thereto. 2. If obligation is solidary or if thing is not divisible: Rules on active solidarity shall apply. i.e. each one of the solidary depositors may do whatever may be useful to the others but not anything which may be prejudicial to the latter, (Art. 1212) and the depository may return the thing to an one of the solidary depositors unless a demand, judicial or extrajudicial, for its return has been made by one of them in which case, delivery should be made to him. 3. Return to one of depositors stipulated. The depositary is bound to return it only to the person designated although he has not made any demand for its return.  Deposit by Travelers in Hotels and Inns: the keepers of hotels or inns shall be responsible as depositories for the deposit of effects made by travelers provided: a. notice was given to them or to their employees of the effects brought by the guest; and b. the guests take the precautions which said hotel-keepers or their substitutes advised relative to the care and vigilance of their effects. Notes:  liability extends to vehicles, animals and articles which have been introduce or placed in the annexes of the hotel. General rule: liability shall EXCLUDE losses which proceed from force majeure. Exception: the act of a thief or robber is not deemed force majeure unless done with the use of arms or irresistible force.   The hotel-keeper cannot free himself from the responsibility by posting notices to the effect that he is not liable for the articles brought by the guest. Any stipulation to such effect shall be void. Notice is necessary only for suing civil liability but not in criminal liability GUARANTY AND SURETYSHIP 3. As to Consideration a. Gratuitous – the guarantor does not receive any price or remuneration for acting as such. b. Onerous – the guarantor receives valuable consideration. GUARANTY 4. As to the Person guaranteed a. Single – one constituted solely to guarantee or secure performance by the debtor of the principal obligation. b. Double or sub-guaranty – one constituted to secure the fulfillment by the guarantor or a prior guaranty. 5. As to Scope and Extent a. Definite – the guaranty is limited to the principal obligation only or to a specific portion thereof. b. Indefinite or simple – one which not only includes the principal obligation but also all its accessories including judicial costs. An accessory contract whereby a person, called the guarantor, binds himself to the creditor to fulfill the obligation of the principal debtor in case the latter should fail to do so (Art. 2047, Par. 1, NCC)   By guaranty a person, called the guarantor, binds himself to the creditor to fulfill the obligation of the principal debtor in case the latter should fail to do so. When a person binds himself solidarily with the principal debtor, the contract is called suretyship. Guaranty and surety are nearly related for there is a promise to answer for the debt or default or another. Surety is usually bound with his principal by the same contract of guaranty, guarantor’s own separate undertaking often supported by a consideration separate from the supporting the contract of the principal, the original contract of his principal is not his contract. (Phil. Export & Guarantee v. VPEusebio Construction, Inc. G.R. no. 140047 July 13, 2004). While a surety is solidarily liable with the principal debtor, his obligation to pay only arises upon the principal debtor’s failure or refusal to pay. A contract of surety is an accessory promise by which a person binds himself for another already bound, and agrees with the creditor to satisfy the obligation if the debtor does not pay. A surety, as an insurer of the debt, promises to pay the principal’s debt if the principal will not pay (Babst v. CA, G.R. No. 99398, January 26, 2001). SURETYSHIP A contract of guaranty where the guarantor binds himself solidarily with the principal debtor (Art. 2047, Par. 2) Solidary liability is one of the primary characteristics of surety contract, solidary obligation proceed against any one of the solidary debtors or some or all of them simultaneously. (Land & Company (Phils.) Inc., el al., v. Metropolitan Bank & Trust Company, G.R. No. 159622, 07/30/2004). Nature of Surety’s undertaking: CLASSIFICATION OF GUARANTY: 1.  1. In the Broad sense: a. Personal – the guaranty is the credit given by the person who guarantees the fulfillment of the principal obligation. b. Real – the guaranty is the property, movable or immovable. 2. As to its Origin a. Conventional – agreed upon by the parties. b. Legal – one imposed virtue of a provision of a law. c. Judicial – one which is required by a court to guarantee the eventual right of one of the parties in a case. 2.  3.  Liability is contractual and accessory but direct He directly, primarily and equally binds himself with the principal as original promisor, although he possesses no direct or personal interest over the latter’s obligation, nor does he receive any benefits therefrom. (PNB vs CA, 198 SCRA 767) Liability limited by the terms of the contract. It cannot be extended by implication beyond the terms of the contract (PNB vs CA, 198 SCRA 767) Liability arises only if principal debtor is held liable. The creditor may sue separately or together the principal debtor and the surety. Where there are several sureties, the oblige may proceed against any one of them.   In the absence of collusion, the surety is bond by a judgment against the principal even though he was not a party to the proceedings. The nature of its undertaking makes it privy to all proceedings against its principal (Finman General Assurance Corp. vs. Salik, 188 SCRA 740) The surety assumes a solidary liability for the fulfillment of the principal obligation as an original promissory and debtor from the beginning (Towers Assurance Corp vs. Ororama Supermart 80 SCRA 262). 4. Surety is not entitled to the benefit of exhaustion 5.  Undertaking is to creditor and not to debtor. The surety makes no covenant or agreement with the principal that it will fulfill the obligation guaranteed for the benefit of the principal. Such a promise is not implied by law either; and this is true even where under the contract the creditor is given the right to sue the principal, or the latter and the surety at the same time. (Arranz vs. Manila Fidelity & Surety Co., Inc., 101 Phil. 272) 6.  Surety is not entitled to notice of principal’s default The creditor owes no duty of active diligence to take care of the interest of the surety and the surety is bound to take notice of the principal’s default and to perform the obligation. He cannot complain that the creditor has not notified him in the absence of a special agreement to that effect. (Palmares vs CA, 288 SCRA 422) 7.  8. Prior demand by the creditor upon principal is not required. As soon as the principal is in default, the surety likewise is in default. Surety is not exonerated by neglect of creditor to sue principal Guaranty may be constituted to guarantee the performance of a voidable or unenforceable contract. It may also guarantee a natural obligation. (Art. 2052, NCC)  The guarantor cannot bind himself for more than the principal debtor and even if he does, his liability shall be reduced to the limits of that of the debtor. (Art. 2054, NCC) 2. Subsidiary and Conditional – takes effect only in case the principal debtor fails in his obligation.  A guaranty may be given, as security for future debts, the amount of which is not yet known; there can be no claim against the guarantor until the debt is liquidated. A conditional obligation may also be secured. (Art. 2053, NCC) 3. Unilateral – may be entered even w/o the intervention of the principal debtor, in which case Art. 1236 and 1237 shall apply and it gives rise only to a duty on the part of the guarantor in relation to the creditor and not vice versa. 4. Nominate 5. Consensual  It is a contract between the guarantor/surety and creditor.  GUARANTY Liability depends upon an independent agreement to pay the obligation if primary debtor fails to do so. Surety assumes liability as regular party to the undertaking. Collateral undertaking Original promissory. Guarantor is secondarily liable. Surety primarily liable Insurer of insolvency of debtor. Insurer of the debt. Guarantor can avail of benefit of excussion and division in case creditor proceeds against him. Surety cannot. INDORSEMENT CHARACTERISTICS SURETYSHIP 1. OF GUARANTY AND Accessory – it is an indispensable condition for its existence that there must be a principal obligation. SURETYSHIP GUARANTY Primarily of transfer Contract of security Unless the note is promptly presented for payment at Failure in either or both of these particulars does not generally work as an maturity and due notice of dishonor given to the indorser within a reasonable time he will be discharged absolutely from all liability thereon, whether the has suffered any actual damage or not. absolute discharge of a guarantor’s liability but his is discharged only to the extent of the loss which he may have suffered in consequence thereof. Indorser does not warrant the solvency. He is answerable on a strict compliance with the law by the holder, whether the promisor is solvent or not. Guarantor warrants the solvency of the promisor Indorser can be sued as promisor. Guarantor cannot be sued as promisor warranty. Double or Sub-Guaranty   Extent of Guarantor’s Liability: 1. 2.  Benefit of Excussion  Right of the guarantor to have the property of the debtor exhausted before he (guarantor) can be made liable. Benefit of Division  Should there be several guarantors of only one debtor and for the same debt, the obligation to answer for the same is divided among all. The creditor cannot claim from them except shares they are bound to pay except when solidarity is stipulated. GUARANTY WARRANTY A contract by which a person is bound to another for the fulfillment of a promise or engagement of a third party. An undertaking that the title, quality or quantity of the subject matter of the contract is what it has been represented to be, and relates to some agreement made ordinarily by the party who makes the One constituted to guarantee the obligation of a guarantor (Art. 2051(2)). Guarantor’s liability cannot exceed principal’s obligation. It is subsidiary and accessory contract. Definite Guaranty – limited to the principal debt to the exclusion of the accessories. Indefinite or Simple guaranty – not only the principal obligation, but also all its accessories, including judicial costs. As a guaranty, it is still characterized by its subsidiary and conditional quality because it does not take effect until the fulfillment of the condition, namely, that the principal obligor should fail in his obligation at the time and in the form he bound himself. Unconditional guarantee is still subject to the condition that the principal debtor should default in his obligation. Guaranty, as opposed to an unconditional guaranty, is one which depends upon some extraneous event, beyond the mere default of the principal and generally upon notice of the principal’s default and reasonable diligence in exhausting proper remedies against the principal. (Philippine Export and Foreign Loan Guarantee Corp. vs. VP Eusebio construction, Inc., et. al,. G.R. 140047, July 13, 2004).  When Guarantor not Entitled to the Benefit of Excussion 1. Renunciation has been expressly made by the guarantor; 2. It would be useless because execution on the property of the principal debtor would not after all result in the satisfaction of the obligation; 3. When guarantor has bound himself solidarily with the principal debtor; 4. Insolvency of the debtor; or 5. When the debtor has absconded or cannot be sued within the Philippines, unless he has left a manager or representative. Rights of the Guarantor after Payment of the Principal’s Obligation 1. Reimbursement a. Total amount of the debt; b. Interest (legal) from the time payment was made known to the debtor; c. Expenses incurred by the guarantor after having notified the debtor that payment had been demanded of him; and d. Damages, if they are due (Art. 2066). Bondsman (Art 2082)  A surety offered in virtue of a provision of law or a judicial order. He must have the qualifications required of a guarantor and in special laws like the Rules of Court. 2. Subrogation When Guarantor May Proceed Against Principal Debtor Even Before Payment: 1. 2. 3. 4. 5. 6. 7. Reasonable ground to fear that principal debtor will abscond; After the lapse of ten years; Period has expired; Imminent danger of debtor becoming insolvent; Debtor is insolvent; Debt is already demandable; and Sued for payment. NOTES: Judicial bonds constitute merely a special class of contracts of guaranty by the fact that they are given “in virtue… of a judicial order.” If the person required to give a legal or judicial bond should not be able to do so, a pledge or mortgage sufficient to cover the obligation shall be admitted in lieu thereof (Art. 2083, NCC) A judicial bondsman and the sub-surety are NOT entitled to the benefit of excussion because they are not mere guarantors, but sureties whose liability is primary and solidary. (Art 2084, NCC) Extinguishment of Guaranty Release in favor of one of the guarantors, without the consent of the others, benefits all to the extent of the share of the guarantor to whom it has been granted (Art. 2078, NCC) If the creditor voluntarily accepts immovable or other properties in payment of the debt, even if he should afterward lose the same through eviction or conveyance of property (Art 2077, NCC); Whenever by some act of the creditor, the guarantors even though they are solidarily liable cannot be subrogated to the rights, mortgages and preferences of the former (Art 2080, NCC); For the same causes as all other obligations (Art 1231, NCC); When the principal obligation is extinguished; Extension granted to the debtor by the creditor without the consent of the guarantor (Art. 2079, NCC) Bond  An undertaking that is sufficiently secured, and not cash or currency PLEDGE PLEDGE A contract by virtue of which the debtor delivers to the creditor or to a third person a movable, or a 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. Essential Mortgage 1. Requirements of Pledge and Constituted to secure the fulfillment of a principal obligation; 2. 3. 4. 5. Pledgor or mortgagor is the absolute owner of the thing pledged or mortgaged; Persons constituting the pledge or mortgage have the free disposal of their property, or legally authorized for the purpose; When the principal obligation becomes due, the things in which the pledge or mortgage consists may be alienated for the payment of the creditor; Thing pledged must be delivered to the creditor or to a third person by common agreement. If there are reasonable grounds to feat the destruction or impairment of the thing pledged, without the fault of the pledge, the pledgor may demand the return of the thing, upon offering another thing in pledge, provided the latter is of the same kind as the former and not of inferior quality, and without prejudice to the right of the pledge under the provisions of the following article. The pledge is bound to advise the pledgor, without delay, of any danger to the thing pledged. Extinguishment of Pledge: 1. Thing pledged returned to pledgor; 2. Statement in writing by pledge that pledge is renounced or abandoned; or 3. Public sale of thing when credit not satisfied in due time. 4. Pactum Commissorium A stipulation whereby the thing pledged or mortgaged or under antichresis shall automatically become the property of the creditor in the event of nonpayment of the debt within the term fixed. Such is forbidden by law and declared null and void.   Foreclosure is but a necessary consequence of a non-payment of mortgage indebtedness. As a rule, the mortgage can be foreclosed only when the debt remains unpaid at the time it is due. (Government of the Philippine Island v. Espejo, 57 Phil. 496). Since the respondents have been constantly paying, the foreclosure cannot be made. If the fact that their payment of P960,000.00 was not credited cannot be their fault. Thus, the loan cannot be considered unpaid as to warrant foreclosure of the mortgage. Furthermore, respondents have not yet defaulted on the payment since the same was payable in 3 years, hence the foreclosure was premature, as the obligation has not yet become due and demandable. (Producers Bank of the Philippines v. CA, et el., G.R. No. 111584, Sept. 17, 2001). Requisites of Pactum Commissorium: 1. A pledge, mortgage, or antichresis of property by way of security for the payment of the principal obligation, and 2. A stipulation for an automatic appropriation by the creditor of the property in the event of nonpayment of the obligation within the stipulated period. Article 2107 RIGHTS AND OBLIGATIONS OF A PLEDGOR 1. 2. 3. 4. 5. 6. 7. Rights Obligations To demand return in 1. case of reasonable grounds to fear destruction or 2. impairment of the thing without the pledgee’s fault, subject to the duty of replacement (Art 2107, NCC) To advise the pledge of the flaws of the thing (Art 2101, NCC) Not to demand the return of the thing until after full payment of the debt, including interest due thereon and expenses incurred for its preservation (Art 2105, NCC) To bid and be preferred at the public auction (Art 2113, NCC) To alienate the thing pledged provided the pledge consents to the sale (Art 2097, NCC) To ask that the thing pledged be deposited (NCC) RIGHTS OF THE PLEDGEE 1. 2. 3. Option to demand replacement or immediate payment of the debt in case of deception as to substance or quality (art 2109, NCC); To sell at public auction in case of reasonable grounds to fear destruction or impairment of the thing without his fault (art 2108, NCC); To bring actions pertaining to the owner (Art 2103, NCC); 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. To choose which of several things pledged shall be sold; To bid at the public auction (Art 2113, NCC); To appropriate the thing in case of failure of the 2nd public auction (Art 2112, NCC); To apply said fruits, interest or earnings to the interests, if any, then to the principal of the credit (Art 2102, NCC); To retain excess value received in the public sale (Art 2115, NCC) To retain the thing until after full payment of the debt (Art 2098, NCC); To be reimbursed for the expenses made for the preservation of the thing pledged(Art 2099, NCC) To object the alienation of the thing; To possess the thing (Art 2098, NCC); To sell at public auction in case of nonpayment of debt at maturity (Art 2112, NCC) to choose which of the several thing pledged shall be sold (Art 2119, NCC). Option to demand replacement or immediate payment of the debt in case of deception as to substance or quality k(Art 2109, NCC) MORTGAGE A. REAL MORTGAGE  A contract whereby the debtor secures to the creditor the fulfillment of a principal obligation, specially subjecting to such security immovable property in case the principal obligation is not complied with at the time stipulated.  An essential requisite of a contract of mortgage is that the mortgagor be the absolute owner of thing mortgaged. The effect of a mortgage by a coowner shall be limited to the portion that may be allotted to that person upon the termination of the co-ownership. (Ocampo, et al., Ocampo, et al., G.R. No. 150707, April 14, 2004) OBLIGATIONS OF THE PLEDGEE Kinds of Mortgage 1. Take care of the thing with the diligence of a good father of a family (art 2099); 2. Not to use thing unless authorized or by the owner or its preservation requires it use (Art 2104, NCC); 3. Not to deposit the thing with a 3rd person unless so stipulated (Art 2100); 4. Responsibility for acts of agents and employees as regards the thing (Art 21000); To advise pledgor of danger to the thing Art 2107, NCC); and 5. To advise pledgor of the result of the public auction (Art 2113, NCC). Voluntary Legal Equitable (Art. 1602, NCC) Special Characteristics of Real Mortgage: 1) 2) 3) 4) 5) Effect of Sale of the Thing Pledged:  1. 2. 3. Extinguish the principal obligation, whether or not the proceeds of the sale are equal to the amount of the principal obligation, interest and expenses in a proper case If the price of the sale is more than the amount due the creditor, the debtor is not entitled to the excess unless the contrary is provided If the price if the sale is less, the creditor is not entitled to recover the deficiency even if there is a stipulation to that effect. (Art 2115) Real right; Accessory obligation; Indivisibility; Retention of Possession; and Inseparability In the accessory contract of real mortgage, in which immovable property or real rights thereto are used as security for the fulfillment of the principal loan obligation, the bid price may be lower than the property’s fair market value. Loan value itself is only 70 percent of the appraised value. A low bid price will make it easier for the owner to effect redemption by subsequently reacquiring the property or by selling the right to redeem and thud recover alleged losses. No personal notice is even required, because an extrajudicial foreclosure is an action of rem, requiring only notice by publication and posting, in order to bind parties interested in the foreclosed property. (New Sampaguita Builders Construction Inc. et al., Philippine National Bank, G.R. No. 148753, July 30, 2004) Pledge 1. Constituted on 1. movables Property is delivered to pledge or by common consent to a third person Not valid against third persons unless 2. 3. payment of the part of the credit secured by the which said third person possesses (Art 2129, NCC)  It is necessary that prior demand for payment must have been made on the debtor and the latter failed to pay (BPI vs. Concepcion & Hijos, Inc., 53 Phil 906) Real Mortgage Constituted on immovables 2. delivery is not necessary 3. not valid against third persons unless registered FORECLOSURE The remedy available to the mortgagee by which he subjects the mortgaged property to the satisfaction of the obligation to secure that for which the mortgage was given. Kinds of Foreclosure 1. Judicial Extent of Mortgage:  Absent express stipulation to the contrary, the mortgage includes the accessories, improvements, growing fruits and income of the property not yet received when the amount of the indemnity granted or owing to the proprietor from the insurers of the property mortgaged, or in virtue of expropriation for public use (Art 2127) Object of Mortgage: Future property cannot be an object of a contract of mortgage (Art 2085[2], NCC) However, a stipulation subjecting to the mortgage the mortgagor may subsequently acquire install, or use in connection with real property already mortgaged belonging to the mortgagor is valid (People’s Bank and Trust Co.,20 SCRA 84) Special rights: 1. 2. Mortgagor – to alienate the mortgaged property but the mortgage shall remain attached to the property.  A stipulation forbidding the owner from alienating the immovable mortgage shall be void (Art 2130, NCC) being contrary to public policy inasmuch as the transmission of property should not be unduly impeded. Mortgagee – To claim from a 3 rd person in possession of the mortgaged property the 2. Extrajudicial JUDICIAL FORECLOSURE EXTRAJUDICIAL FORECLOSURE There is court intervention. No court intervention. Decisions are appealable. Not appealable because it is immediately executory. Order of court cuts off all rights of the parties impleaded. Foreclosure does not cut off right of all parties involved. There is equity of redemption except on banks which provides for a right of redemption. There is a right of redemption. Period of redemption except on banks which provides for a right of redemption. There is a right of redemption.  Right of the mortgagor to redeem the mortgaged property within a certain period after it was sold for the satisfaction of the mortgaged debt. Exercised within one year from the registration of sale.   Where the proceeds of the sale are insufficient to cover the debt in an extrajudicial foreclosure of mortgage, the mortgagee is entitled to claim the deficiency from the debtor. The creditor is not preclude from taking action to recover any unpaid balance on the principal obligation simply because he choose to extrajudicially foreclose the real estate mortgage. (Cunada, et al., vs. Drilon, GR No. 159118, June 28, 2004) Existence of the right of redemption operates to depress the market value of the land until the period expires, and to render that period indefinite by permitting the tenant to file a suit for redemption, with either party unable to foresee when final judgment will terminate the action, would render nugatory the period of two years fixed by statue for making the redemption and virtually paralyzed any efforts of the landowner to realize the value of his land. No buyer can be expected to acquire it without any certainty as to the amount for which it may be redeemed, so that he can recover at least his investment in case of redemption. In the meantime, the landowner’s need and obligations cannot be met. It is doubtful if any such result was intended by the statute, absent clear wording to that effect. (BPI Family Savings Bank v. Sps. Veloso, G.R. No. 141974, 08/09/2004). REDEMPTION OF FORECLOSED PROPERTY: Requisites for Valid Redemption:  1. Must be made within 12 months from the time of the registration of the sale; 2. The following should also be observed: (a) the price which the purchaser paid or the property; (b) interest of 1% per month on the purchase price; (c) the amount of any assessment and taxes which the purchaser may have paid on the property after purchase; (d) interest of 1% per month on such assessment and taxes. Payment of the purchase price of the property plus 1% interest per month together with the taxes thereon, if any, paid by the purchaser with the same rate of interest computed from the date of registration of the sale; and 3. Written notice of the redemption served on the officer who made the sale and a duplicate filed with the Register of Deeds No need for a special power of attorney in the contract of mortgage. Special power of attorney in favor of mortgagee in needed in the contract. “Tipo” or “Upset Price”  A stipulation in a mortgage of real property fixing a minimum price at which the property shall be sold, to become operative in the event of a foreclosure sale at public auction.  A transaction by which the mortgagor reacquires or buys back the property which may have passed under the mortgage may have created. Registration in the Registry of Property is necessary in order to bind third persons but not for the validity of the contract. KINDS OF REDEMPTION 1. Equity of Redemption  The equity of the mortgagor to redeem the mortgaged property after his default in the performance of the conditions of the mortgage but before the sale of the mortgaged property or confirmation of the sale. 2. Right of Redemption PACTO DE NON ALIENDO  A stipulation in a mortgage by which the mortgagor agrees not to alienate or encumber the mortgaged premises to the prejudice of the mortgagee ANTICHRESIS ANTICHRESIS CONTRACT Whereas 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) Characteristics 1. Accessory contract – it secures the performance of a principal obligation 2. Formal Contract – it must be valid in a specified form to be valid, i.e. “in writing.” (Art. 2134, NCC) Special Requisites (In Addition Common Essential Requisites) to the 1. Covers only the fruits of an immovable property; 2. Delivery of an immovable is necessary for the creditor to receive the fruits; REAL MORTGAGE Property is delivered to creditor. Debtor usually retains possession of the property Creditor acquires only the right to receive the fruits of the property, hence, it does not produce a real right Creditor does not have any right to receive the fruits; but the mortgage creates a real right over the property. The creditor, unless there is stipulation to the contrary, is obliged to pay the taxes and charges upon the estate. The creditor has no such obligation. It is expressly stipulated that the creditor given possession of the property shall apply all the fruits thereof to the payment of interest, if owing, and thereafter to the principal There is no such obligation on part of mortgagee Subject matter of both is real property 3. Amount of principal and interest must be specified in writing; and 4. Express agreement that debtor will give possession of the property to creditor and that the latter will apply the fruits to the interest, if any, then to the principal of his credit. Obligations of Antichretic Creditor: 1.  2. ANTICHRESIS Refers to real property. Perfected by mere consent. PLEDGE Refers to personal property. Perfected by delivery of the thing pledged. 3. 4. To pay taxes and charges on the estate, including necessary expenses Creditor may avoid said obligation by: a. Compelling debtor to reacquire enjoyment of the property; or b. By stipulation to the contrary. To apply all the fruits, after receiving them, to the payment of interest, if owing, and thereafter to the principal; To render an account of the fruits to the debtor; To bear the expenses necessary for its preservation and repair.  Remedies of Creditor in Case of Non-Payment of Debt 2. 1. 2. 3. Bring an action for specific performance; or Petition for the sale of the real property as in a foreclosure of mortgages under Rule 68 of the Rules of Court. (Art. 2137, NCC) Special Requisites (In Addition Common Essential Requisites): The parties, however, may agree on an extrajudicial foreclosure in the same manner as they are allowed in contracts of mortgage and pledge (Tavera vs. El Hogar Filipino, Inc., 68 Phil 712) 1. A stipulation authorizing the antichretic creditor to appropriate the property upon the non-payment of the debt within the agreed period is void. (Art. 2088, NCC) 2. 3. 4. CHATTEL MORTGAGE   That contract by virtue of which personal property is recorded in the Chattel Mortgage Register as a security for the performance of an obligation. A registered mortgaged lien is considered inseparable from the property inasmuch as it is a right in rem. The mortgage creates a real right or a lien which, after being recorded, follows the chattel wherever it goes. Under Article 2129 of the same Code, the mortgage on the property may still be foreclosed despite the transfer. Even if the mortgaged property is in the possession of the debtor, the creditor is still protected. To protect the latter from the former’s possible disposal of the property, the chattel mortgage is made effective against third persons by the process of registration. (Philippine National Bank v. RBL Enterprises, Inc., et. al., G.R. No. 149569, May 28, 2004). Characteristics: 1. Accessory contract – it is for the purpose of securing the performance of a principal obligation. Formal contract – registration in the Chattel Mortgage Register is indispensable for its validity. Unilateral contract – it produces only obligations on the part of the creditor to free the thing from the encumbrance on fulfillment of the obligation. 5.  to the It can cover only personal or movable property in general; however, the parties may treat as personal property that which by its nature would be real property; Registration of the mortgage with the Chattel Mortgage Register where the mortgagor resides; if property is located in a different province, registration in both provinces required; Description of the property as would enable the parties or other persons to identify the same after reasonable investigation and inquiry; and Accompanied by an affidavit of good faith to bind third persons, but not for the validity of the contract. It can cover only obligations existing at the time the mortgage is constituted. A mortgage containing a stipulation in regard to future advances in the credit will take effect only form the date the same are made and not from the date of the mortgage (Jaca vs Davao Lumber Co., 113 SCRA 107) ANTICHRESIS CHATTEL MORTGAGE Creditor has right to receive the fruits if the property but with the obligation to apply them to the interest and principal debts. No right to the fruits. Creditor, as a rule shall have possession Debtor always in possession. Contract must always be in writing. Required to registered only for the purpose of binding third persons. Obligation to pay taxes and charges and necessary expenses No such obligation is imposed on the are borne by creditor. creditor. Foreclosure is judicial but parties may agree that it be extrajudicial. Foreclosure may be judicial or extra-judicial at option of the creditor. Chattel Mortgage The mortgagee may, after thirty (30) days from the time of the condition broken, cause the mortgaged property to be sold at public auction by a public officer. The 30-day period is also a grace period for the mortgagor to discharge the mortgage obligation. After the sale of the chattel at public auction, the right of redemption is no longer available to the mortgagor (Cabral vs. Evangelista, 28 SCRA 1000). Pledge 1. Consensual contract 1. 2. Possession of the thing2. mortgaged remains with the debtor 3. Must be recorded in 3. CMR for validity Real contract Possession of the thing pledged vested in creditor Requires that contracts be in public instrument so as to bind 3rd persons 4. Procedure for 4. Sale at public auction foreclosure is different from pledge 5. Debtor still liable for 5. Debtor not liable for deficiency deficiency CHATTEL MORTGAGE  REAL ESTATE MORTGAGE Personal property Real property Requirement of registration is essential for the validity of the contract Merely for the purpose of binding third persons Application of Proceed of Sale: 1. 2. 3. 4. General Rule: The creditor may maintain an action for the deficiency Exception: if the chattel mortgage is constituted as security for the purchase of personal property payable in installments (Recto Law, Art. 1484. Note: for the Recto Law to be made applicable, the mortgage must be over the very same thing sold).  The action for deficiency may be brought within ten (10) years from the time the cause of action accrues (Arts 1141 and 1142).  Only equity of redemption is available to the mortgagor; the latter can no longer redeem after the confirmation of the foreclosure sale. Affidavit of Good Faith  An oath in a contract of chattel mortgage wherein the parties severally swear that: (1) the mortgage is made for the purpose of securing the obligation specified in the conditions thereof and for no other purposes; and (2) that the same is a just and valid obligation and one not entered into for the purpose of fraud. FORECLOSURE OF CHATTEL MORTGAGE  Foreclosure sale in chattel mortgage is by public auction under Act No. 1508, but the parties may stipulate that it be by private sale. Costs and expenses of keeping and sale; Payment of the obligation secured by the mortgage; Claims of persons holding subsequent mortgages in their order; and The balance, if any, shall be paid to the mortgagor or person holding under him. Right of Redemption  When the condition of a chattel mortgage is broken the following may redeem: a. Mortgagor; b. Person holding a subsequent mortgage; or c. Subsequent attaching creditor.  An attaching creditor who so redeems shall be subrogated to the rights of the mortgagee and entitled to foreclose the mortgage in the same manner that the mortgage could foreclose it. The redemption is made by paying or delivering to the mortgagee the amount due on such mortgage over the same property or all of the property of a debtor. and the costs, and expenses incurred by such breach of condition before the sale thereof (Sec. 13, Act No. 1508). Preference of Credit  RIGHT TO PROPERTY 1.   2.  POSSESSION OF FORECLOSED Real Mortgage – After the redemption period has expired, the purchaser of the property has the right to a conveyance and to be placed in possession thereof. Purchaser is not obliged to bring a separate suit for possession. He must invoke the aid of the courts and ask for a WRIT OF POSSESSION. The purchaser is allowed to take possession of the foreclosed property during the period of redemption upon filing of an ex parte application and approval of a bond. (Section 7 of Act No. 3135) Preference of Credit and Lien Distinguished Preference of Credit Applies only to claims which do not attach to specific properties. Chattel Mortgage – When default occurs and the creditor desires to foreclose, the creditor has the right to take the property as a preliminary step for its sale. Where the debtor refuses to yield the property, the creditor’s remedy is to institute an action either to effect judicial foreclosure directly or to secure possession (REPLEVIN) as a preliminary to the sale contemplated in Sec. 1508 Creates a charge on a particular property. An assignment of credit is an agreement by virtue of which the owner of a credit, known as the assignor, by a legal cause, such as sale, dacion en pago, exchange or donation, and without the consent of the debtor, transfers his credit and accessory rights to another, known as the assignee who acquires the power to enforce it against the debtor. As a consequence the third party steps into the shoes of the original creditor as subrogee of the latter. The obligation is not extinguished. In assignment the debtor’s consent is not essential for the validity of the assignment (Article 1624 in relation to Art. 1475, Civil Code), his knowledge therefore affecting only the validity of the payment he might make. (Art. 1626, Civil Code) What the law requires in an assignment of credit is not the consent of the debtor but merely notice to him. CONCURRENCE OF CREDITS Implies the possession by two or more creditors of equal rights or privileges Lien Assignment of credit does not need the consent of the debtor. Such assignment does not extinguish the obligations of the parties. (South City Homes Inc. et al. v. BA Finance, et al., GR 135462, December 7, 2001) CONCURRENCE AND PREFERENCE OF CREDITS  The right held by a creditor to be preferred in the payment of his claim above others out of the debtor’s assets.  A creditor may, therefore, validly assign his credit and its accessories without the debtors’ consent. (National Investment and Development Corporation vs. de los Angeles, 40 SCRA 489).    The purpose of the notice is only to inform the debtor that from the date of the assignment, payment should be made to the assignee and not to the original creditor. (Rodriguez vs. CA, 207 SCRA 553) Lease A consensual, bilateral, onerous and commutative contract by virtue of which one person binds himself to grant temporarily the use of the thing or to render some service to another who undertakes to pay some rent. In an assignment of credit, the consent of the debtor is not necessary in order that the assignment may fully produce legal effects. (Sison and Sison v. Yap Tico and Avanceña, 37 Phil. 587). Conventional subrogation requires an agreement among the three parties concerned – the original creditor, the debtor and the new creditor. It is a new contractual relation based on the mutual agreement among all the necessary parties. Thus, Art. 1301 of the Civil Code explicitly states that the “conventional subrogation of a third person requires the consent of the original parties and of the third person” (Licaros vs. Gatmaitan, GR No. 142838, August 9, 2001) Reflectionary Credit Primarily indebtedness incurred in the repair or reconstruction of something previously made such repair or construction being made necessary by the deterioration or destruction of the things as it formerly existed. TWO – TIER ORDER OF PREFERENCE ◘ LEASE Articles 2241 and 2242, jointly with Article 2246 to 2249, established a two-tier order of preference. The first tier includes only taxes, duties and fees due on a specific movable or immovable property. All other special preferred (non-tax) credits stand on the second-tier to be satisfied pari passu and pro rata, out of any residual value of the specific property to which such other credits relate.  Generally, the renewal of a contract connotes the death of the old contract, and the birth or emergence of a new one. A clause in a lease providing for a renewal merely creates an obligation to execute a new lease contract for the additional term. As renewal of the contract contemplates the cessation of the old contract, then it is necessary that a new one be executed between the parties. (Buce v. CA, GR No. 136913, May 12, 2000) Characteristics or Requisites for Lease of Things 1. Consensual 2. Principal 3. Nominate 4. Purpose is allow to enjoyment or use of a thing (the person to enjoy is the lessee; the person allowing the enjoyment by another is the lessor) 5. Subject matter must be within the commerce of man 6. Purpose to which the thing will be devoted should not be immoral 7. Onerous (there must be rent or price certain) 8. Period is temporary (not perpetual, hence, the longest period is 99 years) 9. Period is either definite or indefinite If no term is fixed, we should apply Art. 1682 (for rural leases) and Art. 1687 (for urban lessee)  If the term is fixed but indefinite, the court will fix the term under the law of obligations and contracts 10. Lessor need not be the owner.   A usufructuary may thus lease the premises in favor of a stranger, such lease to end at the time that the usufruct itself ends. to be paid even if there is destruction of the work through fortuitous event until the work is completed, and said price cannot be lawfully demanded if the work is destroyed before it is finished and accepted Rent    The compensation either in money, provisions, chattels, or labor, received by the lessor from the lessee When a student boards and lodged in a dormitory, there is no contract of lease. The contract is not designated specifically in the Civil Code. It is an innominate contract. It is however; believe that the contract can be denominated as the contract of board and lodging. There is a contract of lease when the use and enjoyment of a safety deposit box in a bank is given for a price certain. This is certainly not a contract of deposit. LEASE Only use or enjoyment is transferred. Transfer is temporary Lessor need not be theowner The price of the object, distinguished from the rent, is usually not mentioned LEASE OF THINGS Object of contract is a thing Lessor has to deliver the thing leased In case of breach, there can be an action for specific performance LEASE OF SERVICES (location operatum) The important object is the labor performed by the lessor The result is generally not important, hence the laborer is entitled SUBLEASE    A separate and distinct contract of lease wherein the original lessee becomes a sublessor to a sublessee. Allowed unless expressly prohibited. The sublessee is subsidiarily liable for any rent due. The lessor has a direct action against the sublessee for unpaid rentals and improper use of the object. The lessee can sublease the leased property, unless there is an express prohibition against subletting in the contract itself. To bar the lessee from subletting, the contract of lease must expressly stipulate the prohibition on subletting. (Mon v. Court of Appeals, et al., G.R. No. 118292, 04/14/204) SALES Ownership is transferred Transfer is permanent Seller must be the owner at the time the property is delivered Usually, the selling price is mentioned  LEASE OF SERVICES Object is some work or service Lessor has to perform some work or service In case of breach, no action for specific performance  When the period of lease has expired, there was no longer any lease has expired, there was no longer any lease that could be extended by the court. Hence when the court extended it, it in effect, made a new contract for the parties, a power it did not have (Henson v. IAC, 148 SCRA 11).  Lease for an indefinite period is one with a resolutory condition. In this case, the contract provided that the lease period shall continue for an indefinite period provided that the lessee is up-todate in the payment of his monthly rentals. (Jespajo Realty Corp. v. CA et al., GR 113626, September 27, 2002). CONTRACT FOR A PIECE (location operas) The important object is the work done The result is generally important; generally, the price is not payable When Lessee may Suspend the Payment of Rent: 1) Lessor fails to undertake necessary repairs. 2) Lessor fails to maintain the lessee in peaceful and adequate enjoyment of the property leased. SUBLEASE There are two leases and two distinct juridical relationships although immediately connected and related ASSIGNMENT OF LEASE There is only one juridical relationship, that of the lessor and the assignee, who is converted into a to each other The personality of the lessee does not disappear The lessee does not transmit absolutely his rights and obligations to the sublessee The sublessee, generally, does not have any direct action against the lessor lessee The personality of the lessee disappears 1. Total destruction by a fortuitous event a.Lease is extinguished 2. Partial destruction a.Proportional reduction of the rent, or b.Rescission of the lease The lessee transmits absolutely his rights to the assignee The assignee has a direct action against the lessor Rights of Lessor if Sublease Prohibited but Entered into by Lessee: 1) Rescission and damages; 2) Damages only (Contract will be allowed to remain in force); or 3) Ejectment.  EFFECT OF DESTRUCTION OF THE THING LEASED:  WHEN LESSEE MAY SUSPEND PAYMENT OF RENT: Lessor fails to undertake necessary repairs “Suspend” – for the intervening period, the lessee does not have to pay the rent. Effectivity of the Suspension Instances When Sublessee is Liable to the Lessor: 1) All acts which refer to the use and preservation of the thing leased in the manner stipulated between the lessor and the lessee 2) The sublessee is subsidiarily liable to the lessor for any rent due from the lessee. The right begins: The sublessee shall not be responsible beyond the amount of rent due from him. Alternative Remedies of Aggrieved Party (Lessor/Lessee) in Case Non-Fulfillment of Duties: 1. Rescission and damages 2. Damages only, allowing the contract to remain in force 3. Specific performance Accion Discreta – direct action which the lessor may bring against a sublessee who misuses the subleased property. Obligations of the Lessor: 1) Delivery of the object ( cannot be waived); 2) Making of necessary repairs; 3) Maintenance in peaceful and adequate possession. Obligations of the Lessee: 1) To pay rent; 2) To use thing leased as a diligent father of a family, devoting it to the use stipulated; 3) To pay expenses for the deed of lease; 4) To notify the lessor of usurpation or untoward acts; 5) To notify the lessor of need for repairs; and 6) To return the property leased upon termination of the lease. 1. 2. In case of repairs, from the time he made the demand for said repairs, and the demand went unheeded. In the case of eviction, from the time the final judgment for eviction becomes effective. Note: Damages Recoverable in ejectment cases the rent or the fair rental value of the premises. The following cannot be successfully claimed: 1. Profits plaintiff could have earned were it not for the possible entry or unlawful detainer; 2. Material injury to the premises; and 3. Actual, moral, or exemplary damages. Immediate Termination of Lease Under Art. 1660 Applies: 1. Only to dwelling place or any other building intended for human habitation 2. Even if at the time the contract was perfected, the lessee knew of the dangerous condition or waived the right to rescind on account of this condition Rules on Alteration of the Form of the Lease: 1. The Lessor can alter provided there is no impairment of the use to which the thing is devoted under the terms of the lease 2. Alteration can also be made by the Lessee so long as the value of the property is not substantially impaired. Rules in Case of Urgent Repairs: 1. The lessee is obliged to tolerate the work although it may be very annoying to him and although during the same time he may be deprived of a part of the premises. 2. If repairs last for more than 40 days: Lessee cannot act for reduction of rent or rescission. 3. If 40 days or more: lessee can ask for proportionate reduction.  In either case, rescission may be availed of if the main purpose is to provide a dwelling place and the property becomes uninhabitable. Effects If Lessor Fails to Make Urgent Repairs: 1. Lessee may order repairs at the lessor’s cost. 2. Lessee may sue for damages. 3. Lessee may suspend the payment of the rent. 4. Lessee may ask for rescission, in case of substantial damage to him. Trespass in Lease: 1. Trespass in fact (perturbacion de mere hecho):  Physical enjoyment is reduced.  Lessor will not be held liable. 2. Trespass in law (perturbacion de derecho):  A third person claims legal right to enjoy the premises  Lessor will be held liable Note: While the Japanese Occupation was a fortuitous event, the lessor is still not excused from his obligation to warrant peaceful legal possession. Lease is a contract that calls for prestations both reciprocal and repetitive; and the obligations of either party are not discharged at any given moment, but must be fulfilled all throughout the term of the contract. (Villaruel vs. Manila Motor Co., GR L-10394, December 13, 1958) Duration of Lease 1. Lease made for a determinate time or fixed period  Lease will be for the said period and it ends on the day fixed without need for a demand 2. If there is no fixed period A. For Rural Lands (Article 1680)  It shall be for all time necessary for the gathering of fruits which the whole estate may yield in 1 year, or which it may yield once. B. For Rural Lands (Article 1687) a. is from day to day If rent is paid daily: lease b. If rent is paid weekly: lease is from week to week c. If rent is paid monthly: lease is from month to month d. If rent is paid yearly: lease is from year to year RULES ON EXTENSION OF THE LESSEE PERIOD: 1. If a lessee contract for a definite term allows lessee to extend the term, there is no necessity for lessee to notify lessor of his desire to so extend the term, unless the contrary is stipulated. 2. “May be extended” as stipulation: lessee can extend without lessor’s consent but lessee must notify lessor. 3. “May be extended for 6 years agreed upon by both parties” as stipulation: this must be interpreted in favor of the lessee. Hence, ordinarily the lessee at the end of the original period may either: a. leave the premises; or b. remain in possession 4. In co-ownership, assent of all is needed; otherwise, it is void or ineffective as against non-consenting co-owners. 5. Where according to the terms of the contract, the lease can be extended only by the written consent of the arties thereto, no right of extension can rise without such written consent. Rule If Lessor Objects to the Continued Possession: Requisites: 1. Contract has expired 2. Lessee continued enjoying the thing 3. Lessor Objected to this enjoyment Lessee’s  If the three requisites are present, the lessee shall be considered a possessor in bad faith IMPLIED NEW LESSEE (TACITA RECONDUCCION)  Lease which arises if at the end of the contract the lessee should continue enjoying the thing leased for 15 days with the acquiescence of the lessor, unless a notice to the contrary had previously been given by either party. Requisites: b. The term of the original contract has expired c. The lessor has not given the lessee a notice to vacate d. The lessee continued enjoying the thing leased for at least 15 days with the acquiescence of the lessor WHEN THERE IS NO IMPLIED NEW LEASE: 1. When before or after the expiration of the term, there is a notice to vacate given by either party. 2. When there is no definite fixed period in the original lease contract as in the case of successive renewals. Effects: a. The period of the new lease is not that stated in the original contract but the terms in Articles 1682 and 1687. b. Other terms of the original contract are revived.    Terms that are revived are only those which are germane to the enjoyment of possession, but not those with respect to special agreements which are by nature foreign to the right of occupancy or enjoyment inherent in a contract of lease – such as an option to purchase the leases premises (Dizon v. Magsaysay GR No. 23399, May 31, 1974) Perpetual Lease A lease contract providing that the lessee can stay in the premises for as long as he wants for as long as he can pay the rentals and its increases. This is not permissible; it is a purely potestative condition because it leaves the effectivity and enjoyment of leasehold rights to the sole and exclusive will of the lease. NOTE: In Jespajo Realty vs. CA, 27 Sept. 2002, the SC upheld a lease contract, which provides that “the lease contract shall continue for an indefinite period provided that the lessee is up-to-date in the payment of his monthly rentals” for the contract is one with a period subject to a resolutory condition. PURCHASE OF THE LEASED PROPERTY General Rule: Purchaser of thing leased can terminate lease. Exceptions: a. Lease is recorded in Registry of Property; b. There is stipulation in the contract of sale that purchaser shall respect the lease; c. Purchaser knows the existence of the lease; d. Sale is fictitious; or e. Sale is made with right of repurchase. RENTAL REFORM ACT OF 2002 [RA NO. 9161] Effectivity: January 1, 2002 Coverage: 1. All residential units of NCR and other highly urbanized cities, the total monthly rental for each of which does not exceed P7,500. 2. All residential units in other areas the total monthly rentals for each of which does not exceed P4,000as of 1/1/02 without prejudiced to pre-existing contracts.  The lessee cannot controvert the title of the lessor. Rule 131, Sec. 2(b) of the Rules of Court precludes a tenant from denying the title of his landlord and tenant between them. In Geminiano v. CA, 259 SCRA 344; it was said that the lessees who had undisturbed possession for the entire term under the lease, are then estopped to deny their landlord’s title, or to assert a better title not only in themselves, but also in some third person while they remain in possession of the leased premises and until they surrender possession to the landlord. This estoppel applies even though the lessor had no title at that tame the relation of the lessor and lessee was created, and may be asserted not only by the original lessor, but also by those who succeed to his title. (Golden Horizon Realty Corporation v. Sy Checah, etc., GR No. 145416, Sept. 21, 2001) Termination Of The Lease If made for a determinate time, it ceases upon the day fixed without the need of a demand. 1. By the expiration of the period; 2. 3. 4. 5. By the total loss of the thing; By the resolution of the right of the lessor; By the will of the purchaser or transferee of the thing; or By rescission due to non-performance of the obligation of one of the parties. 1. 2. If there is period. If no fixed a. If rent b. If rent c. If rent d. If rent a fixed period, lease will be for said period, apply the following rules: is paid daily: day to day; is paid weekly: week to week; is paid monthly: month to month; is paid yearly: year to year. Lease duration: If not fixed, it shall be for all time necessary for the gathering of fruits which the whole estate may yield 1 year, or which it may yield once. Grounds for Judicial Ejectment (RA 9161) 1. Assignment of Lease or Subleasing of residential units in whole or in part, including the acceptance of boarders or bedspacers, without written consent of owner. 2. Arrears in payment of rent for a total of 3 months; provided that in case of refusal by lessor to accept payment of the rental agreed upon, the lessee may either deposit, by way of consignation, the amount in court or with city or municipal treasurer as the case may be, or in a bank in the name of & with notice to lessor, within a month after refusal of lessor to accept payment (Chan & Co v. Medalla; GR 147999, February 27, 2004) LAND TITLES & DEEDS Ordinary registration of title TORRENS TITLE Certificate of ownership issued under the Torrens System of registration by the government, through the Registrar of Land Titles and Deeds; naming and declaring the owner in fee simple of the real property described therein, free from all liens and encumbrances except such as may be expressly noted thereon or otherwise reserved by law.  SPECIAL PROVISIONS FOR RURAL LANDS Effect of loss due to fortuitous event: 1. Ordinary fortuitous event  No reduction 2. Extraordinary fortuitous event  If more than ½ of the fruits were lost, there shall be a reduction, unless there is a stipulation to the contrary.  If ½ or less, there shall be no reduction. The real purpose of the system is to quiet title to put a stop forever to any question of the legality of the title, except claims which were noted at the time of the registrations in the certificate, or which amy arise subsequent thereto. (Legarda vs., Saleeby, 31 Phil 590) LAND TITLE  That upon which ownership is based; it is the evidence of the right of the owner or the extent of his interest, and by which means he can maintain control and as a rule assert right to exclusive possession and enjoyment of property. Repairs for which urban lessor is liable: 1. 2. 3. Special stipulation If none, custom of the place In case of doubt, the repairs are chargeable against him. Lease Duration: Types of Estate 1. Freehold Estate – indicates titles of ownership a. Fee simple – absolute title; conferred without limitation, qualification or restriction. c. Fee tail – pass title to grantee and his heirs. c. Life state – held for duration of life. 2. Less than Freehold Estate a. Tenancy from period to period – lease running from month to month or year to year with automatic renewal. b. Tenancy at will – person is permitted to occupy land of another without stipulation as to period. c. Estate for years – lease for a period agreed upon; less or retains ownership of of land. Registration of Deeds  Constitutes a public repository of records instruments affecting registered unregistered lands and chattel mortgages the province or city wherein such office situated.  of or in is The function of a Register of Deeds with reference to the registration of deeds, encumbrances, instruments and the like is ministered in nature (Baranda vs. Gustillo, 167 SCRA 757). Registration and Transfer  We have consistently held that the Torrens System is not a means of acquiring titles to lands. (Sps. Del Rosario vs. Montana, et al., G.R. No. 134433, May 28, 2004)  Requisites in Ordinary Land Registration Proceedings 1. Survey of land by the Bureau of Lands or a duly licensed private surveyor. 2. Filing of application for registration by the applicant. 3. Setting of the date for the initial hearing of the application by the court. 4. Transmittal of the application and the date of initial hearing by the Clerk of Court to the Land Registration Commission. 5. Publication of notice in the Official Gazette. 6. Service of notice upon contiguous owners or those who have interests in the property by the sheriff. 7. Filing of answer by any person named in the notice or not. 8. Hearing of the case. 9. Promulgation of judgment. 10. Issuance of the decree by the Court. 11. Entry of the decree of registration. 12. Transcription of the decree.  When Stronghold registered its notice of attachment, it did not know that the land being attached had been sold to petitioner. It had no such knowledge precisely because the sale, unlike the attachment, had not been registered. It is settled that a person dealing with registered property may rely on the title and be charged with notice of only such burdens and claims as annotated thereon. (Dy vs. Stronghold Insurance Co., Inc., G.R. No. 156580, June 14, 2004) Probative Value of Torrens Title – Torrens Title should be received as evidence in all the court of the Philippines, and shall be conclusive as to all matters contained therein principally, the identity of the owner of the covered thereby except so far as provided in the Land Registration Act. Administration of the Torrens System 1. Land Registration Authority (LRA) – charged with the efficient execution of laws relative to the registration of lands. 2. Register of Deeds (RD) the public repository of records of instruments affecting registered or unregistered lands and chattel mortgages in the province or city wherein such office is located. DEED An instrument in writing by which any real estate or interest therein is created, alienated, mortgaged or assigned, or by which title to any real estate may be affected in law or equity. Registered owner are entitled to the possession of the property covered the said title prior physical possession is necessary only in forcible entry cases. In Section 48 of PD No. 1529, a certificate of title shall not be subject to collateral attack. It cannot be altered, modified or cancelled. An amendment consisting in the inclusion of an area not originally applied for registration must be published. Without new publication the registration court cannot acquire jurisdiction over the area covered by the application (Benin vs. Tuason, 57 SCRA 531)  One who is in actual possession of a piece of land claiming to be the owner, may wait until his possession is disturbed or his title attached before taking steps to vindicate his right. The reason being undisturbed possession gives him a continuing right to sell. (Spouses Occena vs. Esponilla, GR 156973, June 4, 2004) Instances When RD May Deny Registration 1. When there is more than one copy of the owner’s duplicate certificate of title and not all such copies are presented to the Register of Deeds. 2. Where the voluntary instrument bears an infirmity on its face. 3. Where the validity of the instrument sought to be registered is in issue in a pending court suit 4. When the document is not verified and notarized ◘ REMEDIES TO CHALLENGE THE JUDGMENT IN LAND REGISTRATION 1. New Trial, on the grounds of: a. Fraud, accident, mistake or excusable negligence; b. Newly discovered evidence; c. Award of excessive damages, or insufficiency of the evidence to justify the decision, or decision is against the law. 2. Relief From Judgment When a judgment or order is entered, or other proceeding is taken, against a party in Regional Trial Court through fraud, accident, mistake, or excusable negligence, he may file a petition in such court and in the same cause praying that judgment, order or proceeding be set aside. has passed to an innocent purchaser for value and in good faith, the aggrieved party may bring an ordinary action for damages only against the applicant or persons responsible for the fraud or were instrumental in depriving him of the property. Such action prescribes in ten (10) years from the issuance of the Torrens title over the property. 7. Action For Compensation Under The Assurance Fund, requisites a. The aggrieved party, or the suitor, sustained loss or damage, or is deprived of land or any estate or interest therein; b. Such loss, damage or deprivation (1) was occasioned by the bringing of the land under the operation of the Torrens System or (b) arose after original registration of land; c. The loss, damage or deprivation was due to (a) fraud, or (b) any error, omission, mistake or misdescription in any certificate of title or in any entry or memorandum in the registration book; d. There was no negligence on his party; e. He is barred under the PD 1529 or under the provision of any law from bringing an action for the recovery of such land or the estate or interest therein; and f. The action has not prescribed. 8. 9. 10. 11. Cancellation Suits Involving Double Title Annulment of Judgment Quieting of Title Criminal Action 3. Appeal 4. Petition For Review, requisites: a. Petitioner has a real and dominical right; b. He has been deprived thereof; c. Through actual fraud; d. Petition is filed within one year from issuance of the decree; e. Property has not yet passed to an innocent purchaser for value. 5. Action For Reconveyance, grounds: a. Fraud (within four years from discover of fraud); b. Implied or constructive trust; c. Express trust; d. Void contract. 6. Action For Damages After one year from date of the decree and if reconveyance is not possible because the property RECONSTITUTION OF TITLE Restoration of the instrument which is supposed to have been lost or destroyed in its original form and condition. CLASSIFICATION OF LANDS 1. Forest 2. Agricultural 3. Mineral 4. Public Parks Kinds of Original Registration 1. Ordinary – voluntary registration  Under P.D. No. 1529 and under Sec. 48(b) of OA No. 141 as amended. 2. Cadastral – compulsory registration initiated by the government  Involuntary registration MODES OF ACQUIRING LAND TITLE By public grant – conveyance of public land by government to private individual. By adverse possession – open, continuous, exclusive, notorious possession of property. By accretion – alluvium. By reclamation – filing of submerged land by deliberate act and reclaiming title thereto; government. By private grant or voluntary transfer – voluntary execution of deed of conveyance. By involuntary alienation – no consent from owner of land. By descent or devise – hereditary succession to the estate of deceased owner. By Emancipation Patent – for purpose of ameliorating sad plight of tenant-farmers; not transferable except by hereditary succession. ORIGINAL REGISTRATION PROCEEDING – proceeding brought before the land registration court to determine title of ownership to the land on the basis of an application filed for registration or of an answer filed by a claimant in a cadastral registration SUBSEQUENT REGISTRATION PROCEEDING – where incidental matters after original registration may be brought before the land registration court by way of motion or petition filed by the registered owner or a party in interest or through the registration of deeds that may affect land. PERSONS WHO MAY APPLY FOR REGISTRATION OF LAND TITLES 1. Those who by themselves or through their predecessors-in-interest have been in open, continuous, exclusive and notorious possession and occupation of alienable and disposable lands of the public domain under a bona fide claim of ownership since June 12, 1945, or earlier; 2. Those who have acquired ownership of private lands by prescription under the provisions of existing laws; 3. Those who have acquired ownership of private lands or abandoned river beds by right or accession or accretion; and 4. Those who have acquired ownership of land in any other manner provided for by law. SYSTEMS OF REGISTRATION 1. System under the Spanish Mortgage Law 2. Torrens System 3. System of recording for unregistered lands Ways of Registering Title to the Torrens System 1. Judicial  Filing of petition with the court  Decree – OCT 2. Administrative  Filing of petition with the DENR or Director of Lands  Patent – OCT KINDS OF REGISTRATION PROCEEDINGS 1. Original – securing the title for the first time (OCT) 2. Subsequent – registration after the original registration (OCT – TCT) ◘ LIMITATION TO OWNERSHIP OF LAND BY CORPORATION A. Private Lands  At least sixty percent Filipino to acquire private land.  Restricted as to extent reasonably necessary to enable it to carry out purpose which it was created.  If engaged in agricultural-restricted to 1.024 hectares. B. Patrimonial Property of State    Lease for twenty-five years renewable. Limited to 1000 hectares Apply to both Filipino and foreign corporations. 1. 2. 3. Muniments of Title – instruments or written evidences which applicant holds or possesses to enable him to substantiate and prove title to his estate. INDEFEASIBLITY OF CERTIFICATE OF TITLE General Rule: upon expiration of 1 year from and after the entry of the decree of registration in the Register of Deeds, the certificate of title becomes incontrovertible and indefeasible. Exceptions: a. If previous valid title of the same land exists; b. When land covered is not capable of registration; and c. When acquisition of certificate is attended by fraud. DOCTRINE OF NON-COLLATERAL ATTACK OF DECREE OR TITLE Decree of a registration and a registered title can not be impugned, enlarged, altered, modified, or diminished in a collateral proceeding, not even by direct proceeding, after the lapse of the period prescribed by law. RECONSTITUTION OF CERTIFICATE OF TITLE 1. Judicial Reconstitution of Title 2. Administrative Reconstitution of Title Requisites: a. Substantial loss or destruction of land titles due to fire, flood or other force majeure; b. The number of certificates of titles lost or damaged should be at least ten percent (10%) of the total number in the possession of the office of the Register of Deeds; c. There are at least 500 certificates of title that were lost or damaged be less than five hundred (500). Requirements for Deeds and Other Voluntary Acts of Conveyance to Be Registrable 4. Presentation of the Owner’s Duplicate Certificate whenever any duly executed voluntary instrument is filed for registration; Payment of prescribed registration fees and the requisite documentary stamps; Evidence of full payment of real estate tax as may be due; and Inclusion of one extra copy of any document of transfer of alienation of the real property to be furnished the city or provincial assessor. AMENDMENT AND ALTERATION OF CERTIFICATE OF TITLE  A certificate of title cannot be altered or amended except in direct proceeding in court; a summary proceeding  Entries in registration books are not allowed to be altered except by order of court Grounds for Amendment or Alteration of Certificate of Title 1. New interest not appearing on the instrument have been created; 2. Interest have terminated or ceased; 3. Omission or error was made in entering certificate; 4. Name of person on certificate has been changed; 5. Registered owner has married; 6. Marriage has terminated; 7. Corporation which owner registered land has dissolved and has not conveyed the property within three years after its dissolution. Involuntary Dealings with Registered Land  Transactions affecting land in which cooperation of registered owner is not needed; it may even be against its will. ATTACHMENT  A writ issued at the institution or during progress of an action commanding the sheriff to attach the property, rights, credits or effects of the defendant to satisfy demands of the plaintiff.  If the attachment is registered, such creates a real right and has a priority over execution sales.  As between two attachments, one that is earlier in registration is preferred.  If the attachment is not registered, actual knowledge is the same as registration.     REGISTRATION OF LIS PENDENS TThe purpose of this is to keep subject matter within the power of the court until the entry of final judgment, therefore it creates a contingency and not a lien on the property. NNotice of lis pendens is an involuntary transaction, hence, it is sufficient that there is an entry in the day book. Effect of Registration of Lis Pendens 1. Impossibility of alienating the property in dispute during the pendency of the suit – may be alienated but purchaser is subject to final outcome of pending suit. 2. The Register of Deeds is bound to carry over notice of lis pendens on all new titles to be issue. Cancellation of Lis Pendens 1. Before final judgment the court may order cancellation after showing that notice is only for purpose of molesting an adverse party or it is not necessary to protect rights of party who caused it to be registered. 2. Register of Deeds may also cancel by verified petition of party who caused such registration. 3. Deemed cancelled when certificate of clerk of court stating manner of disposal of proceeding is registered. CADASTRAL REGISTRATION Cadastral Registration  This is a government initiated proceeding wherein all lands within a stated region are up for registration – whether or not owners are interested to settle their titles.  The nature of the proceeding is in rem and compulsory. PROCEDURE FOR CADASTRAL REGISTRATION 1. Cadastral Survey  When in the opinion of the President of the Philippines, pursuant to requirement of public   interest, title of land within a specified area needs to be settled and adjudicated. Order the Director of Lands to make survey and plan. The Director of Lands shall give notice to persons claiming interest in lands and to general public of day survey, which will be published in the Official Gazette and posted in conspicuous places on lands to be surveyed. The Geodetic Engineers shall commence the survey During the survey the boundaries are marked by monuments. 2. Filing of Petition  After the survey and a plot is made, the Director of Lands, represented by the Solicitor General, shall institute a cadastral proceeding by filing a petition in court against holders, claimants, possessors or occupants of the property.  Parcels of lands are given their cadastral numbers. 3. Publication of Notice and Hearing  The court shall order a date of hearing.  The Land Registration Authority shall notify the public by publishing the notice, once in the Official Gazette, and once in newspaper of general circulation and copy mailed to person whose address is known and copies posted in conspicuous place designated by law. 4. Filing of Answer  Any person claiming interest in any part of lands subject to petition is required to file an answer. 5. Hearing of Case  In any convenient place where land lies.  The procedure is like any ordinary trial in the Regional Trial Court where all conflicting and adverse claims are determined.  Lots claimed are awarded to persons or entities.  If none of the claimants can prove their title to the property, the land is declared of public domain 6. Decision 7. Issuance of Decree and Certificate of Title  Upon the order of the court, the Land Registration Authority shall enter the decree of registration.  The decree shall be made the basis of an OCT. CADASTRAL PROCEEDINGS This is initiated by the Government. The subject matter are private and public property The Government is not interested in asserting ownership but merely interested in the settlement of titles. The Government undertake the survey and advances the expenses In absence of successful claimant, property goes to the government. ORDINARY REGISTRATION Private individuals initiate the proceeding. Only private lands may be subjected to the proceedings Ownership is asserted by the individual. The expenses are shouldered by the individual Applicant has another chance to claim if dismissal is without prejudice. primarily and directly reasonable for any accident, injury or death caused by the operation of the vehicle in the streets and highways. To require the driver of the vehicle to be authorized by the actual owner before the registered owner can be held accountable is to defeat the very purpose why motor vehicle legislations are enacted in the first place. This court has consistently ruled that regardless of who the actual owner of a motor vehicle might be, the registered owner is the operator of the same with respect to the public and third persons, and as such, directly and primarily responsible for consequences of its operation. In contemplation of law, the owner/operator of record is the employer of the driver, the actual operator and employer being considered merely as his agent (MYC – Agro-Industrial Corporation vs. Vda. De Caldo, 132 SCRA 10, citing Vargas vs. Langcay, 6 SCRA 174; Tamayo vs. Aquino, 105 Phil. 949). Strict Liability ◘ When the person is made liable independent of fault or negligence upon submission of proof of certain facts specified by law. Strict liability tort can be committed even if reasonable care was exercised and regardless of the state of mind of the actor at that time. TORTS AND DAMAGES ◘ TORTS Types: A private or civil wrong or injury, other than breach of contract for which the court will provide a remedy in the form of an action for damages. 1. Animals General Rule: The possessor of an animal or whoever may make use of the same is responsible for the damages, which it may cause although it may escape or be lost. It is an act or omission producing an injury to another, without any previous existing lawful relation of which the said act or omission may be said to be a natural outgrowth or incident. Bases of Tort Liability (Sin) 1. 2. 3. Strict liability; Intentional acts; and Negligence  Whether the driver is authorized or not by the actual owner is irrelevant in determining the liability of the registered owner who the law holds Exception: When the damage was caused by force majeure or by the person who suffered the damage (Article 2183 Civil Code)   If the acts of a third person cannot be foreseen or prevented, the n the situation is similar to that of force majeure and the possessor is not liable. Art. 2183 is applicable whether the animal is domestic, domesticated, or wild. 2. Falling Objects  The head of a family that lives in a building or a part thereof is responsible for damages caused by things thrown or falling from the same (Article 2193 Civil Code).  The term “head of the family” is not limited to the owner of the building, and it may even include the lessee thereof (Dingcong vs. Kanaan, 72 Phil 14). 3. Liability of Employers  Article 1711 of the NCC imposes an obligation on owners of enterprises and other employers to pay for the death or injuries to their employees.  Liability is strict because it exists even if the cause is purely accidental.  If the mishap was due to the employee’s own notorious negligence, or voluntary act or drunkenness, the employer shall not be liable for compensation.  When the employee’s lack of due care contributed to his death or injury, the compensation shall be equitably reduced.  If the death or injury is due to the negligence of a fellow-workman the latter and the employer shall be solidarily liable for compensation.  If a fellow-worker’s intentional or malicious act is the only cause of the death or injury, the employer shall not be answerable unless it should be shown that the latter did not exercise due diligence in the selection or supervision of the plaintiff’s fellow-worker. 4. Nuisance  Any act, omission, establishment, business, condition of property, or anything else which: a. Injures or endangers the health or safety of others; b. Annoys or offends the senses; c. Shocks, defies or disregards decency or morality; d. Obstructs or interferes with the free passage of any public highway or street, or any body of water; or e. Hinders or impairs the user of property. (Article 694, Civil Code)   There is a strict liability on the part of the owner or possessor of the property where a nuisance is found because he is obliged to ab ate the same irrespective of the presence or absence of fault or negligence. Every successive owner or possessor of property who fails or refuses to abate a nuisance in that property started by a former owner or possessor is liable therefore in the same manner as the one who created it. (Article 686, Civil Code) Product Liability by Manufacturers Manufacturers and processors of foodstuffs, drinks, toilet articles and similar goods shall be liable for death or injuries caused by any noxious or harmful substances used, although no contractual relation exists (Article 2187, Civil Code) Other Cases of Liability without Fault: 1. 2. 3. 4. Proprietor of a building or structure, for damages resulting from its total or partial collapse, if it should be due to lack of necessary repairs. Breach of implied warranties. Consumer Act (RA 7394) – any Filipino or foreign manufacturer, producer and importer, independently of fault shall be liable for redress for damages caused to consumers by defects resulting from: a. Design; b. Manufacture; c. Construction; d. Assembly and erection; e. Formulas and handling and making up; or f. Presentation or packing of their products as well as for the insufficient or inadequate information on the use and hazards thereof. Even when an act or event causing damage to another’s property was not due to the fault or negligence of the defendant, the latter shall be liable for indemnity if through the act or event he was benefited. (Art. 23, Civil Code) PRODUCT AND SERVICE LIABILITY Alternative Theories on Basis of Liability 1. Fraud or Misrepresentation  Not all expression of opinion is actionable misrepresentations of they are established to be inaccurate. 2. Warranties    The Consumer Act recognizes that the provisions of the Civil Code on conditions and warranties shall govern all contracts of sale with conditions and warranties. Retailer shall be subsidiarily liable under the warranty in case of failure of both the manufacturer and distributor to honor the warranty. Privity of contract is not necessary. 3. Negligence  In product liability law, certain standards are already imposed by special laws, rules and regulations of proper government agencies; certain acts or omission are expressly prohibited by the statutes thereby making violation thereof negligence per se.  It is negligence per se if manufacturer manufactured products which do not comply with the safety standards promulgated by appropriate government agencies. 4. Delict The liability may be based on criminal negligence under the RPC or violation of any special law. 5. Strict liability  Manufacturers and processors of foodstuffs, drinks, toilet articles, and similar goods, shall be liable for death or injuries caused by any noxious or harmful substances used although no contractual relation exists (Art. 2187, Civil Code).  Privity of contract is not required.  It does not preclude an action based on negligence (quasi-delict) for the same actof using noxious or harmful substances.  Art. 97 and 99 of the Consumer Act imposes liability on defective products and services upon manufacturers independent of fault.  Knowledge of the manufacturer is not important; the focus is on the condition of the product and not on the conduct of the manufacturer or seller. c. 2. Requisites: The plaintiff should allege and prove that: a. The product was defective; b. The product was manufactured by the defendant; c. The defective product was the cause of his injury. 4 Kinds of Defective Products: a. Manufacturing defect b. Design defect c. Presentation defect d. Absence of appropriate warning BUSINESS TORTS 1. Interference of Contracts Elements: a. Existence of a valid contract; b. Knowledge on the part of the third person of the existence of the contract; and c. Interference of the third person without legal justification.   DEFENSES: 1. The manufacturer, builder, producer, or importer shall not be liable when it evidences: a. That it did not place the product on the market b. That although it did place the product on the market such product has no defect. That the consumer of third party is solely at fault (Art. 97, Consumer Act) The supplier of the services shall not be held liable when it is proven: a. That there is no defect in the services rendered. b. That the consumer or third party is solely at fault. (Art. 99 Consumer Act) The existence of a contract is necessary and the breach must occur because of the alleged act of interference. No action can be maintained if the contract is void. Malice is not essential. Elements of Privilege to Interfere 1) The defendant’s purpose is a justifiable one, and 2) The actors employ no means of fraud or deception which are regarded as unfair. Kinds: a. Fraudulent transactions; b. Misstatements or omission of statement of a material fact required to be stated. Extent of Liability: 1. Rule on Daywalt vs. La Corporation 39 Phil 587:  Whatever may be the character of the liability which a stranger to a contract may incur by advising or assisting one of the parties to evade performance, there is one proposition upon which all must agree. This is, that the stranger cannot become more extensively liable in damages for the nonperformance of the contract than the party in whose behalf he intermeddles. To hold the stranger liable for damages in excess of those that could be recovered against the immediate party to the contract would lead to results at once grotesque and unjust. Defendant cannot be held liable for more than the amount for which the contracting party who was induced to break the contract can be held liable. 3. Rule under Article 2201 and 2202 Civil Code. If in bad faith: defendant is liable for all natural and probable consequences of his act or omission, whether the same is foreseen or unforeseen. If in good faith: defendant is liable only for consequences that can be foreseen.  Extent of Damages: Not exceeding triple the amount of the transaction. Prescriptive Period: Action must be brought within 2 years after discovery of facts constituting the cause of action accrued. INTENTIONAL TORTS  2. Interference with Prospective Advantage  Defendants are free from liability if they can prove that at the time of the acquisition the plaintiff knew of the untrue statement or if he was aware of the falsity. It is a tort committed when there is no contract yet and the defendant is only being sued for inducing another not to enter into a contract. Include conduct where the actor desires to cause the consequences of his act or believes that the consequences are substantially certain to result from it. These are: 1) Principle of Abuse Rights (Art. 19, Civil Code) 2) General sanction for all other provisions of law which do not especially provide for their own sanction. 3) Acts Contra Bonus Mores (Art. 21, NCC). 4) Torts against Human Dignity (Art. 26, Civil Code). 3. Unfair Competition.  Unfair Competition in agricultural, commercial, or industrial enterprises, or in labor, through the use of force, intimidation, deceit, machination or any unjust or oppressive or highhanded method shall give rise to a right of action by a person who thereby suffers damage. (Article 27, Civil Code) NEGLIGENCE   Cases included: a. b. c. d. Passing off and disparagement of products; Interference; Misappropriation; Monopolies and predatory pricing. 4. Securities Related Torts  The omission of that degree of diligence, which is required by the nature of the obligation and corresponding to the circumstances of person, time and place (Article 1173 Civil Code) It is the omission to do something which a reasonable man, guided by those considerations, which ordinarily regulates the conduct of human affairs, would do or the doing of something which a prudent and reasonable man would not do. Involve voluntary acts or omissions which result in injury to others without intending to cause the same or because the actor fails to exercise due care in performing such acts or omissions. GROSS NEGLIGENCE Negligence where there is “want of even slight care and diligence.” Use: Whenever the cause of the damage is not known. There is an assumption that given circumstances in a particular situation, there is no other explanation for the damage caused where the defendant had exclusive control of the things damaged. General Rule: negligence must be proved on a suit in a quasi-delict so that the plaintiff may recover QUASI-DELICTS Fault or negligence of a person, who, by his act or omission, connected or unconnected with, but independent from, any contractual relation, causes damages to another person. Elements (ADEN): 1. Act or omission; 2. Damage to another; 3. Existence of fault or negligence; and 4. No pre-existing contractual relation between the parties. Extent of Liability 1) Tortfeasor must foresee the result of the act or omission. 2) Damage must be direct 3) Damage must be the natural and probable result of the act even if not necessarily foreseeable. Responsibility for tort is entirely separate and distinct from civil liability but damages cannot be recovered twice for the same act or omission. Test of Negligence “Would a prudent man, in the position of the person to whom negligence is attributed foresee harm to the person injured as a reasonable consequence of the course about to be pursued?” If so, the law imposes a duty on the actor to refrain from that course or to take precaution against tits mischievous results, and the failure to do so constitutes negligence. Res Ipsa Loquitor The thing or transaction speaks for itself. Exception: some cases where negligence may be hard to prove and RES IPSA LOQUITOR is applied. Take note that this presumption is rebuttable. Requisites of Res Ipsa Loquitor: 1. The concurrence must not be a normal occurrence; 2. There is a failure to explain the extraordinary occurrence. DAMNUM ABSQUE INJURIA Is a principle that involves damage but no liability therefore is incurred, there is no legal injury. There exist cases where damage is incurred but there is no legal injury. Thus, there is no one to run after. An example is a fortuitous event. When Defendant Presumed Negligent: 1. Accident was a kind which does not ordinarily occur unless someone is negligent. 2. Instrumentality or agency, which caused the injury, was under the exclusive control of the person charged with negligence. 3. Injury suffered must not have been due to any voluntary action or contribution on the part of the person injured; and 4. Absence of explanation by the defendant. Joint Tortfeasors  All the person who command, instigate, promote, encourage, advise, countenance, cooperate in, aid or abet the commission of a tort, or who approve of it after it is done, if done for their benefit;  They are each solidarily liable as principals. Principle of Concurrent Cause  B. Imputed Contributory Negligence – negligence is imputed if the actor is different from the person who is being made liable. Where the concurrent or successive negligent acts or omissions of two or more persons, although acting independently, are in combination with the direct and proximate cause of a single injury to a third person, and it is impossible to determine what proportion each contributed to the injury, either of them is responsible for the whole injury, even though his act alone might not have caused the entire injury. Effects of Contributory Negligence    Circumstances to Consider In Determining Negligence 1. 2. 3. 4. 5. 6. 7. Time Place Emergency Gravity of Harm to be avoided Alternative Course of Action Social value or utility of activity Person exposed to the risk DEFENSES IN NEGLIGENCE CASES: 1. Fortuitous Event Essential Requisites: a. b. c. d. The cause of the unforeseen and unexpected occurrence, or of the failure of the debtor to comply with his obligation, must be independent of the human will; It must be impossible to foresee the event which constitutes the “caso fortuito,” or if it can be foreseen, it must be impossible to avoid; The occurrence must be such as to render it impossible for the debtor to fulfill his obligation in a normal manner; and The obligor must be free from any participation in the aggravation of the injury resulting to the injury being the defendant’s negligence. A. Comparative Negligence – the relative degree of negligence of the parties is considered in determining whether and to what degree, either should be responsible his negligence – apportionment of damages If the sole cause of the damage is plaintiff’s own fault – no recovery. If plaintiff’s fault or omission is the proximate cause – no recovery. If the proximate cause is still defendant’s act or omission, but plaintiff was also negligent – the amount of damages will be mitigated. Note: in crimes thru reckless imprudence, the defense of contributory negligence does not apply.  Article 2185 of the Civil Code lays down the presumption that a person driving a motor vehicle has been negligent, if at the time of the mishap, he was violating any traffic regulation. In Article 2180, when an injury is caused by the negligence of a servant or an employee the mast or employer is presumed to be negligent either in the selection or in the supervision of that employee. (Pleyto, et al. v. Lomboy, et. al., G.R. No. 148737, 05/16/2004). 3. Assumption of Risk A plaintiff who voluntarily assumes a risk of harm arising from teh negligent or reckless conduct of the defendant cannot recover from such harm. VOLENTI NO FIT INJURIA One is not legal injured if he has consented to the act complained of or was willing that it should occur. Elements: 1. 2. 3. Plaintiff must know that the risk is present He must further understand its nature His choice to incur it is free and voluntary. NATURE Negligence Pre-existing obligation Proof Needed. Defense of a good father of a family. Burden of Proof CONTRACTUAL Merely incidental to the performance of the obligation already existing because of a contract. Yes, express or implied. Preponderance of evidence In the selection and supervision of employees – not a proper defense but may mitigate damages – doctrine of respondiat superior. Debtor – As long as it is provided that there was a contract and that it was not carried out, it is presumed that the debtor is at fault. It’s the debtor’s duty to prove that there was no negligence in carrying out the terms of the contract. AQUILIANA Negligence is direct, substantive and independent of a contract. CRIMINAL Negligence is direct, substantive and independent of a contract. None, except the duty to be careful in all human actions. Preponderance of evidence Yes, in so far as employees or guardians are concerned. None, except the duty to harm others. Ordinarily, victim has to prove the negligence of the defendant because the action is based on alleged negligence on the part of the defendant. Accused is presumed innocent until the contrary is proved, so prosecution has the burden of proving the negligence of the accused. Proof beyond reasonable doubt. Not a proper defense the employee’s guilt is automatically the guilt of the employer of the former is insolvent.  EMERGENCY OR SUDDEN PERIL DOCTRINE  Under this emergency rule, an automobile driver who, by the negligence of another, is suddenly placed in an emergency and compelled to act instantly to avoid a collision or injury is not guilty of negligence if he makes a choice as a person of ordinary prudence placed in such a position might make during an emergency even though he did not make the wisest choice.    That the cause which is the last link in the chain of events; the nearest point of time or relation. Proximate cause is not necessarily the nearest cause but that which is the procuring efficient and predominant cause. 4. CONCURRENT CAUSE  The actor is liable even if the active and substantially simultaneous operation of the effects of a third person’s innocent, tortuous or criminal act is also a substantial factor in bringing about the harm so long as the actor’s negligent conduct actively and continuously operate to bring about harm to another.  Where several causes producing the injury are concurrent and each is an efficient cause without which the injury would not have happened, the injury may be attributed to all or any of the causes and recovery may be had against any or all of the responsible persons.  Where the concurrent or successive negligent acts or omissions of two or more persons, although acting independently, are in combination with the direct and proximate cause of a single injury to a third person, and it is impossible to determine what proportion each contributed to the injury, even though his act alone might not have caused the entire injury; they become joint tort-feasors and are solidarity liable for the resulting damage under Article 2194 of the Civil Code.  Primary cause remains the proximate cause which merely cooperated with the primary cause and which did not break the chain of causation. Under the emergency rule, one who suddenly finds himself in a place of danger, and is required to act without time to consider the best means that may be adopted to avoid the impending danger, is not guilty of negligence, if he makes a choice as a person of ordinary prudence placed in such a position might make during an emergency even though he did not make the wisest choice. Under the emergency rule, one who suddenly finds himself in a place of danger, and is required to act without time to consider the best means that may be adopted to avoid the impending danger, is not guilty of negligence, if he fails to adopt what subsequently and upon reflection may appear to have a better method, unless the danger in which he finds himself is brought about his own negligence (Deelsan Transport Lines, Inc. v. C & Construction Inc. GR No. 150634, October 1, 2003). 4. Prescription Four years from the date of the accident (Art. 1146) 5. Involuntariness It is a complete defense in quasi-delict cases and the defendant is therefore not liable if force was exerted on him. CAUSATION: TESTS OF PROXIMATE CAUSE Two-Part Test 1. Cause-in-fact Test 2. Policy Test 1. PROXIMATE CAUSE It is that cause which in natural and continuous sequence, unbroken by any efficient intervening cause, produces the injury and without which, the result would not have occurred. Note: In determining the proximate cause of the injury, it is first necessary to determine of the defendant’s negligence was the cause-in-fact of the damage to the plaintiff (Cause-in-fact test).  2 . REMOTE CAUSE  That cause which some independent forces merely took advantage of to accomplish something not the natural effect thereof. 3. NEAREST CAUSE  If the defendant’s negligence was not the cause-infact, the inquiry stops. If it is, the inquiry shifts to the question of limit of the defendant’s liability (Policy test) DOCTRINE OF ATTRACTIVE NUISANCE RULE:  One who maintains on his premises dangerous instrumentalities or appliances of a character likely to attract children in play, and who fails to exercise ordinary care to prevent children from playing therewith or resorting thereto, is liable to a child of tender years who is injured thereby, even if the child is technically a trespass in the premises. PRESCRIPTION for QUASI DELICT Article 1146 – [quasi-delict] must be instituted within four years. VICARIOUS LIABILITY – One liable for the act of another under his authority regardless of his negligence IMPUTED NEGLIGENCE – One who did not commit the act or omission causing damage to another can still be civilly liable directly or subsidiarily. Article 2180- liability for acts or omission of those persons for whom one is responsible, the employer, parents, guardians, teachers and heads of schools of Arts and Trade (however, now it applies to all kinds of schools), and the owner and manager of establishments are solidarily liable. However under the Revised Penal Code, the employer is subsidiarily liable that is, only if the employee is insolvent. LIABILITY FOR ACTS OR OMISSION OF THOSE PERSONS FOR WHOM ONE IS RESPONSIBLE: 1. Father, or in case of death or incapacity, the mother: a. Damage caused by minor children; b. Living in their company. 2. Guardian a. For minors or incapacitated; b. Under their Authority; c. Living in their company. 3. Owners and manager of establishments; 1. For their employees; 2. In the service of the branches in which they are employed; or 3. On the occasion of their functions. 4. Employers a. For employees and household helpers; b. Acting within the scope of their assigned task; c. Even if employers are not engaged in any business or industry; d. The defense of due diligence in the selection and supervision of the employee is not available if the defendant is sued under the RPC; e. One who hires an independent contractor but controls the latter’s work is responsible also for the latter’s negligence. 5. State – acting through a special agent and not when the damage has been caused by the official to whom the task done property pertains. 6. Teachers or heads of establishments of arts and trades for pupils and students or apprentices they remain in their custody – Applies to academic institutions as well. Liability attaches to the teacher-in-charge. DEFENSE FOR 1-6: Observance of diligence of a good father of family to prevent damage. DEFENSE OF EMPLOYERS: 1. Exercise of due diligence supervision. 2. in control and  Where the security agency recruits, hires and assigns the works of its watchmen or security guards to a client, the employer of such agency, and not the client, since the latter has no hand in selecting the security guards. Thus, the duty to observe the diligence of a good father of a family cannot be demanded from the said client. A client or customer of a security agency has no hand in selecting who among the pool of security guards or watchmen employed by the agency shall be assigned to it; he duty to observe the diligence of a good father of a family in the selection of guards cannot, in the ordinary course of events, be demanded from the client whose premises or property are protected by the security guards. The fact that a client company may give instructions or directions to the security guards assigned to it, does not, by itself, render the client responsible as an employer of the security guards concerned and liable for their wrongful acts or omissions. (Mercury Drug Corporation v. Libunao, G.R. No. 144458, 07/14/2004) Act was done outside working hours and in violation of the company’s rules and regulations. LIABILITY WITHOUT FAULT: INTENT OR NEGLIGENCE IS IMMATERIAL: 1. A possessor of an animal or whomever may make use of the same for damages it may cause. Defenses: a. Force majeure; b. Fault of the person suffering the damage; and c. Act of third persons. 2. Product liability of manufacture and processor of foodstuff, drinks, toilet articles and similar goods, for death or injuries caused by any noxious or harmful substances used, although no contractual relation exists between them and consumers.  There is prima facie presumption of negligence on the part of the defendant if the death or injury results from his possession of dangerous weapon or substances EXCEPT when the possession or use is indispensable to his occupation or business. 3. Proprietor of a building or structure – damages resulting from its total or partial collapse, if it should be due to lack of necessary repairs. 4. Head of a family living in a building – damages caused by things thrown or failing from the same. 5. Breach of implied warranties 6. Consumer’s Act (R.A. 7394) – any Filipino or foreign manufacturer, producer and importer, independently of fault shall be liable for redress, for damages caused to consumers by defects resulting from: a. Design; b. Manufacture; c. Construction; d. Assembly and erection; e. Formulas and handling and making up; f. Presentation or packing of their products as well as for the insufficient or inadequate information on the use and hazards thereof. To justify a grant of actual or compensatory damages, however, it would be necessary to prove the amount of loss with a reasonable degree of certainly, based upon competent proof and the best evidence obtainable by the injured party. Moral damages are explicitly authorized in breaches of contract when the defendant has acted fraudulently or in bad faith. Concededly, the bank was remiss in its obligation to releases the balance of the loan extended to respondents. Exemplary damages, are intended to serve as an example or a correction for the public good. Courts may award them if the defendant is found to have acted in a wanton, fraudulent, reckless, oppressive, or malevolent manner. (Philippine National Bank v. RBL Enterprise, Inc. et al., G.R. No. 149569, 05/28/2004) DAMAGES A sum of money, which the law awards or imposes as pecuniary compensation, recompense or satisfaction, for an injury done or a wrong sustained as a consequence of the breach of some duty or violation of some right (PNB v. RBL Enterprise, G.R. No. 149589, May 28, 2004) KINDS OF DAMAGES 1. ACTUAL DAMAGES  Those recoverable for pecuniary loss General Rule: The actual value of the loss must be proved for recovery. Exceptions: a. Stipulation of the parties. b. When provided by law.  The award of actual damages cannot be based on the allegation of a witness without any tangible document to support such claim. In determining actual damages, courts cannot rely on mere speculations, but must depend on competent proof. (Bank of the Philippines Islands vs. ALS Management & Development Corp., G.R. No. 151621, April 14, 2004). There is Need to: a. Stipulation of the parties. b. When provided by law. Question: Is proof of pecuniary loss necessary in an award of actual or compensatory damages? Is the rule absolute? Answer: Yes, an award of actual or compensatory damages requires actual proof of pecuniary loss. An exception from the rule, pursuant to Article 2206 of the Civil Code, are “damages for death caused by a crime or quasi-delict” which can be awarded forthwith to the heir of the victim by proof alone of such fact of death. No proof of pecuniary loss is likewise necessary in order that moral, nominal, temperate, liquidated or exemplary damages may be adjudicated (Article 2216, New Civil Code), and it is quite enough that proof of damage, except for liquidated damages which the parties themselves fix, is left to the sound discretion of the court. ACTUAL DAMAGES IN CASE OF: Contracts and Quasi-Contracts 1. In Good Faith (mere carelessness) it is essential that damages be: a. The natural and probable consequence of the breach of obligation; b. Those that parties foresaw or could have foreseen at the time the obligation was constituted 2. In Bad Faith (fraud, malice, deliberate and wanton-wrong doing)   It is sufficient that the damages may be reasonably attributed to the non-performance of the obligation. It is enough that there is a CAUSE and EFFECT relation. All damages can be recovered including attorney’s fees, loss of profits, etc. Ordinary Damages That which is generally an inherent breach of typical contract. Special Damages That which exists because of special circumstances and for which a debtor in good faith can be held liable only if he had been previously informed of such circumstances. Crimes and Quasi-Delicts Defendant is liable for all damages that are natural and probable consequence of the act or omission complained of. It is NOT NECESSARY that such damages have been foreseen or could have been reasonably foreseen  Attorney’s Fees and Interests The law allows a party to recover attorney’s fees under a written agreement. Article 2208 of the Civil Code an award of attorney’s fees is proper if the parties stipulated it.  Attorney’s fees should not be awarded in the absence of stipulation except under the instances enumerated in Article 2208 of the Civil Code. Article 2208 of the Civil Code allows attorney’s fees to be awarded by a court when its claimant is compelled to litigate with third persons or to incur expenses to protect his interest by reason of an unjustified act or omission of the party from whom it is sought. The matter cannot and should not be left to speculation and conjecture. The Court had occasion to state that ‘[t]he reason for the award of attorney’s fees must be disallowed on appeal. (Spouses Hernandez, et al., v. Dolor, et al., GR 160286, 07/30/2004) Damages May Be Recovered: 1. For loss or impairment of earning capacity in case of temporary or permanent physical injury. 2. For injury to the plaintiff’s business standing or commercial credit. Damages For Death: P50,000 minimum Formula: Gross Income - Expenses (necessary living expenses) Earning Capacity Earning Capacity x Life Expectancy (in months) Damages Recoverable By Heirs Factors in Determining Amount of Damages: 1. Life expectancy (state of health, habits, and consequent loss of earning capacity) 2. Pecuniary loss of support and service 3. Moral and mental suffering RULE ON ATTORNEY’S FEES General Rule: Attorney’s fees, expenses of litigation (other than judicial costs) are not recoverable. Exceptions: 1. Stipulation of parties; 2. When exemplary damages are awarded; 3. When defendant’s act or omission has compelled the plaintiffs to litigate with third persons or incurred expenses to protect his interest; 4. Malicious prosecution against plaintiff; 5. Clearly unfounded civil actions or proceedings against plaintiff; 6. Defendant acted in gross and evident bad faint in refusing to satisfy the plaintiff’s plainly just and demandable claim; 7. Legal support actions; 8. Recovery of wages of household helpers, laborers and skilled workers; 9. Actions for indemnity under workmen’s compensation and employer liability laws; 10. Separate civil action to recover civil liability arising from crime; 11. When at least double judicial costs deem just. (Hernandez et al., vs. Dolor et al., GR No. 160286, July 30, 2004) Interest on Damages for: 1. Breach of Contract  Discretion of the court  Not from the date of filing of the complaint but from the date the judgment of the trial court is rendered. 2. Crimes and Quasi-Delicts  Purely discretionary on the courts. 3. Interest On Interest Due (Accrued Interest)  Interest due shall earn legal interest from the time it is judicially demanded, not from default, even, if the obligation is silent on the matter. 4. Interest on Unliquidated Claims or Damages General Rule: Cannot be recovered Exception: When the demand can be established with reasonable certainty. to take into account all the circumstances obtaining in the case and assets and damages according to their discretion. Worthy of note is that moral damages are not awarded to penalize the defendant, or to enrich a complainant, but to enable the latter to obtain means, diversions or amusements that will serve to alleviate the moral suffering he has undergone, by reason of defendant’s culpable action. In any case, award of moral damages must be proportionate to the sufferings inflicted. (Carpio vs. Velmonte, GR 151866, September 9, 2004)  Physical Suffering Includes pain incident to surgery treatment; also includes future pain.  Mental Anguish A high degree of mental suffering, not merely disappointment or regret.  A bank is not entitled to any damages. Award of moral damages cannot be granted to a corporation, it being an artificial person that exists only in legal contemplation and cannot, therefore, experience physical suffering and mental anguish, which can be experienced only by one having a nervous system. The award of damages to Atty. Valero is also baseless. We cannot ascribe any illegal motive or malice to the bank for impleading Atty. Valero as an officer of respondent municipality. The bank filed the case against respondent municipality in the honest belief that it is exempt from paying taxes and fees. Since Atty. Valero was the official charged with the implementation of the ordinances of respondent municipality, he was rightly impleaded as a necessary party in the case. (Rural Bank of Makati, Inc., et al. vs. Municipality of Makati, et al., GR 150763, July 2, 2004).  Malicious prosecution, both in criminal and civil cases, requires the presence of two elements: a) malice; and b) absence of probable cause. Moreover, there must be proof that the prosecution was prompted by a sinister design to vex and humiliate a person, and that it was initiated deliberately knowing that the charge was false and baseless. Moral damages cannot be recovered from a person who has filed a complaint against another in good faith, or without malice or bad faith. (Ceballos vs. Intestate Estate of Mercado. Et al., G. R. No. 155856, May 28, 2004) 2. MORAL DAMAGES Requisites: 1. Physical Suffering, 2. Mental anguish, 3. Fright, 4. Serious anxiety, 5. Besmirched reputation, 6. Wounded feeling, 7. Moral shock, 8. Social humiliation, etc., (this must be alleged and proved)  Moral damages may be awarded whenever the defendant’s wrongful act or omission is the proximate cause of the plaintiff’s physical suffering, mental anguish, fright, serious anxiety, besmirched reputation, wounded feelings, moral shock, social humiliation, and similar injury in the cases specified or analogous to those provided in Article 2219 of the Civil Code. Though no proof of pecuniary loss is necessary in order that moral damages may be adjudicated, courts are mandated or medical Who are entitled to Moral Damages in Case of Death? 1. Primary  Spouse, legitimate and illegitimate children. 2.Secondary  Grandparents.  Absence of primary and secondary – siblings. Willful Injury To Property – discretionary on the court depending on the circumstances of the case 3. NOMINAL DAMAGES  Those adjudicated in order that a right of the plaintiff which has been violated or invaded by the defendant, may be vindicated or recognized and not for the purpose of indemnifying the plaintiff for any such loss suffered by him. Elements 1. Right of plaintiff; 2. Resulting damage must not be capable of pecuniary estimation; 3. Violation of such right; and 4. Purpose is not to indemnify but to vindicate or recognize right violated. 4. TEMPERATE (MODERATE) DAMAGES  Compensation more than nominal but less than compensatory damages awarded when court finds that offended party suffered some pecuniary loss not ascertainable. Requisites: 1. Some pecuniary losses; 2. Loss is incapable of pecuniary estimation; 3. Must be reasonable. 5. LIQUIDATED DAMAGES Those agreed upon by parties to be paid in case of breach of contract. It is in the nature of penalty. 6. EXEMPLARY DAMAGES Imposed by way of example or correction for public good in addition to the moral, temperate, liquidated or compensatory damages. Pre – Requisite: claimant must prove that he is entitled to moral, temperate or compensatory damages even if liquidated have been agreed on in order for exemplary damages may be awarded. Exceptions to the Necessity of Proof: 1. In case liquidated damages had been previously agreed upon. 2. In case loss is presumed as when a child (minor) or a spouse dies. 3. In case of forfeiture of bonds in favor of the government for the purpose of promoting public interest or policy.  Act of dismissal must be attended with bad faith, or fraud, or was oppressive to labor or done in a manner contrary to morals, good customs or public policy and that social humiliation, wounded feelings, or grave anxiety resulted therefrom.Exemplary damages are recoverable only when the dismissal was affected in a wanton, oppressive or malevolent manner. (Manila Water Company, Inc. vs. Pena, et al., G.R. 158255, July 8, 2004) Guidelines in the Award of Exemplary Damages: 1. Exemplary or corrective damages are imposed, by way of example or correction for the public good, in addition to the moral, temperate, liquidated or compensatory damages (Article 2229, NCC) 2. In criminal offenses, exemplary damages as part of the civil liability may be imposed when the crime was committed with one or more aggravating circumstances. Such damages are separate and distinct from fines and shall be paid of the offended party (Article 2232, NCC) 3. In quasi-delicts, exemplary damages may be granted if the defendant acted with gross negligence (Article 2232, NCC) 4. In contacts and quasi-contracts, the court may award exemplary damages if the defendant acted in a wanton, fraudulent, reckless, oppressive or malevolent (Article 2232, New Civil Code) 5. Exemplary damages cannot be recovered as a matter of right; the court will decide whether or not they should. Be adjudicated (Article 2233, NCC) 6. While the amount of the exemplary damages need not be proved, the plaintiff must show that he is entitled to moral, temperate or compensatory damages before the court may consider the question, of whether or not exemplary damages should be awarded. In 7. case liquidated damages have been agreed upon, although no proof of loss is necessary in order that such liquidated damages may be recovered, nevertheless, before the court may consider the question of granting exemplary damages in addition to the liquidated damages, the plaintiff must show that he would be entitled to moral, temperate or compensatory damages were it not far the stipulation for liquidated damages (Article 2234, NCC) A stipulation whereby exemplary damages are renounced in advance shall be null and void (article 2235, New Civil Code) CONFLICT OF LAW [PRIVATE INTERNATIONAL LAW] - that part of the Municipal law of a state which directs its courts and administrative agencies, when confronted with a legal problem involving a foreign element, whether or not they should apply a foreign law or foreign laws. Testamentary Dispositions) 3. As to applicability Governs rights and obligations of States and their relationships among themselves Deals with rights and obligations of private individuals and their private transactions which involve a foreign element 4. As to persons involved Governs only states Governs individuals or and internationally corporations recognized organizations 5. As to transactions Recognized Assumes control over transactions in which transactions strictly sovereign States are private in nature interested 6. As to remedies In case of violation of All remedies are International Law, the provided by municipal State may resort to laws of the State, such diplomatic protest, as resort to courts and negotiation, arbitration administrative tribunals or adjudication by filing cases before international tribunals or may even resort to use of force or go to war DEFINITION OF TERMS: DISTINCTION BETWEEN PUBLIC I.L. & PRIVATE I.L. Public International Private International Law Law 1. As to nature or character International in National, municipal or character as it applies local in character in the international sphere 2. As to sources Custom, treaty and Generally derived from general principles of the internal law of each law recognized by state; except any civilized nations and conflict of laws juridical decisions and question which is teachings of the most governed by a treaty highly qualified (e.g. Hague publicists Convention on the conflicts of law relating to the Form of Borrowing Statute – bars the filing of a suit in a forum if it is already barred by the statute of limitations in the place where the cause of action accrued. Characterization – a process by which a court, at the beginning of a choice-of-law process, assigns a disputed question to an area in substantive law, such as family relations, etc. Doctrine of Forum Non Conveniens – jurisdiction should be declined because “the forum is inconvenient”. The “inconvenience” may be manifested in the following ways: a) The evidence and the witnesses may not be readily available. b) The court dockets of the forum may already be clogged. c) The evils of “forum shopping” ought to be curbed. d) The forum has no particular interest in the case. e) Other courts are open: certainly, the case may be better tried in said courts.  Long Arm Statutes – statutes specifying the kinds of contacts upon which jurisdiction will be asserted. A state must show that there are minimum contacts between the non-resident defendant and the forum to justify the exercise of jurisdiction.  Long-arm statute is a legislative act which provides for personal jurisdiction, via substituted service or process over persons or corporations which are non-residents of the state and which voluntarily go into the state directly or by agent or communicate with persons in the state for limited purposes. (Black’s Law Dictionary, 5th Ed., 1979). immovables are governed by the law of the state where they are situated.  Lex loci actus – law of the place where the act was done.  Lex loci celebrations – law of the place where the contract is made.  Lex loci solutionis – law of the place of the solutions; the law of the place where the payment or performance of a contract is to be made.  Lex loci delicti commissi – law of the place where the crime took place.  Depecage – the phenomenon where the different aspects of the case involving a foreign element may be governed by different systems of law.  Lex mercatoria - law of merchants; commercial law; that system of laws which is adopted by all commercial nations and constitute as part of the law of the land.  Renvoi – a doctrine whereby a jural mater is presented which the conflict of law rule of the forum refer to a foreign law, the conflicts of laws rules of which, in turn, refers the matter back to the law of the forum or a third state.  Lex non scripta – the unwritten common law, which includes general and particular customs and particular part of common law.  Double Renvoi – occurs when the local court, in adopting the foreign court theory, discovers that the foreign court accepts the renvoi.  Transmission – the process of applying the law of foreign state through the law of a second foreign state.  Remission – a kind of renvoi where the reference is made back to the law of the forum.  Lex Fori (law of the forum) – the positive law of the state, country or jurisdiction, of whose judicial system of the court where the suit is brought or remedy is sought, is an integral part.  Lex loci contractus – the law of the place where the contract was made or law of the place where the contract is to be governed which may not be the same as that of the place where it was made.  Lex loci rei sitae – law of the place where the thing or subject matters is situated. Questions of real property can be affected only by the law of the place where it is situated.  Lex situs – law of the place where property is situated; the general rule is that lands and other  Lex Domicilii – Law of the domicile; in conflicts, the law of one’s domicile is applied in the choice of law questions  Lex Loci - law of the place  Lex Nationalii – Law of one’s nationality; in conflicts, the law of one’s domicile is applied in the choice of law questions.  Lex Patriae - National law  Long Arm Statutes – statutes specifying the kinds of contracts upon which jurisdiction will be asserted. A state must show that there are minimum contracts between the non-resident defendant and the forum to justify the exercise of jurisdiction.  Nationality - theory by virtue of which the status and capacity of an individual are generally governed by the law of his nationality. This is principally adopted in the RP.  Particularism - maintains the view that each State creates its own unique norms of Conflict of Laws pursuing its own policy.  Universalism - considers Conflict of Laws as a part of international Law, claiming that its norms are uniform, universal and obligatory for all states.   Private international law "sensu stricto" comprises conflict of laws rules which determine the law of which country (state) is applicable to specific relations.  Private international law "sensu largo" comprises private international law "sensu stricto" (conflict of laws rules) and material legal norms (the applicable specific municipal law of a state, whether of the forum or foreign) which have direct extraterritorial character and are imperatively applied (eg., regulations on real property, consumer law, currency control regulations, insurance and banking regulations).  Doli incapax a principle which raises an irrebuttable presumption in criminal law that an infant is incapable of committing a crime.   Per verbis inter praesentes - a simple public exchange of vows. NOTE: In some states, the legal acceptability of common law marriage is very limited. Some couples, whether because there are no local formalities relevant to them or because they have strongly-held prejudices against compliance with the local forms, decide to create a marriage either by a simple public exchange of vows (per verbis inter praesentes),  Limping marriages - Wherever possible, there should be international uniformity in defining a person's marital status so that people will not be treated as married under the law of one state, but not married under the law of another. However, there may be situations in which it would be quite unjust and inappropriate for the courts of one state to be bound by another state's laws as to status.  Favor matrimonii - upholds the validity of all marriages entered into with a genuine commitment.  Get - the form of divorce in Judaism Asmachta -- Some rabbis will only marry a couple on condition that, should the need arise, they will handle a divorce through him so he will guarantee the Get is done correctly. Other rabbis contend that this condition is unenforceable under Jewish law. This type of condition is known as an asmachta - a condition made under circumstances that led the contracting parties to believe that it would never be germane. For example, in our case, a couple getting married never "really" assumes that they will get divorced. Although they are aware it is a possibility the marriage could fail, the act of contracting the marriage reveals their state of mind - i.e., that they do not believe that it will fail. 1. 2. 3. 4. 5. 6. Talaq – the muslim divorce. Note: The husband may initiate the divorce process by pronouncing the talaq, the formula of repudiation, three times. The first two times the talaq is pronounced, it may be withdrawn. But the third time it is pronounced, the divorce is irrevocable. There are a range of systems specifying the requisite formalities to complete an irrevocable divorce, i.e., whether some period of time must elapse between each pronouncement of talaq, whether there must be mediation, or the need for witnesses. For example, in Pakistan, section 7 Muslim Family Laws Ordinance 1961 requires the following steps: that the husband pronounces the required statement of divorce in front of witnesses; and gives written notice of that pronouncement to the Chairman of the local Union Council; and gives written notice to the wife; there is a waiting period of ninety days, or of a longer period of time if the wife is pregnant; an Arbitration Council must be constituted within thirty days of the date the written notice is given; and the Arbitration Council must take all steps necessary to try to bring about a reconciliation.  Kyogi rikon divorce - Art. 763 of the Civil Code of Japan authorizes a husband and wife to divorce by mutual agreement (kyogi rikon divorces), and more than 90% of all Japanese divorces adopt this fast, simple and entirely non-judicial procedure. Kyogi rikon divorces are entirely non-judicial without the involvement of lawyers or any tribunal. The only requirements are that each spouse should sign a form, known as a rikon todoke, in front of two witnesses, and that the form should be filed with the local registration office. The parties do not need to make any appearance at the registry office. International couples may obtain a consent divorce in Japan if one of them is a Japanese citizen.  Mareva injunction (variously known also as a freezing order, Mareva order or Mareva regime), in Commonwealth jurisdictions, is a court order which freezes assets so that a defendant to an action cannot dissipate their assets from beyond the jurisdiction of a court so as to frustrate a judgment. It is named for Mareva Compania Naviera SA v International Bulkcarriers SA [1975] 2 Lloyd's Rep 509, decided in 1975, although the first recorded instance of such an order in English jurisprudence was Nippon Yusen Kaisha v Karageorgis in 1975, decided very shortly before the Mareva decision; however, in the UK the Civil Procedure Rules 1998 now define a Mareva order as a "freezing" order. It is widely recognized in other common law jurisdictions and such orders can be made to have world-wide effect. It is variously construed as part of a court's inherent jurisdiction to restrain breaches of its process. WHEN FORUM LAW MAY BE APPLIED OVER A CONFLICT PROBLEM a) A specific law of the forum decrees that a specific law should apply; b) The proper foreign law was not properly pleaded or proved; c) The case falls under any of the exceptions to the application of foreign law. Examples:  Article 16 of the Civil Code – real and personal property subject to the law of the country where they are situated and testamentary succession governed by lex nationalii  Article 829 of the Civil Code – makes revocation done outside Philippines valid according to law of the place where will was made or lex domicilii  Article 819 of the Civil Code – prohibits Filipinos from making joint wills even if valid in foreign country  The proper foreign law was not properly pleaded and proved EXCEPTIONS TO FOREIGN LAW: a. b. c. d. e. f. g. h. WAYS OF DEALING WITH CONFLICTS PROBLEM 1. Dismiss the case for lack of jurisdiction, or on the ground of forum non-conveniens. 2. Assume jurisdiction and apply either the law of the forum or of another state: a. b. Apply the Internal Law – forum law should be applied whenever there is good reason to do so. Apply the Foreign Law – when the proper foreign law was properly pleaded and proved. THE APPLICATION OF Foreign law is contrary to public policy of the forum. Foreign law is procedural in nature. The case involves issues related to property. The issues involved in the enforcement of foreign claim is fiscal or administrative. The foreign law or judgment is contrary to good morals. The foreign law is penal in character. When application of the foreign law may work undeniable injustice to the citizens of the forum. When application of the foreign law might endanger the vital interest of the State. THEORIES ON THE APPLICATION OF FOREIGN LAW 1. Theory of Comity Foreign law is applied because it is convenient and because we want to give protection to our citizens, residents and transients in our land. 2. Theory of Vested Rights We seek to enforce not foreign laws itself but the rights that have been vested under such foreign law; an act done in another state may give rise to the existence of a right if the laws of that state created such right. 3. To conclude that the parties who fail to introduce proof as to the content of a foreign law acquiesce to the application of the forum law. 3. Theory of Local Law Adherents of this school of thought believe that we apply foreign law not because it is foreign, but because our laws, by applying similar rules, require us to do so; hence, it is as if the foreign law has become part and parcel of our local law. 4. Presumption that the foreign law is the same as the law of the forum 4. Theory of Harmony of Laws Theorists here insist that in many cases we have to apply the foreign law so that whenever a case is decide, that is, irrespective of the forum, the solution should be approximately the same; thus identical or similar solutions anywhere and everywhere. When the goal is realized, there will be “harmony of laws”. DOCTRINE OF PROCESSUAL PRESUMPTION Proceeds from the theory that the basic law is the law of the forum and when the claimed applicable foreign law is not proved, then the court has no reason to displace the basic law. 5. Theory of Justice The purpose of all laws, including conflict of laws, is the dispensing of justice; if this can be attained in many cases applying the proper foreign law, we must do so. PROOF OF FOREIGN LAW 1. By pleading and proof a. Written law i. By official publication ii. Copy attested by officer having legal custody plus a certificate with seal from secretary of embassy, legation, consul general, consul, vice consul, consular agent or any officer in the foreign service of the Philippines stationed in the foreign country to the effect that said officer has custody (Section 24 Rule 132 of the Revised Rules of Court) b. Unwritten law – by testimony of experts or writings of jurists 2. Judicial Notice (when the laws are already within the actual knowledge of the court, such as when they are well and generally known or they have been actually ruled upon in other cases before it and none of the parties concerned claim otherwise (PCIB vs. Escrolin, 56 SCRA 266)
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