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MAGIC AREAS in CIVIL LAW

2016 Bar Examination


Dean ED VINCENT S. ALBANO
Proprietor & Bar Review Director
PRELIMINARY CHAPTER
Effectivity of laws; publication required.
It is well-settled that laws must be published to be valid. In fact, publication is an indispensable
condition for the effectivity of a law. Taada v. Tuvera (G.R. No. L-63915, 1986) said as much:
Publication of the law is indispensable in every case x x x. Laws must come out in the open in the clear
light of the sun instead of skulking in the shadows with their dark, deep secrets. Mysterious
pronouncements and rumored rules cannot be recognized as binding unless their existence and
contents are confirmed by a valid publication intended to make full disclosure and give proper notice to
the people. The furtive law is like a scabbarded saber that cannot feint, parry or cut unless the naked
blade is drawn. The publication must be of the full text of the law since the purpose of publication is to
inform the public of the contents of the law. Mere referencing the number of the presidential decree, its
title or whereabouts and its supposed date of effectivity would not satisfy the publication requirement.
(EDUARDO M. COJUANGCO, JR. v. REPUBLIC OF THE PHILIPPINES, G.R. No. 180705, November 27, 2012,
Velasco, Jr.)
HUMAN RELATIONS
Abuse of right.
A bank may be considered grossly negligent in not giving prior notice to client about its course
of action to suspend, terminate, or revoke the credit line, thus violating Art. 19 of the Civil Code.
In order for Art. 19 to be actionable, the following elements must be present: "(1) the existence
of a legal right or duty, (2) which is exercised in bad faith, and (3) for the sole intent of prejudicing or
injuring another." Prior notice is required before termination of the credit line. This is the legal duty of
the bank and since it failed to do so, it is liable for damages.
Malice or bad faith is at the core of Art. 19. Malice or bad faith "implies a conscious and
intentional design to do a wrongful act for a dishonest purpose or moral obliquity." (EUSEBIO GONZALES
v. PCIB, et al., G.R. No. 180257, February 23, 2011, Velasco, J; Ardiente v. Pastorfide, G.R. No. 161921,
July 17, 2013)
Liability for breach of promise to marriage; basis.
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 moral damages. (Art. 21, NCC)
A person cannot escape liability by promising to marry her, only to thereafter renege on his promise
after cohabiting with her for 21 days. There are other reprehensible acts which he did, like practically
detaining the woman after the alleged rape, leaving her without any justifiable reason, withdrawing the
application for marriage license, acts which can make him liable for damages. (Bunag, Jr. vs. CA, et al.,
G.R. No. 101749, July 10, 1992; Baksh vs. CA, et al., G.R. No. 97336, Feb. 19, 1993)
Prejudicial question.
The 2000 Rules on Criminal Procedure, effective since December 1, 2000 provides that the two
essential elements of a prejudicial question are: (a) the 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. Therefore, in order
for a civil case to create a prejudicial question and, thus, suspend a criminal case, it must first be
established that the civil case was filed previous to the filing of the criminal case. Assuming arguendo
that the civil case was instituted prior to the criminal action, there is still, no prejudicial question to
speak of due to the absence of the second element, because the agreement surrounding the issuance
of dishonored checks is irrelevant to the prosecution for violation of BP 22. The gravamen of the offense
is the issuance of a bad check. (DREAMWORK CONSTRUCTION, INC. v. CLEOFE S. JANIOLA, G.R. No.
184861, June 30, 2009, VELASCO, JR., J.).
PERSONS AND FAMILY RELATIONS
Marriage without a license is void.
If a marriage was celebrated without a license, it is void.
The certification of the Local Civil Registrar that their office had no record of a marriage license
was adequate to prove the non-issuance of said license. (Cario v. Cario, 403 Phil. 861, 869, [2001])
The mere fact that a wedding ceremony was conducted and a marriage contract was signed
does not operate to cure the absence of a valid marriage license. Article 4 of the Family Code is clear
when it says, "The absence of any of the essential or formal requisites shall render the marriage void
ab initio, except as stated in Article 35(2)." Article 35(3) of the Family Code also provides that a
marriage solemnized without a license is void from the beginning, except those exempt from the
license requirement under Articles 27 to 34, of the same Code. Again, this marriage cannot be
characterized as among the exemptions, and thus, having been solemnized without a marriage license,
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is void ab initio. As the marriage license, a formal requisite, is clearly absent, the marriage of the
parties is void ab initio. (SYED AZHAR ABBAS v. GLORIA GOO ABBAS, G.R. No. 183896, January 30,
2013, Velasco, Jr., J; Cario v. Cario, 403 Phil. 861, 869, [2001]).
The Rule on Declaration of Absolute Nullity of Void Marriages and Annulment of Voidable
Marriages, clearly allow the reception of evidence on custody, support, and property relations after the
trial court renders a decision granting the petition, or upon entry of judgment granting the petition.
Judge Reyes-Carpio did not deny the reception of evidence on custody, support, and property relations
but merely deferred it, based on the existing rules issued by this Court, to a time when a decision
granting the petition is already at hand and before a final decree is issued. The trial court shall proceed
with the liquidation, partition and distribution, custody, support of common children, and delivery of
their presumptive legitimes upon entry of judgment granting the petition. (ERIC U. YU v. HONORABLE
JUDGE AGNES REYES-CARPIO, G.R. No. 189207, June 15, 2011, Velasco, Jr., J.)
Divorce between Filipino citizens void; second marriage void.
When the first marriage between him and the first spouse, both Filipinos, was solemnized in the
Philippines, the law in force adopted the nationality rule to the effect that Philippine laws relating to
family rights and duties, or to the status, condition and legal capacity of persons were binding upon
citizens of the Philippines. Pursuant to the nationality rule, Philippine laws governed this case. So they
remained married until his death which terminated their marriage. From the time of the celebration of
his first marriage until the present, absolute divorce between Filipino spouses has not been recognized
in the Philippines. The non-recognition of absolute divorce between Filipinos has remained even under
the Family Code, even if either or both of the spouses are residing abroad.
Hence, the second marriage is void for being bigamous. And under Article 144 of the Civil Code
(now Art. 148, FC) the property relation between them is governed by the rules on co-ownership. But in
order to establish co-ownership the second wife should prove that she actually contributed in the
acquisition of the property. Even under the Family Code, where co-ownership between them is
presumed, there must still be proof of actual contribution for the presumption to apply. In this case, she
failed to prove her actual contribution in the acquisition of the subject properties.
If the parties have no legal impediment to marry, it is not necessary that there be actual or
material contribution because in such a case, there is a presumption that the contribution is equal. In
fact, the contribution may only be spiritual. (Lavadia v. Heirs of Luna, G.R. No. 171914, July 23, 2014).
Foreign divorce.
A foreign divorce can be recognized in the Philippines provided the divorce decree is proven as
a fact and as valid under the national law of the alien spouse. The fact that a party was clearly an
American citizen when she secured the divorce and that divorce is recognized and allowed in any of the
States of the Union, the presentation of a copy of foreign divorce decree duly authenticated by the
foreign court issuing said decree is, as here, sufficient.
Given the validity and efficacy of divorce decree, the same shall be given a res judicata effect in this
jurisdiction. As an obvious result of the divorce decree obtained, the marital vinculum between the
spouses is considered severed; they are both freed from the bond of matrimony. In plain language, they
are no longer husband and wife to each other. Consequent to the dissolution of the marriage, the
husband could no longer be subject to a husband's obligation under the Civil Code. (MARIA REBECCA
MAKAPUGAY BAYOT v. THE HONORABLE COURT OF APPEALS, G.R. No. 155635, November 7, 2008,
VELASCO, JR., J.).
Duty to support; effect if a party is a foreigner who divorced the Filipino; nationality
principle.
Insofar as Philippine laws are concerned, specifically the provisions of the Family Code on
support, the same only applies to Filipino citizens. By analogy, the same principle applies to foreigners
such that they are governed by their national law with respect to family rights and duties which
provides that laws relating to family rights and duties, or to the status, condition and legal capacity of
persons are binding upon citizens of the Philippines, even though living abroad. (Art. 15, NCC).
The obligation to give support to a child is a matter that falls under family rights and duties.
Since the respondent is a citizen of Holland or the Netherlands, the lower court was correct that he is
subject to the laws of his country, not to Philippine law, as to whether he is obliged to give support to
his child, as well as the consequences of his failure to do so.
In Vivo v. Cloribel, G.R. No. L-25441, October 26, 1968, 25 SCRA 616, it was said that being still
aliens, they are not in position to invoke the provisions of the Civil Code of the Philippines, for that Code
cleaves to the principle that family rights and duties are governed by their personal law, i.e., the laws
of the nation to which they belong even when staying in a foreign country (Civil Code, Article 15; Norma
A. Del Socorro v. Ernest Johan Brinkman Van Wilsen, G.R. No. 193707, December 10, 2014, Peralta, J).
Why the foreign law which does not oblige the father to support his child cannot be made
to apply in the Philippines.
Notwithstanding that the national law of respondent states that parents have no obligation to
support their children or that such obligation is not punishable by law, said law would still not find
applicability. In Bank of America, NT and SA v. American Realty Corporation, 378 Phil. 1279 [1999] it
was said that when the foreign law, judgment or contract is contrary to a sound and established public
policy of the forum, the said foreign law, judgment or order shall not be applied.
Prohibitive laws concerning persons, their acts or property, and those which have for their
object public order, public policy and good customs shall not be rendered ineffective by laws or
judgments promulgated, or by determinations or conventions agreed upon in a foreign country.

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Moreover, foreign law should not be applied when its application would work undeniable
injustice to the citizens or residents of the forum. To give justice is the most important function of law;
hence, a law, or judgment or contract that is obviously unjust negates the fundamental principles of
Conflict of Laws.
Applying the foregoing, even if the laws of the Netherlands neither enforce a parents obligation
to support his child nor penalize the non-compliance therewith, such obligation is still duly enforceable
in the Philippines because it would be of great injustice to the child to be denied of financial support
when the latter is entitled thereto. (Norma A. Del Socorro v. Ernest Johan Brinkman Van Wilsen, G.R. no.
193707, December 10, 2014).
Purpose of Art. 26(2), F.C.
The intention of the law is to avoid the absurd situation where the Filipino spouse remains
married to the alien spouse who, after obtaining a divorce, is no longer married to the Filipino
spouse. The legislative intent is for the benefit of the Filipino spouse, by clarifying his or her marital
status, settling the doubts created by the divorce decree. Essentially, the second paragraph of Article
26 of the Family Code provided the Filipino spouse a substantive right to have his or her marriage to
the alien spouse considered as dissolved, capacitating him or her to remarry. The capacity of the
Filipino spouse to remarry, however, depends on whether the foreign divorce decree capacitated the
alien spouse to do so. Without the second paragraph of Article 26 of the Family Code, the judicial
recognition of the foreign decree of divorce, whether in a proceeding instituted precisely for that
purpose or as a related issue in another proceeding, would be of no significance to the Filipino spouse
since our laws do not recognize divorce as a mode of severing the marital bond; (Art. 17, NCC) Article
17 of the Civil Code provides that the policy against absolute divorces cannot be subverted by
judgments promulgated in a foreign country. The inclusion of the second paragraph in Article 26 of the
Family Code provides the direct exception to this rule and serves as basis for recognizing the
dissolution of the marriage between the Filipino spouse and his or her alien spouse. (Gilbert B. Corpus
v. Daisylyn Tirol Sto. Tomas, et al., G.R. No. 186571, August 11, 2010).
Article 26(2) a corrective measure.
The second paragraph of Article 26 is only a corrective measure to address the anomaly that
results from a marriage between a Filipino, whose laws do not allow divorce, and a foreign citizen,
whose laws allow divorce. The anomaly consists in the Filipino spouse being tied to the marriage while
the foreign spouse is free to marry under the laws of his or her country. The correction is made by
extending in the Philippines the effect of the foreign divorce decree, which is already effective in the
country where it was rendered. The second paragraph of Article 26 of the Family Code is based on the
Courts decision in Van Dorn v. Romillo, 223 Phil. 357 [1985], which declared that the Filipino spouse
should not be discriminated against in her own country if the ends of justice are to be served.
The principle in Article 26 of the Family Code applies in a marriage between a Filipino and a
foreign citizen who obtains a foreign judgment nullifying the marriage on the ground of bigamy. The
Filipino spouse may file a petition abroad to declare the marriage void on the ground of bigamy. The
principle in the second paragraph of Article 26 of the Family Code applies because the foreign spouse,
after the foreign judgment nullifying the marriage, is capacitated to remarry under the laws of his or
her country. If the foreign judgment is not recognized in the Philippines, the Filipino spouse will be
discriminatedthe foreign spouse can remarry while the Filipino spouse cannot remarry.
Under the second paragraph of Article 26 of the Family Code, Philippine courts are empowered
to correct a situation where the Filipino spouse is still tied to the marriage while the foreign spouse is
free to marry. Moreover, notwithstanding Article 26 of the Family Code, Philippine courts already have
jurisdiction to extend the effect of a foreign judgment in the Philippines to the extent that the foreign
judgment does not contravene domestic public policy. A critical difference between the case of a
foreign divorce decree and a foreign judgment nullifying a bigamous marriage is that bigamy, as a
ground for the nullity of marriage, is fully consistent with Philippine public policy as expressed in Article
35(4) of the Family Code and Article 349 of the Revised Penal Code. The Filipino spouse has the option
to undergo full trial by filing a petition for declaration of nullity of marriage under A.M. No.02-11-10-SC,
but this is not the only remedy available to him or her. Philippine courts have jurisdiction to recognize a
foreign judgment nullifying a bigamous marriage, without prejudice to a criminal prosecution for
bigamy. (Minoru Fujiki vs. Marinay, et al., G.R. No. 196049, June 26, 2013)
Marriage valid even if the purpose is to secure citizenship.
The avowed purpose of marriage under Article 1 of the Family Code is for the couple to establish
a conjugal and family life. The possibility that the parties in a marriage might have no real intention to
establish a life together is, however, insufficient to nullify a marriage freely entered into in accordance
with law. The same Article 1 provides that the nature, consequences, and incidents of marriage are
governed by law and not subject to stipulation. A marriage may, thus, only be declared void or voidable
under the grounds provided by law. There is no law that declares a marriage void if it is entered into for
purposes other than what the Constitution or law declares, such as the acquisition of foreign
citizenship. Therefore, so long as all the essential and formal requisites prescribed by law are present,
and it is not void or voidable under the grounds provided by law, it shall be declared valid. (Article 4,
Family Code; Republic v. Albios, G.R. No. 198780, October 16, 2013).
Judgment reconsidered; bringing children to mahjong sessions exposed them to culture of
gambling; eroded moral fiber.
A mothers act of bringing her children with her to her mahjong sessions did not only point to
her neglect of parental duties, but also manifested her tendency to expose them to a culture of
gambling. Her willfully exposing her children to the culture of gambling on every occasion of her
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mahjong sessions was a very grave and serious act of subordinating their needs for parenting to the
gratification of her own personal and escapist desires.
She revealed her wanton disregard for her childrens moral and mental development. This
disregard violated her duty as a parent to safeguard and protect her children affecting the development
of their moral, mental and physical character and well-being. (Art. 209, FC; Kalaw v. Fernandez, G.R. No.
166357, January 14, 2015).
Emotional immaturity, not evidence of psychological incapacity.
The Court, in Dedel v. CA, 466 Phil. 226 [2004], held that respondents emotional immaturity
and irresponsibility could not be equated with psychological incapacity as it was not shown that
these acts are manifestations of a disordered personality which make her completely unable to
discharge the essential marital obligations of the marital state, not merely due to her youth,
immaturity or sexual promiscuity. In the same light, the Court, in the case of Pesca v. Pesca, 408
Phil. 713 [2001], ruled against a declaration of nullity, as petitioner therein utterly failed, both in her
allegations in the complaint and in her evidence, to make out a case of psychological incapacity on the
part of respondent, let alone at the time of solemnization of the contract, so as to warrant a declaration
of nullity of the marriage, significantly noting that the emotional immaturity and
irresponsibility,invoked by her, cannot be equated with psychological incapacity. In Pesca, the Court
upheld the appellate courts finding that the petitioner therein had not established that her husband
showed signs of mental incapacity as would cause him to be truly incognitive of the basic marital
covenant, as so provided for in Article 68 of the Family Code; that the incapacity is grave, has preceded
the marriage and is incurable; that his incapacity to meet his marital responsibility is because of a
psychological, not physical illness; that the root cause of the incapacity has been identified medically or
clinically, and has been proven by an expert; and that the incapacity is permanent and incurable in
nature.(Republic vs. De Gracia, G.R. No. 171557, February 12, 2014)
Extent of the petition under Article 26 paragraph 2 of the Family Code.
An action based on the second paragraph of Article 26 of the Family Code is not limited to the
recognition of the foreign divorce decree. If the court finds that the decree capacitated the alien
spouse to remarry, the courts can declare that the Filipino spouse is likewise capacitated to contract
another marriage. No court in this jurisdiction, however, can make a similar declaration for the alien
spouse (other than that already established by the decree), whose status and legal capacity are
generally governed by his national law.
An aliens legal capacity to contract is evidenced by a certificate issued by his or her respective
diplomatic and consular officials, which he or she must present to secure a marriage license (Article 21,
Family Code). The Filipino spouse who seeks to remarry, however, must still resort to a judicial action
for a declaration of authority to remarry. (Gilbert B. Corpus v. Daisylyn Tirol Sto. Tomas, et al., G.R. No.
186571, August 11, 2010).
Concept of mixed marriage.
Paragraph 2 of Article 26 of the Family Code should be interpreted to include cases involving
parties who, at the time of the celebration of the marriage were Filipino citizens, but later on, one of
them becomes naturalized as a foreign citizen and obtains a divorce decree. The Filipino spouse should
likewise be allowed to remarry as if the other party were a foreigner at the time of the solemnization of
the marriage. To rule otherwise would be to sanction absurdity and injustice. Where the interpretation
of statute according to its exact and literal import would lead to mischievous results or contravene the
clear purpose of the legislature, it should be construed according to its spirit and reason, disregarding
as far as necessary the letter of the law. A statute may therefore be extended to cases not within the
literal meaning of its terms, so long as they come within its spirit or intent.
Even if the marriage became mixed after its celebration and divorce was obtained later after
one of the spouses embraced American citizenship, the Filipino can remarry. While the law appears to
apply only to cases where the parties must be Filipinos and aliens in order that the Filipino who was
divorced was remarry, yet, the Supreme Court said it applies even if the marriage becomes mixed after
its celebration. To rule otherwise, would be to sanction the foreigner, capacitating him on her to
remarry. (Republic v. Orbecido III, G.R. No. 154380, October 5, 2005).
Affidavit of cohabitation; effect if contents are false.
The marriage is void if it was contracted without a license. For Art. 76, NCC or Art. 34, FC to
apply where in lieu of a license an affidavit of cohabitation would be sufficient, it is required that the
man and the woman must have attained the age of majority, and that being unmarried, they have lived
together as husband and wife for at least 5 years. The minimum requisite of 5 years of cohabitation is
an indispensable requisite carved in the language of the law. This material fact cannot be dispensed
with, otherwise the marriage is void. It is not a directory requirement but a mandatory one. In this case,
they lived for less than 6 months the affidavit was false. The marriage is void. (Republic v. Jose Dayot,
March 28, 2008).
Requisites of declaration of presumptive death of an absent spouse.
Before a judicial declaration of presumptive death can be obtained, it must be shown that the
prior spouse had been absent for four consecutive years and the present spouse had a well-founded
belief that the prior spouse was already dead. Under Article 41 of the Family Code, there are four (4)
essential requisites for the declaration of presumptive death:
1. That the absent spouse has been missing for four consecutive years, or two consecutive years if
the disappearance occurred where there is danger of death under the circumstances laid down
in Article 391, Civil Code;
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2. That the present spouse wishes to remarry;


3. That the present spouse has a well-founded belief that the absentee is dead; and
4. That the present spouse files a summary proceeding for the declaration of presumptive death of
the absentee. (Rep. v. Maria Fe Espinosa Cantor, G.R. No. 184621, December 10, 2013 citing
Republic v. Nolasco, G.R. No. 94053, March 17, 1993, 220 SCRA 20)
Serious efforts must be exerted to locate absent spouse for the latter to be declared
presumptively dead; reiteration of strict standard rule.
The Family Code provides that before a judicial declaration of presumptive death may be
granted, the present spouse must prove that he/she has a well-founded belief that the absentee is
dead. (Republic v. Cantor, G.R. No. 184621, December 10, 2013).
The well-founded belief in the absentees death requires the present spouse to prove that
his/her belief was the result of diligent and reasonable efforts to locate the absent spouse and that
based on these efforts and inquiries, he/she believes that under the circumstances, the absent spouse
is already dead. It necessitates exertion of active effort (not a mere passive one). Mere absence of the
spouse (even beyond the period required by law), lack of any news that the absentee spouse is still
alive, mere failure to communicate, or general presumption of absence under the Civil Code would not
suffice. (Rep. v. Cantor). The premise is that Article 41 of the Family Code places upon the present
spouse the burden of complying with the stringent requirement of "well-founded belief" which can only
be discharged upon a showing of proper and honest-to-goodness inquiries and efforts to ascertain not
only the absent spouses whereabouts but, more importantly, whether the absent spouse is still alive or
is already dead. (Republic of the Philippines v. Court of Appeals (10 th Div.), 513 Phil. 391, 397-398
[2005]; Rep. v. Edna Orcelino-Villanueva, G.R. No. 210929, July 29, 2015, Mendoza, J).
Reason for strict standard approach.
This strict standard approach ensures that a petition for declaration of presumptive death under
Article 41 of the Family Code is not used as a tool to conveniently circumvent the laws in light of the
States policy to protect and strengthen the institution of marriage. Courts should never allow
procedural shortcuts but instead should see to it that the stricter standard required by the Family Code
is met. (Rep. v. Cantor, supra.).
The requirement of well-founded belief.
The law does not define what is meant by well-founded belief. It depends upon the
circumstances of each particular case. Its determination, so to speak, remains on a case-to-case basis.
To be able to comply with this requirement, the present spouse must prove that his/her belief was the
result of diligent and reasonable efforts and inquiries to locate the absent spouse and that based on
these efforts and inquiries, he/she believes that under the circumstances, the absent spouse is already
dead. It requires exertion of active effort (not a mere passive one). (Rep. v. Cantor, G.R. No. 184621,
December 10, 2013).
Reasons for the use of strict standard approach.
The application of this stricter standard becomes even more imperative if we consider the
States policy to protect and strengthen the institution of marriage. Since marriage serves as the
familys foundation and since it is the states policy to protect and strengthen the family as a basic
social institution, (Constitution, Article 2, Section 12) marriage should not be permitted to be dissolved
at the whim of the parties. In interpreting and applying Article 41, this is the underlying rationale to
uphold the sanctity of marriage. In Arroyo, Jr. v. Court of Appeals, G.R. Nos. 96602 and 96715,
November 19, 1991, 203 SCRA 750, 761, it was stressed that the protection of the basic social
institutions of marriage and the family in the preservation of which the State has the strongest interest;
the public policy here involved is of the most fundamental kind. In Article II, Section 12 of the
Constitution there is set forth the following basic state policy:
The State recognizes the sanctity of family life and shall protect and strengthen
the family as a basic autonomous social institution. (Rep. v. Maria Fe Espinosa Cantor,
G.R. No. 184621, December 10, 2013 citing Republic v. Nolasco, G.R. No. 94053, March
17, 1993, 220 SCRA 20).
Fraudulent declaration of presumptive death; remedy.
Mere filing of an affidavit of reappearance would not suffice for the purpose of not only
terminating the effects of the declaration of presumptive death. Annulment of judgment on the ground
of extrinsic fraud is the proper remedy. There is extrinsic fraud when a litigant commits acts outside of
the trial which prevents a party from having a real contest or from presenting all of his or her case, or
when there is no fair submission of the controversy.
Her allegations in her petition for annulment of judgment constitute extrinsic fraud and lack of
jurisdiction. In fact there was even no publication of the notice of hearing of her husbands petition in a
newspaper of general circulation.
She did not admit to have been absent so it would be inappropriate to file an affidavit of
reappearance if she did not disappear in the first place. Besides, she sought not merely the termination
of the subsequent marriage but also the nullification of its effects. So an affidavit of reappearance is not
a sufficient remedy because it will only terminate the subsequent marriage but not nullify the effects of
the declaration of her presumptive death and the subsequent marriage. (Santos v. Santos, G.R. No.
187061, October 8, 2014).
LEGAL SEPARATION

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Decree of legal separation; property relation of the spouses; effect on the guilty spouse.
Among the effects of the decree of legal separation is that the conjugal partnership is dissolved
and liquidated and the offending spouse would have no right to any share of the net profits earned by
the conjugal partnership. It is only the share in the net profits which is forfeited in favor of their
daughter. Article 102(4) of the Family Code provides that [f]or purposes of computing the net profits
subject to forfeiture in accordance with Article 43, No. (2) and 63, No. (2), the said profits shall be the
increase in value between the market value of the community property at the time of the celebration of
the marriage and the market value at the time of its dissolution. Clearly, what is forfeited in favor of
their daughter is not his share in the conjugal partnership property but merely in the net profits of the
conjugal partnership property. (Siochi v. Gozon, et al., G.R. No. 169900; Interdimensional Realty, Inc. v.
Siochi, et al., G.R. No. 169977, March 18, 2010).
Sleeping with the spouse after giving rise to a case for legal separation is condonation.
In legal separation, condonation means forgiveness, express or implied. Sleeping together after
full knowledge of the offense is condonation. Implied condonation may be evidenced by voluntary
intercourse after knowledge of the cause. (Johnston v. Johnston, 116 Va. 778; Keezer, Marriage and
Divorce, p. 554; Bugayong v. Ginez, December 28, 1956).
DONATIONS DURING THE MARRIAGE
Reason for the prohibition against donation of spouses to one another.
The basic reason why the spouses cannot donate to one another is that there may be undue
influence that may be exerted by one against the other, to the extent that the heirs or creditors of the
donor may be prejudiced if the spouses are allowed to sell to one another.
The prohibition should likewise apply to persons living together as husband and wife without the
benefit of nuptials. For it is not to be doubted that assent to such irregular connection for thirty (30)
years bespeaks greater influence of one party over the other so that the danger that the law seeks to
avoid is correspondingly increased to the extent that the heirs, or creditors of the donor may be
prejudiced. (Matabuena v. Cervantes, 38 SCRA 284).
Prohibition applies to common-law relationship.
If the donor and done are living in a common-law relationship, the donation is void because it
was made between persons guilty of adultery at the time of the donation. Moreover, Article 87 of the
Family Code provides that the prohibition against donations between spouses now applies to donations
between persons living together as husband and wife without a valid marriage (Buenaventura v.
Bautista, 50 O.G. 3679; Matabuena v. Cervantes, 38 SCRA 284), for otherwise, the condition of those
who incurred guilt would run out to be better than those in the legal union. (Buenaventura v. Bautista,
50 O.G. 3679; Matabuena v. Cervantes, 38 SCRA 284; Agapay v. Palang, G.R. No. 116668, July 28, 1997,
85 SCAD 145; Arcaba v. Tabancura Vda. de Batocael, G.R. No. 146683, November 22, 2001; Sps. Cirelos
v. Sps. Hernandez, G.R. No. 146523, June 15, 2006).
PROPERTY RELATIONSHIP
Presumption of conjugality.
Properties acquired by onerous title during the marriage are presumed to be conjugal. It is an
error to say that before conjugal ownership could be legally presumed, there must be a showing that
the property was acquired during marriage using conjugal funds. Only proof of acquisition during the
marriage is needed to raise the presumption that the property is conjugal. (METROPOLITAN BANK AND
TRUST CO. v. NICHOLSON PASCUAL, G.R. No. 163744, 29 February 2008, Second Divison, (Velasco, Jr., J)
Owner of damages recovered by a spouse in an action for damages.
If the damages recovered are in the nature of unrealized profits or earnings, they are conjugal.
However, moral damages are generally considered exclusive properties of the spouse to whom they are
awarded (Lilius and Lilius vs. MRR, 62 Phil. 56). However, there is an exception to this rule, for the
Supreme Court, in Zulueta vs. PANAM, 49 SCRA 1, held that moral damages recovered by the spouse as
a result of the unjustifiable cancellation of the confirmed reservation in PANAM during their trip abroad
as conjugal since the award was collectively adjudged in favor of the spouses premised on a breach of
contract and conjugal funds were used to pay for the plane tickets.
Surety undertaking does not redound to the benefit of family.
If a spouse acts as a surety in an undertaking, the contract does not redound to the benefit of
the family, instead, it would later dissipate the assets of the family. While the obligation was contracted
during the marriage, yet the measure of liability of the community of property is the benefit it would
bring to the family. A guaranty agreement is without any consideration. This is especially so if the
spouse has abandoned the family. (BA Finance Corporation v. CA, G.R. No. L-61464, May 28, 1988).
The conjugal partnership cannot possibly be benefitted when the husband binds himself, as
guarantor, because this act does not conserve or augment conjugal funds but instead threatens to
dissipate them by unnecessary and unwarranted risks to the partnerships financial stability. When the
husband assumes the obligations of a guarantor, the presumption that he acts, as administrator, for
the benefit of the conjugal partnership, is lost. (BA Finance Corporation v. CA, G.R. No. 61464, May 28,
1988; Ting v. Villarin, G.R. No. 61754, August 17, 1989; Phil. Bank of Communications v. CA, et al., G.R.
No. 106858, September 5, 1997, 86 SCAD 599).
In Ayala Investment and Development Corp. v. CA, et al., G.R. No. 118305, February 12, 1998,
91 SCAD 663, it was ruled that surety obligations cannot be categorized as falling within the context of
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obligations for the benefit of the conjugal partnership. It is merely for the benefit of the principal
debtor, not for the surety of his family. There is no presumption if the husband enters into a surety or
accommodation agreement that is for the benefit of the family. Proof must be presented to establish
benefit redounding to the conjugal partnership.
Mortgage of conjugal property without consent of spouse is void; effect of subsequent
execution of a special power of attorney authorizing mortgage.
As a rule, a spouse cannot sell, encumber or mortgage a CP or AC property without the consent
of the other spouse, otherwise, it is void. however, the subsequent execution of the SPA can be made
to retroact to the date of the execution of the real estate mortgage as it cures the defect of such act,
because the execution of the SPA can be considered as acceptance of the mortgage by the other
spouse that perfected the contract or continuing offer.
Both Article 96 and Article 124 of the Family Code provide that the powers of the administration
do not include disposition or encumbrance without the written consent of the other spouse. Any
disposition or encumbrance without the written consent shall be void. However, both provisions also
state that the transaction shall be construed as a continuing offer on the part of the consenting spouse
and the third person, and may be perfected as a binding contract upon the acceptance by the other
spouse x x x before the offer is withdrawn by either or both offerors. (Arturo Sarte Flores v. Sps. Enrico
& Edna Lindo, G.R. No. 183984, April 13, 2011).
Void marriage; property relationship is governed by the rule on co-ownership.
Article 105 of the Family Code explicitly mandates that the Family Code shall apply to conjugal
partnerships established before the Family Code without prejudice to vested rights already acquired
under the Civil Code or other laws. Thus, under the Family Code, if the properties are acquired during
the marriage, the presumption is that they are conjugal. Hence, the burden of proof is on the party
claiming that they are not conjugal. This is counter-balanced by the requirement that the properties
must first be proven to have been acquired during the marriage before they are presumed conjugal.
(Villanueva v. Court of Appeals, 471 Phil. 394, 411 [2004]).
The applicable law, however, in so far as the liquidation of the conjugal partnership assets and
liability is concerned, is Article 129 of the Family Code in relation to Article 147 of the Family Code.
In a void marriage, as in those declared void under Article 36 of the Family Code, the property
relations of the parties during the period of cohabitation is governed either by Article 147 or Article 148
of the Family Code. Article 147 of the Family Code applies to union of parties who are legally
capacitated and not barred by any impediment to contract marriage, but whose marriage is
nonetheless void. (Virginia Ocampo v. Deogracio Ocampo, G.R. No. 198908, August 3, 2015, Peralta, J).
When Art. 147, applies.
This particular kind of co-ownership applies when a man and a woman, suffering no illegal
impediment to marry each other, exclusively live together as husband and wife under a void marriage
or without the benefit of marriage. It is clear, therefore, that for Article 147 to operate, the man and the
woman: (1) must be capacitated to marry each other; (2) live exclusively with each other as husband
and wife; and (3) their union is without the benefit of marriage or their marriage is void. The term
"capacitated" in the first paragraph of thse provision pertains to the legal capacity of a party to
contract marriage. This rule applies if the marriage is void under Article 36 of the Family Code on the
ground of psychological incapacity. (See Marietta N. Barrido v. Leonardo V. Nonato, G.R. No. 176492,
October 20, 2014).
From the foregoing, property acquired by both spouses through their work and industry should,
therefore, be governed by the rules on equal 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 to the same jointly if said
party's efforts consisted in the care and maintenance of the family household. Efforts in the care and
maintenance of the family and household are regarded as contributions to the acquisition of common
property by one who has no salary or income or work or industry. (Barrido v. Nonato, G.R. No. 176492,
October 20, 2014).
FAMILY HOME
Article 162, F.C., not retroactive.
The residential house and lot of defendant 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 3 August 1988, published in the Manila Chronicle on August 4, 1987 (1988 being a
leap year).
Defendants contention that it should be considered a family home from the time it was
occupied by him and his family in 1969 is not well-taken. Under Article 162 of the Family Code, The
provisions in this Chapter shall also govern existing family residences insofar as said provisions are
applicable. It does not mean that Articles 152 and 1153 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 exempted 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. (Modequillo v. Breva, G.R. No. 86355, May 31, 1990).
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When family home cannot be partitioned.


Article 159, FC shields the family home from immediate partition despite the death of one or
both spouses or of the unmarried head of the family for a period of ten (10) years for as long as there is
a minor beneficiary. The heirs cannot partition the same unless the court finds a compelling reason.
(Josef v. Santos, November 27, 2008). The purpose of the law is to avert the disintegration of the family
unit following the death of its head. The law preserves the family home as the physical symbol of family
love, security and unit by imposing the restrictions against extrajudicial or judicial partition. The law
applies even if the family home has passed by succession to the co-ownership of the heirs or even if
has been willed to anyone of them. (Arriola v. Arriola, January 28, 2008).
The family homes exemption from execution must be set up and proved to the Sheriff
before the sale of the property at public auction.
The exemption of the family home from attachment, levy or forced sale must be invoked as
soon as possible, otherwise, it is considered as waived. The failure to invoke and prove that the house
and lot was a family home is a waiver of such defense or right. In Honrado v. CA, 512 Phil. 657 (2005),
it was said that at no other time can the status of a residential house as a family home can be set up
and proved and its exemption from execution be claimed but before the sale thereof at public auction:
The settled rule is that the right to exemption or forced sale under Article 153 of
the Family Code is a personal privilege granted to the judgment debtor and as such, it
must be claimed not by the sheriff, but by the debtor himself before the sale of the
property at public auction. It is not sufficient that the person claiming exemption merely
alleges that such property is a family home. This claim for exemption must be set up and
proved to the Sheriff.
Having failed to set up and prove to the sheriff the supposed exemption of the subject property
before the sale thereof at public action, they now are barred from raising the same. Failure to do so
estop them from later claiming the said exemption. (De Mesa v. Acero, et al., G.R. No. 185064, January
16, 2012, Reyes, J).
Effect if there are improvements on family home.
Any subsequent improvement or enlargement of the family home by the persons constituting it,
its owners, or any of its beneficiaries will still be exempt from execution, forced sale or attachment
provided the following conditions obtain: (a) the actual value of thse property at the time of its
constitution has been determined to fall below the statutory limit; and (b) the improvement or
enlargement does not result in an increase in its value exceeding the statutory limit. Otherwise, the
family home can be the subject of a forced sale, and any amount above the statutory limit is applicable
to the obligations under Articles 155 and 160.
To warrant the execution sale of respondents family home under Article 160, petitioners needed
to establish these facts: (1) there was an increase in its actual value; (2) the increase resulted from
voluntary improvements on the property introduced by the persons constituting the family home, its
owners or any of its beneficiaries; and (3) the increased actual value exceeded the maximum allowed
under Article 157. (Sps. Eulogio v. Paterno Bell, Sr., et al., G.R. No. 186322, July 8, 2015, Sereno, J).
FILIATION AND PROOF OF THE SAME
Reason for the presumption of legitimacy of child
The law requires that every reasonable presumption be made in favour of legitimacy. The
rationale of this rule as explained in Cabatana v. CA, G.R. No. 124814, October 21, 2004, is that the
presumption of legitimacy does not only flow out of a declaration in the statute but based on the broad
principles of natural justice and the supposed virtue of the mother. It is grounded on the policy to
protect the innocent offspring from the odium of illegitimacy. (Gerardo Concepcion v. Court of Appeals,
G.R. No. 123450, August 31, 2005).
Application of Art. 168, F.C.
If the marriage is terminated and the mother contracted another marriage within three hundred
days after such termination of the former marriage, these rules shall govern in the absence of proof to
the contrary:
(1) A child born before one hundred eighty days after the solemnization of the subsequent
marriage is considered to have been conceived during the former marriage, provided it be born
within three hundred days after the termination of the former marriage;
(2) A child born after one hundred eighty days following the celebration of the subsequent
marriage is considered to have been conceived during such marriage, even though it be born
within the three hundred days after the termination of the former marriage. (Art. 168, F.C.)
Unsigned birth certificate not proof of filiation.
While it is true that the father did not sign the birth certificate, the placing of his name therein is
incompetent evidence of paternity, the rule does not apply if the father himself gave all the data
regarding the childs birth and caused his name to be placed therein as the childs father. Even if he did
not sign the certificate, the same is still competent proof that he is the father because he was the one
who supplied the data to the nurse. If he failed to sign the birth certificate, it was only because he left
the hospital quite early (He is bound by the principle of estoppel in pais). (Ilano v. CA, G.R. No. 104376,
February 23, 1994, 48 SCAD 432).
SSS Form indicating child as legitimate child is admission of legitimate filiation.
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The filiation of illegitimate children, like legitimate children, is established by (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 thereof, 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. 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. In fact, any authentic
writing is treated like SSS form indicating a child as illegitimate child not just a ground for
compulsory recognition; it is in itself a voluntary recognition that does not require a
separate action for judicial approval. Where, instead, a claim for recognition is predicated on other
evidence merely tending to prove paternity, i.e., outside of a record of birth, a will, a statement before
a court of record or an authentic writing, judicial action within the applicable statute of limitations is
essential in order to establish the childs acknowledgment. (Rodolfo Aguilar v. Edna G. Siasat, G.R. No.
200169, January 28, 2015, Del Castillo, J).
Effect if legitimacy is not impugn within the period; conclusive presumption of legitimacy.
There is perhaps no presumption of the law more firmly established and founded on
sounder morality and more convincing reason than the presumption that children born in
wedlock are legitimate. This presumption indeed becomes conclusive in the absence of proof that
there is physical impossibility of access between the spouses during the first 120 days of the 300 days
which immediately precedes the birth of the child due to (a) the physical incapacity of the husband to
have sexual intercourse with his wife; (b) the fact that the husband and wife are living separately in
such a way that sexual intercourse is not possible; or (c) serious illness of the husband, which
absolutely prevents sexual intercourse. Quite remarkably, upon the expiration of the periods set forth
in Article 170, and in proper cases Article 171, of the Family Code (which took effect on 03 August
1988), the action to impugn the legitimacy of a child would no longer be legally feasible and the status
conferred by the presumption becomes fixed and unassailable. (Rodolfo Aguilar v. Edna G. Siasat, G.R.
No. 200169, January 28, 2015, Del Castillo, J).
Unsigned autobiography of the father is sufficient evidence of filiation.
An unsigned autobiography of the father where he stated that he is the father of the fetus
inside the womb of his girlfriend is a proof of filiation, hence, the child can use the surname of his
father.
Article 176 of the Family Code, as amended by R.A. 9255, permits an illegitimate child to use
the surname of his/her father if the latter had expressly recognized him/her as his offspring through the
record of birth appearing in the civil register, or through an admission made in a public or private
handwritten instrument. The recognition made in any of these documents is, in itself, a consummated
act of acknowledgment of the childs paternity; hence, no separate action for judicial approval is
necessary (De Jesus v. Estate of Juan Dizon, G.R. No. 142877, October 2, 2001, 366 SCRA 499).
Article 176 of the Family Code, as amended, does not, indeed, explicitly state that the private
handwritten instrument acknowledging the childs paternity must be signed by the putative father.
This provision must, however, be read in conjunction with related provisions of the Family Code which
require that recognition by the father must bear his signature, thus:
Art. 175. Illegitimate children may establish their illegitimate filiation in the same
way and on the same evidence as legitimate children.
xxxx
Art. 172. The filiation of legitimate children is established by any of the following:
(1) The record of birth appearing in the civil register or a final
judgment; or
(2) An admission of legitimate filiation in a public document or a
private handwritten instrument and signed by the parent
concerned.
That a father who acknowledges paternity of a child through a written instrument must affix his
signature thereon is clearly implied in Article 176 of the Family Code. Paragraph 2.2, Rule 2 of A.O. No.
1, Series of 2004,merely articulated such requirement; it did not unduly expand the import of Article
176 as claimed by petitioners. (Dela Cruz vs. Gracia, 594 SCRA 649, G.R. No. 177728, July 31, 2009)
Putative father of an illegitimate child was the informant of the live birth; he is considered
the father; considered as recognition.
The father had duly acknowledged the child as his illegitimate son. The birth certificate of the
child appearing in the Register of Births showed that the father had himself caused the registration of
his birth, he being the informant of the live birth to be registered. Considering that the putative father,
had a direct hand in the preparation of the birth certificate, reliance on the birth certificate of Anacleto
as evidence of his paternity was fully warranted. It is settled that a certificate of live birth purportedly
identifying the putative father is not competent evidence as to the issue of paternity, when there is no
showing that the putative father had a hand in the preparation of said certificates, and the Local Civil
Registrar is devoid of authority to record the paternity of an illegitimate child upon the information of a
third person. Simply put, if the alleged father did not intervene in the birth certificate, e.g., supplying
the information himself, the inscription of his name by the mother or doctor or registrar is null and void;
the mere certificate by the registrar without the signature of the father is not proof of voluntary
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acknowledgment on the latters part. (Alejandra Arado Heirs, etc. v. Anacleto Alarcon, et al., G.R. No.
163362, July 8, 2015, Bersamin, J, citing Jison v. Court of Appeals, G.R. No. 124853, February 24, 1998,
286 SCRA 495, 523).
Collateral attack on legitimacy; seconday evidence in proof of filiation.
Proof of legitimacy under Article 172, or illegitimacy under Article 175, should only be raised in
a direct and separate action instituted to prove the filiation of a child. The rationale behind this
procedural prescription is that the presumption of legitimacy in the Family Code x x x actually fixes a
civil status for the child born in wedlock, and that civil status cannot be attacked collaterally. The
legitimacy of the child can be impugned only in a direct action brought for that purpose, by the proper
parties, and within the period limited by law. This action can be brought only by the husband or his
heirs and within the periods fixed in the present articles.
Upon the expiration of the periods provided in Article 170, the action to impugn the legitimacy
of a child can no longer be brought. The status conferred by the presumption, therefore, becomes fixed,
and can no longer be questioned. The obvious intention of the law is to prevent the status of a child
born in wedlock from being in a state of uncertainty for a long time. It also aims to force early action to
settle any doubt as to the paternity of such child, so that the evidence material to the matter, which
must necessarily be facts occurring during the period of the conception of the child, may still be easily
available.
Only the husband can contest the legitimacy of a child born to his wife. He is the one directly
confronted with the scandal and ridicule which the infidelity of his wife produces; and he should decide
whether to conceal that infidelity or expose it, in view of the moral and economic interest involved. It is
only in exceptional cases that his heirs are allowed to contest such legitimacy. Outside of these cases,
none even his heirs can impugn legitimacy; that would amount to an insult to his memory.
(Geronimo v. Santos, G.R. No. 197099, September 28, 2015, Villarama, J; Jison v. Court of Appeals, G.R.
No. 124853, February 24, 1998, 286 SCRA 495, 523).
Surname of illegitimate child.
Under Article 176 of the Family Code as amended by Republic Act (RA) No. 9255, which took
effect on March 19, 2004, illegitimate children shall use the surname of their mother, unless their father
recognizes their filiation, in which case they may bear the fathers surname. In Wang vs. Cebu Civil
Registrar, it was held that an illegitimate child, whose filiation is not recognized by the father, bears
only a given name and his mothers surname. The name of the unrecognized illegitimate child identifies
him as such. It is only when said child is recognized that he may use his fathers surname, reflecting his
status as an acknowledged illegitimate child. (Alba, et al. vs. CA, et al., 465 SCRA 495, G.R. No. 164041
July 29, 2005)
An illegitimate child recognized by his father cannot be compelled to use his surname.
An illegitimate child may carry the surname of the father if he was recognized.
Article 176 of the Family Code as amended by RA 9255 provides that illegitimate children shall
use the surname and shall be under the parental authority of their mother, and shall be entitled to
support in conformity with this Code. However, illegitimate children may use the surname of their
father if their filiation has been expressly recognized by their father through the record of birth
appearing in the civil register, or when an admission in a public document or private handwritten
instrument is made by the father. Provided, the father has the right to institute an action before the
regular courts to prove non-filiation during his lifetime. The legitime of each illegitimate child shall
consist of one-half of the legitime of a legitimate child.
The general rule is that an illegitimate child shall use the surname of his or her mother. The
exception provided by RA 9255 is, in case his or her filiation is expressly recognized by the father
through the record of birth appearing in the civil register or when an admission in a public document or
private handwritten instrument is made by the father. In such a situation, the illegitimate child may use
the surname of the father. (Grace Grande v. Patricio Antonio, G.R. No. 206248, February 18, 2014,
Velasco, J).
Child has the right to decide whether to use or not to use surname of father.
Art. 176 gives illegitimate children the right to decide if they want to use the surname of their father or
not. It is not the father or the mother who is granted by law the right to dictate the surname of their
illegitimate children. On its face, Art. 176, as amended, is free from ambiguity. And where there is no
ambiguity, one must abide by its words. The use of the word "may" in the provision readily shows that
an acknowledged illegitimate child is under no compulsion to use the surname of his illegitimate father.
The word "may" is permissive and operates to confer discretion upon the illegitimate children. On the
matter of childrens surnames, the use of the fathers surname does not serve the best interest of the
minor child. Indeed, the rule regarding the use of a childs surname is second only to the rule requiring
that the child be placed in the best possible situation considering his circumstances. (GRACE M.
GRANDE v. PATRICIO T. ANTONIO, G.R. No. 206248, February 18, 2014, Velasco, Jr., J.)
Judgment involving the custody of a child not res judicata to any future action of the same
nature.
The order granting provisional custody to one of the spouses does not disregard the res
judicata rule. The matter of custody is not permanent and unalterable and can always be re-examined
and adjusted (Espiritu v. CA, G.R. No. 115640, March 15, 1995, 242 SCRA 362). In Dacasin v. Dacasin,
G.R. No. 168785, February 5, 2010, 611 SCRA 657, it was ruled that a custody agreement can never be
regarded as permanent and unbending, the simple reason being that the situation of the parents and
even of the child can change, such that sticking to the agreed arrangement would no longer be to the
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10

latters best interest. In a very real sense, then, a judgment involving the custody of a minor child
cannot be accorded the force and effect of res judicata.
The matter of custody is not permanent and unalterable. If the parent who was given custody
suffers a future character change and becomes unfit, the matter of custody can always be re-examined
and adjusted x x x. To be sure, the welfare, the best interests, the benefit, and the good of the child
must be determined as of the time that either parent is chosen to be the custodian. (Espiritu v. CA,
supra.; Geoffrey Beckett v. Judge Olegario Sarmiento, Jr., A.M. No. RTJ-12-2326, January 10, 2013).
No separation from mother child below 7; exception.
In disputes concerning post-separation custody over a minor, the well-settled rule is that no
child under seven (7) years of age shall be separated from the mother, unless the court finds
compelling reasons to order otherwise. (Art. 23, F.C.). And if already over 7 years of age, the childs
choice as to which of his parents he prefers to be under custody shall be respected, unless the parent
chosen proves to be unfit. In Perez v. Court of Appeals, G.R. No. 118870, March 29, 1996, 255 SCRA
661, it was held that in custody cases, the foremost consideration is always the welfare and best
interest of the child, as reflected in no less than the U.N. Convention on the Rights of the Child which
provides that [i]n all actions concerning children, whether undertaken by public or private social
welfare institutions, courts of law, administrative authorities or legislative bodies, the best interests of
the child shall be a primary consideration. (Article 3, number 1, CONVENTION ON THE RIGHTS OF THE
CHILD, Adopted by the General Assembly of the United Nations on November 20, 1989).
Code Commissions reason.
The general rule that children under seven years of age shall not be separated from their
mother finds its raison detre in the basic need of minor children for their mothers loving care. In
explaining the rationale for Article 363 of the Civil Code, the Code of Commission stressed thus:
The general rule is recommended in order to avoid a tragedy where a mother
has a 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 mothers heart is not to be unduly hurt. If she 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)
In Lacson vs. San Jose-Lacson, 133 Phil. 884 (1968), the Court held that the use of shall in
Article 363 of the Civil Code and the observations made by the Code Commission underscore the
mandatory character of the word. Holding in that case that it was a mistake to deprive the mother of
custody of her two children, both then below the age of seven, the Court stressed:
Article 363 prohibits in no uncertain terms the separation of a mother and her
child below seven years, unless such a separation is grounded upon compelling reasons
as determined by a court.
In like manner, the word shall in Article 213 of the Family Code and Section 6 of the Rule 99 of
the Rules of Court has been held to connote a mandatory character. Article 213 and Rule 99 similarly
contemplate a situation in which the parents of the minor are married to each other, but are separated
by virtue of either a decree of legal separation or a de facto separation (Briones vs. Miguel, G.R. No.
156343, October 18, 2004). In the present case, the parents are living separately in fact.(PabloGualberto vs. Gualberto V, 461 SCRA 450, G.R. Nos. 154994 and 156254, June 28, 2005)
As a rule, the legally wedded spouse has the right to have custody of the remains of
deceased spouse; rule.
The surviving spouse is entitled to the remains of the deceased. The duty and the right to make
arrangements for the funeral of a relative shall be in accordance with the order established for support,
under Article 294. In case of descendants of the same degree, or of brothers and sisters, the oldest
shall be preferred. In case of ascendants, the paternal shall have a better right. (Art. 305, NCC).
Whenever two or more persons are obliged to give support, the liability shall devolve upon the
following persons in the order herein provided:
(1) The spouse;
(2) The descendants in the nearest degree;
(3) The ascendants in the nearest degree; and
(4) The brothers and sisters. (294a) (Art. 199, F.C.).
Further, the Civil Code provides that no human remains shall be retained, interred, disposed of
or exhumed without the consent of the persons mentioned in Articles 294 and 305. (Art. 308, NCC).
Section 1103 of the Revised Administrative Code provides that if the deceased was a married
man or woman, the duty of the burial shall devolve upon the surviving spouse if he or she possesses
sufficient means to pay the necessary expenses.
It is thus, undeniable that the law simply confines the right and duty to make arrangements to
the members of the family to the exclusion of ones common-law partner. (Fe Flore Valino v. Adriano, et
al., G.R. No. 182894, April 22, 2014, Mendoza, J).
ADOPTION
Nature of adoption.
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Adoption is a juridical act that creates between two persons certain relations, purely civil, of
paternity and filiation. The adopted becomes a legitimate child of the adopter with reciprocal rights and
obligations arising from that relationship. Consequently, the child has the right to bear the surname of
the adopter, receive support and to inherit. (Art. 189, Family Code).
The relationship established by adoption is limited to the adopting parents and does not extend
to their other relatives, except as expressly provided by law. Thus, the adopted child cannot be
considered as a relative of the ascendants and collaterals of the adopting parents, nor of the legitimate
children which they may have after the adoption, except that the law imposes certain impediments to
marriage by reason of adoption. Neither are the children of the adopted considered descendants of the
adopter. (Santos, Jr. v. Republic, 21 SCRA 379). Hence, no relationship is created between the adopted
and the collaterals of the adopting parents. As a consequence, the adopted is an heir of the adopters,
but not of the relatives of the adopter. (Teotico v. Del Val, 13 SCRA 406).
Middle name of an adopted is surname of biological mother; reason.
First, it is necessary to preserve and maintain the childs filiation with her natural mother
becase under Article 189 of the Family Code, she remains to be an intestate heir of the latter. Thus, to
prevent any confusion and needless hardship in the future, her relationship or proof of that relationship
with her natural mother should be maintained.
Second, there is no law prohibiting the adopted to use the surname of her natural mother as her
middle name. What the law does not prohibit, it allows.
Last, it is customary for every Filipino to have a middle name, which is ordinarily the surname of
the mother. This custom has been recognized by the Civil Code and Family Code. In fact, the Family Law
Committees agreed that the initial or surname of the mother should immediately precede the surname
of the father so that the second name, if any, will be before the surname of the mother. (In the Matter
of Adoption of Stephanie Nathy Astorga Garcia, Honorato Catindig, Petititioner, G.R. No. 148311, March
31, 2005).
PARENTAL AUTHORITY
Welfare of child is of utmost importance.
The paramount consideration in matters of custody of a child is the welfare and well-being of
the child. (Silva v. CA, 275 SCRA 609; Cervantes v. Fajardo, 169 SCRA 575). Strong bias is created in
favour of the mother. The reason is to avoid a tragedy where a mother has seen her baby torn away
from her. No man can sound the deep sorrow of a mother who is deprived of her child of tender age.
The exception is when there is a competing reason or reasons like neglect, abandonment,
unemployment and immorality, habitual drunkenness, drug addiction, maltreatment of the child,
insanity, and affliction with a communicable illness. (Perez v. CA, 255 SCRA 661). In this case, the father
was given temporary custody as the mother, a nurse, left for the USA. If the child however is 7 years
and above, he can make a choice but not binding upon the courts. (See Santos v. CA; Tonog v. CA, et
al., G.R. No. 122906, February 6, 2002; Agnes Gamboa-Hirsch v. CA, et al., G.R. No. 174485, July 11,
2007; Malto v. People, G.R. No. 164733, September 27, 2007).
CHANGE OF NAME
Grounds for Change of Name (RA 9048)
The petition for change of first or nickname may be allowed in any of the following cases:
1. The petitioner finds the first name or nickname to be ridiculous, tainted with dishonor or
extremely difficult to write or pronounce;
2. The new first name or nickname has been habitually and continuously used by the petitioner
and he has been publicly known by that first name or nickname in the community; or
3. The change will avoid confusion. (Sec. 4, RA 9048)
Sex reassignment not a ground for change of name.
RA 9048 does not sanction a change of first name on the ground of sex reassignment. Rather
than avoiding confusion, changing petitioners first name for his declared purpose may only create
grave complications in the civil registry and the public interest.
Before a person can legally change his given name, he must present proper or reasonable
cause or any compelling reason justifying such chance. In addition, he must show that he will be
prejudiced by the use of his true and official name. In this case, he failed to show, or even allege, any
prejudice that he might suffer as a result of using his true and official name. In this case, he failed to
show, or even allege, any prejudice that he might suffer as a result of using his true and official name.
Under RA 9048, a correction in the civil registry involving the change of sex is not a mere
clerical or typographical error. It is a substantial change for which the applicable procedure is Rule 108
of the Rules of Court. Furthermore, there is no special law in the Philippines governing sex
reassignment and its effects. (Rommel Jacinto Dantes Silverio v. Republic, G.R. No. 174689, October 22,
2007).
PROPERTY
Mortgage of building independently of the land.
While a mortgage of a parcel of land necessarily includes the improvements thereon in the
absence of a stipulation on the improvement thereon like a building, still, a building by itself may be
mortgaged apart from the land on which it has been built. Such mortgage would still be a real estate
mortgage for the building would still be considered immovable even if dealt with separately and apart
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from the land (Leung Yee vs. Strong Machinery Co., 37 Phil. 644). The real estate mortgage over
machineries and equipments is even in accord with the classification of such properties by the Civil
Code as immovable property. (Art. 415, NCC; Star Two [SVP-AMC] Inc. v. Paper City Corp. of the
Philippines, G.R. No. 169211, March 6, 2013)
Machinery is movable; exception.
Machinery is a rule movable. However, if it was placed by the owner on his land or building to
respond to his needs and industry it is considered as immovable by destination. The machinery is a
movable property if it was placed by the tenant, not by the owner. Immobilization by destination cannot
be made by one who is not the owner of the land. However, if there is an agreement in the lease
contract that the machinery shall be owned by the lessor after the expiration of the contract, it is
considered as an immovable because the lessee becomes the agent of the lessor. (Davao Sawmills Co.
v. Castillo, 61 Phil. 709).
Builder in good faith; owner makes the choice.
The landowner can choose between appropriating the building by paying the proper indemnity
or obliging the builder to pay the price of the land, unless its value is considerably more than that of
the structures, in which case the builder in good faith shall pay reasonable rent. If the parties cannot
come to terms over the conditions of the lease, the court must fix the terms thereof.
The choice belongs to the owner of the land, a rule that accords with the principle of accession,
i.e., that the accessory follows the principal and not the other way around. Even as the option lies with
the landowner, the grant to him, nevertheless, is preclusive. (PNB v. De Jesus, 411 SCRA 557 [2003]).
The landowner cannot refuse to exercise either option and compel instead the owner of the building to
remove it from the land. (Rosales, et al. v. Castellfort, et al., G.R. No. 157044, October 5, 2005 citing
Technogas Phils. Mfg. Corp. v. CA, 268 SCRA 5 [1997]).
Reasons for the law
The raison detre for the law is that, where the builder, planter or sower has acted in good faith,
a conflict of rights arises between the owners, and it becomes necessary to protect the owner of the
improvements without causing injustice to the owner of the land. In view of the impracticability of
creating a state of forced co-ownership, the law has provided a just solution by giving the owner of the
land the option to acquire the improvements after payment of the proper indemnity, or to oblige the
builder or planter to pay for the land and the sower the proper rent. He cannot refuse to exercise the
option, because his right is older, and because, by principle of accession, he is entitled to the
ownership of the accessory thing (Depra v. Dumlao, 136 SCRA 475 [1985]).
Intent of Art. 448, NCC.
The primary intent of Article 448 is to avoid a state of forced co-ownership and that the parties,
including the two courts below, in the main agree that Articles 448 an 546 of the Civil Code are
applicable and indemnity for the improvements may be paid although they differ as to the basis of the
indemnity.
The objective of Article 546 of the Civil Code is to administer justice between the parties
involved. In this regard, it has been ruled in Rivera v. Roman Catholic Archbishop of Manila, 40 Phil.
717, that the said provision was formulated in trying to adjust the rights of the owner and possessor in
good faith of a piece of land, to administer complete justice to both of them in such a way as neither
one nor the other may enrich landowner of that which does not belong to him. Guided by this precept,
it is therefore the current market value of the improvements which should be made in the basis of
reimbursement. A contrary ruling would unjustly enrich the landowner who would otherwise be allowed
to acquire a highly valued income yielding four-unit apartment building for a measly amount.
Consequently, the parties should therefore be allowed to adduce evidence on the present market value
of the apartment building upon which the trial court should base its finding as to the amount of
reimbursement to be paid by the landowner.
Lessee not a builder in good faith.
Lessees are not builders in good faith. They came into possession of the lot by virtue of a
contract of lease executed by petitioners mother in their favor. They are then estopped to deny their
landlords 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.
(Munar v. CA, 56 SCAD 787, 230 SCRA 372). This estoppel applies even though the lessor had to title at
the time. The relation of lessor and lessee was created and may be asserted not only by the original
lessor, but also by those who succeed to his title. (49 Am. Jur. 122, 152; Feliciano v. Sps. Zaldivar, G.R.
No. 162593, September 26, 2009; Federico Geminiano, et al. v. CA, et al., G.R. No. 120303, July 24,
1996).
Being mere lessees, they knew that their occupation of the premises would continue only for
the life of the lease plainly, they cannot be considered as possessors nor builders in good faith. (Racaza
v. Susana Realty, Inc., 18 SCRA 1172; Vda. de Bacaling v. Laguna, 54 SCRA 243; Santos v. CA, 221 SCRA
42; Garbito v. CA, G.R. No. 77976, November 24, 1988).
Donation of purchased money must be in writing.
The contract is one of loan, not a donation if there was a contract to sell over a property owned
by the GSIS but due to failure to pay the amortization she sought for financial assistance from her
brother who paid the balance. The contention that there was payment out of generosity, hence there
was a donation is not correct.
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There was no compliance with the formal requisite that it be in writing, hence, there can be no
donation. She never presented a copy of the written agreement evidencing the same. In Moreno-Lentfer
v. Wolff, 484 Phil. 552 [2004], it was said that a donation must comply with the mandatory formal
requirements set forth by law for its validity. When the subject of donation is purchase money, Article
748 of the NCC is applicable. Accordingly, the donation of money as well as its acceptance should be in
writing. Otherwise, the donation is invalid for non-compliance with the formal requisite prescribed by
law. (Carinan v. Sps. Cueto, G.R. No. 198636, October 8, 2014, Reyes, J).
Quieting of title imprescriptible; when.
If the plaintiff is in possession, the action to quiet title does not prescribe because the owners is
given the continuing aid by the court to ascertain and determine the nature of such claim and its effect
on his title. He can wait until his possession is disturbed and attacked before taking steps to vindicate
his right. (Sapto v. Fabiana, 103 Phil. 683; Rodolfo Coronel v. IAC, October 29, 1987).
If plaintiff is not in possession, it may prescribe. The rationale of the rule is that he owner of real
property who is in possession thereof may wait until his possession is invaded or his title is attacked
before taking steps to vindicate his right. A person claiming title to real property, but not in possession
thereof, must act affirmatively and within the time provided by law. Possession is a continuing right as
is the right to defend such possession x x x. (See Coronel v. IAC, 155 SCRA 270; Solid State MultiProducts Corp. v. CA, 196 SCRA 630 [1991]; Ragasa v. Sps. Roa, G.R. No. 141964, June 30, 2006; Pingol
v. CA, et al., G.R. No. 102909, September 6, 1993, 44 SCAD 498).
Nature of and requisites of quieting of title.
Quieting of title is a common law remedy for the removal of any cloud upon, doubt, or
uncertainty affecting title to real property. Whenever there is a cloud on title to real property or any
interest in real property by reason of any instrument, record, claim, encumbrance, or proceeding that is
apparently valid or effective, but is, in truth and in fact, invalid, ineffective, voidable, or unenforceable,
and may be prejudicial to said title, an action may be brought to remove such cloud or to quiet the title.
In such action, the competent court is tasked to determine the respective rights of the complainant and
the other claimants, not only to place things in their proper places, and make the claimant, who has no
rights to said immovable, respect and not disturb the one so entitled, but also for the benefit of both, so
that whoever has the right will see every cloud of doubt over the property dissipated, and he can
thereafter fearlessly introduce any desired improvements, as well as use, and even abuse the property.
In order that an action for quieting of title may prosper, two requisites must concur: (1) the
plaintiff or complainant has a legal or equitable title or interest in the real property subject of the
action; and (2) the deed, claim, encumbrance, or proceeding claimed to be casting cloud on his title
must be shown to be in fact invalid or inoperative despite its prima facie appearance of validity or legal
efficacy.
xxxx
Thus, the cloud on title consists of: (1) any instrument, record, claim, encumbrance or
proceeding; (2) which is apparently valid or effective; (3) but is in truth and in fact invalid, ineffective,
voidable, or unenforceable; and (4) may be prejudicial to the title sought to be quieted. x x x. (Phil-Ville
Development and Housing Corporation v. Bonifacio, G.R. No. 167391, June 8, 2011, 651 SCRA 327, 341347).
CO-OWNERSHIP
Co-owner cannot acquire by prescription.
The possession of a co-owner is like that of a trustee and shall not be regarded adverse to the
co-owners but in fact as beneficial to all of them. Acts which may be considered adverse to strangers
may not be considered adverse insofar as co-owners are concerned. A mere silent possession by a coowner, his receipt of rents, fruits or profits from the property, the erection of buildings an fences, and
the planting of trees thereon, and the payment of land taxes, cannot serve as proof of exclusive
ownership, if it is not borne out by clear and convincing evidence that he exercised acts of possession
which unequivocably constituted an ouster or deprivation of the right of the other co-owners. (Aguirre,
et al. v. CA, et al., G.R. no. 122249, January 29, 2004 citing Salvador v. CA, 243 SCRA 329; Carmen
Fangonil-Herrera v. Tomas Fangonil, et al., G.R. No. 169359, August 28, 2007).
When prescription runs against co-owners.
Prescription as a rule does not run against co-owners and co-heirs as long as the co-ownership
is expressly or impliedly recognized.
The exception is when there is repudiation, provided that the following requisites are present;
1. He must make known to the others that he is repudiating the co-ownership and claiming
complete ownership of the entire property. (Trinidad v. CA, et al., G.R. No. 118904, April 20,
1998, 93 SCAD 610).
2. Evidence of repudiation and knowledge of others is clear and convincing.
3. There is open, continuous, peaceful, public and adverse possession for a period of time required
under the law. (Santos v. Heirs of Crisostomo, 41 Phil. 342; Galvez, et al. v. CA, et al., G.R. No.
157954, March 26, 2006).
Concept of unlawfully deprived.
The term or phrase unlawfully deprived extends to all cases where there has been no valid
transmission of ownership, including a depositary or a lessee who has sold the same. (Dizon v. Suntay,
47 SCRA 160; Ledesma v. CA, et al., G.R. No. 86051, September 1, 1992; EDCA Publishing and
Distributing Corp. v. Santos, 184 SCRA 614 [1990]).
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If there was a perfected unconditional contract of sale between the seller and the buyer and the
former voluntarily caused the transfer, title thereto was acquired. The subsequent dishonor of the
check merely amounted to a failure of consideration which does not render the contract of sale void,
but merely allows the prejudiced party to sue for specific performance or rescission of the contract and
to prosecute the impostor for estafa under Art. 315, RPC. (Ledesma v. CA, et al., G.R. No. 86051,
September 1, 1992).
Partition is imprescriptible; exception.
The contention that partition is already barred by res judicata since the first case for partition
was dismissed for failure to prosecute is not correct.
The dismissal with prejudice under Rule 17, Sec. 3 of the Rules of Court cannot defeat the right
of a co-owner to ask for partition at any time, provided that there is no actual adjudication of ownership
of shares yet. The rule is so because no co-owner shall be obliged to remain in the co-ownership. Each
co-owner may demand at any time the partition of the thing owned in common, insofar as his share is
concerned.
The law generally does not favor the retention of co-ownership as a property relation, and is
interested instead in ascertaining the co-owners specific shares so as to prevent the allocation of
portions to remain perpetually in limbo. Thus, the law provides that each co-owner may demand at any
time the partition of the thing owned in common. (Quintos, et al. v. Nicolas, et al., G.R. No. 210252,
June 16, 2014, Velasco, J).
Between dismissal with prejudice under Rule 17, Sec. 3 and the right granted to co-owners
under Art. 494 of the Civil Code, the latter must prevail. To construe otherwise would diminish the
substantive right of a co-owner through the promulgation of procedural rules. Such a construction is not
sanctioned by the principle, that a substantive law cannot be amended by a procedural rule. (Philippine
National Bank v. Asuncion, 170 Phil. 356 [1977]).
Thus, for the Rules to be consistent with statutory provisions, it was held that Art. 494, NCC is
an exception to Rule 17, Sec. 3 of the Rules of Court to the effect that even if the order of dismissal for
failure to prosecute is silent on whether or not it is wnhith prejudice, it shall be deemed to be without
prejudice.
Possession
Distinguish occupation from possession.
Occupation and possession are distinguished, as follows:
1. Occupation is a mode of acquiring ownership while possession is not;
2. Occupation itself, when proper, confers ownership; but possession does not by itself give
rise to ownership (II Tolentino, Civil Code, 1992 ed., p. 489).
3. Only corporeal things can be the object of occupation; whereas, not only things but likewise
rights can be the object of possession;
4. A parcel of land cannot be the object of occupation while the same can be the object of
possession (Art. 714, NCC);
5. Occupation can take place only with respect to property without an owner; while possession
can refer to all kinds of property, whether with or without an owner (II Tolentino, Civil Code,
1992, ed., p. 489).
Concept of tacking of possession.
Under the law, possession of hereditary property is deemed transmitted to the heir without
interruption and upon the moment of death of the decedent if inheritance is accepted. In the case, it
was accepted since he continued possessing the land. This is so because an heirs possession is tacked
to the possession of his father. In the computation of the time necessary for prescription, the present
possessor may complete the period for prescription by tacking his possession to that of his grantor or
predecessor-in-interest. (Art. 1138; 533, NCC)
Remedy of owner of movable if unlawfully deprived.
Under the law, one who has lost any movable or has been unlawfully deprived thereof, may
recover it from the person in possession of the same. (Art. 559, NCC)
The term or phrase unlawfully deprived extends to all cases where there has been no valid
transmission of ownership, including a depositary or a lessee who has sold the same. (Dizon vs. Suntay,
47 SCRA 160; Ledesma vs. CA, et al., G.R. No. 86051, Sept. 1, 1992; EDCA Publishing and Distributing
Corp. vs. Santos, 184 SCRA 614 [1990])
Effect if check was dishonored; not unlawfully deprived.
If a person issues a check in payment of an obligation and the check bounces, the other party is
not considered unlawfully deprived within the meaning of the law. In Ledesma vs. CA, et al., G.R. No.
86051, Sept. 1, 1992, it was said that there was a perfected unconditional contract of sale between the
seller and the buyer. The former voluntarily caused the transfer. Title thereto was acquired. The
subsequent dishonor of the check merely amounted to a failure of consideration which does not render
the contract of sale void, but merely allows the prejudiced party to sue for specific performance or
rescission of the contract and to prosecute the impostor for estafa under Art. 315, RPC.
USUFRUCT
Extinguishment of usufruct.

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Usufruct may be deemed terminated or extinguished by the occurrence of the resolutory


conditions provided in the title creating the usufruct. The deterioration of the relations of the kins to
almost irretrievable level is a good reason fo/r the termination of the usufruct. This is aside from the
provisions of Article 603, NCC. (Moralidad v. Sps. Pernes, G.R. No. 152809, August 3, 2009).
By express provision of law as usufructuary he does not have the right to reimbursement for the
improvements he may have introduced on the property. Under the law the usufructuary may make on
the property held in usufruct such useful improvements for mere pleasure as he may deem proper,
provided he does not alter its form or substance; but he shall have no right to be indemnified. He may,
however, remove such improvements, should it be possible to do so without damage to the property.
(Art. 579, NCC).
The usufructuary may set off the improvements he may have made on the property against any
damage to the same. (Art. 580, NCC).
If the rule on reimbursement or indemnify were otherwise, then the usufructuary might improve
the owner out of his property. He may, however, remove or destroy the improvements they may have
introduced thereon without damaging the property.
EASEMENT
Voluntary easement may not be extinguished by an action in court.
The opening of an adequate outlet to a highway can extinguish only legal or compulsory
easements, not voluntary easements. The fact that an easement by grant may have also qualified as
an easement of necessity does not detract from its permanency as a property right, which survives the
termination of the necessity. (La Vista Assn. Inc. v. CA, G.R. No. 95252, September 5, 1997, 287 SCRA
498). A voluntary easement of right of way, like any other contract, could be extinguished only by
mutual agreement or by renunciation of the owner of the dominant estate. (La Vista case; Unisource
Commercial & Dev. Corp. v. Chung, et al., G.R. No. 173252, July 17, 2009).
Agreement on easement binding upon the parties and their heirs.
That the heirs or assigns of the parties were not mentioned in the annotation does not mean
that it is not binding on them. Again, a voluntary easement of right of way is like any other
contract. As such, it is generally effective between the parties, their heirs and assigns, except in case
where the rights and obligations arising from the contract are not transmissible by their nature, or by
stipulation or by provision of law. (Art. 1311, NCC). Petitioner cites City of Manila v. Entote, L-24776,
June 28, 1974, 57 SCRA 497) in justifying that the easement should bind only the parties mentioned
therein and exclude those not so mentioned. However, that case is inapplicable since the issue therein
was whether the easement was intended not only for the benefit of the owners of the dominant estate
but of the community and the public at large. In interpreting the easement, the clause any and all
other persons whomsoever in the easement embraces only those who are privy to the owners of the
dominant estate and excludes the indiscriminate public from the enjoyment of the right-of-way
easement. (Unisource Commercial & Dev. Corp. v. Chung, et al., G.R. No. 173252, July 17, 2009).
Permanent easement; survives termination of necessity.
When the easement in this case was established, the parties unequivocally made provision for
its observance by all who, in the future might succeed them in dominion. So, it is permanent in
character, which was annotated on each and all of the transfer certificates of title.
Even assuming that with the demolition of the house by owner, the necessity for the
passageway ceased still such fact does not detract from its permanency as a property right which
survives the termination of the necessity.
It is true that the private respondent is the owner of the portion on which the right of way had
been established and that an easement cannot impair ownership, but the petitioner is not claiming the
easement or any part of the property as its own, rather, it is seeing to have private respondent respect
the easements already existing thereon. (Benedicto v. CA, 25 SCRA 145).
Reckoning period in computing the acquisition by prescription of a positive and a negative
easement.
(1) In a positive easement, the period shall be computed from the day the owner of the dominant
estate or the person who made use of it commenced to exercise it upon the servient estate.
(2) In a negative easement, the period shall be computed from the day the dominant estate
forbade by an instrument acknowledged before a notary public, the owner of the servient estate
from exercising an act which would be lawful without the easement. (Art. 621, NCC)
Effect of existence of apparent sign of easement.
Under the provision of Article 624 of the New Civil Code, the existence of an apparent sign of
easement between two estates, established or maintained by the owner of both, shall be considered,
should either of them be alienated, as a title in order that the easement may continue actively and
passively, unless, at the time the ownership of the two estates is divided, the contrary should be
provided in the title of conveyance of either of them, or the sign aforesaid should be removed before
the execution of the deed. This provision shall also apply in case of the division of a thing owned in
common by two or more persons.
Example of this rule is a case where there is an apparent sign of the existence of an easement
of light and view involving two estates originally owned by one and the same person. This is indicated
by the doors and windows of the house in the southern portion overlooking the northern portion. The
sign was established by the original owner. The southern portion was subsequently alienated to Y and
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the northern portion to Z. Furthermore, nothing contrary to the easement was stated in the deed of
conveyance; neither was the sign removed. Therefore, the easement of light and view shall now be
protected by law. Z cannot construct his building unless he complies with the three-meter rule as
provided by law (See Gargantos vs. Tan Yanon, 108 Phil. 888). Reason: Easement is inseparable from
the estate to which it belongs.
Easement to be established at point least prejudicial.
Where there are several tenements surrounding the dominant estate, and the easement may be
established on any of them, the one where the way is shortest and will cause the least damage should
be chosen. The conditions of least damage and shortest distance are both established in one
tenement, which is the petitioners property. (Sta. Maria v. CA, et al., G.R. No. 127549, January 28,
1998, 91 SCA 65; Alicia Reyes v. Sps. Valentin, G.R. No. 194488, February 11, 2015).
There must be proof that the easement must be established at a point least prejudicial to the
servient estate. If the servient estate is only 164 meters, an improvident imposition of the easement on
the lot may unjustly deprive the owner of the optimum use and enjoyment of the property considering
that its already small area will be reduced further by the easement. Worst, it may even render the
property useless for the purpose useless for which it is intended. (Cristobal, et al. v. CA, et al., G.R. No.
125339, June 22, 1998, 95 SCAD 44).
Requisites of easement of right of way.
The owners of the dominant estate, may validly claim a compulsory right of way only after they
had established the four requisites under Arts. 649 and 650 of the NCC, to wit:
1. The dominant estate is surrounded by the other immovables and is without adequate outlet to a
public highway;
2. After payment of proper indemnity;
3. The isolation was not due to the proprietors own acts; and
4. The right of way claimed is at a point least prejudicial to the servient estate. (La Vista Assn., Inc.
v. CA, et al., G.R. No. 95252, September 5, 1997, 86 SCAD 551; Cristobal, et al. v. CA, et al., G.R.
No. 125339, June 23, 1998, 95 SCAD 44).
DONATION
Distinctions between donations inter vivos and donations mortis causa.
a. Donations mortis causa take effect upon the death of the donor, while donations inter vivos take
effect immediately or during the lifetime of the donor;
b. In donations mortis causa, ownership is conveyed upon the death of the donor, while in
donations inter vivos, ownership is conveyed before his death;
c. In donations mortis causa, it is void if the transferor survives the transferees, while in donations
inter vivos, it is valid if the transferor survives the transferee;
d. Donations mortis causa are basically revocable; donations inter vivos are not revocable as a
rule;
e. Donations mortis causa require compliance with the requirements of a will; donations inter
vivos merely require compliance with Arts. 748 and 749, NCC.
Theory of Cognition.
The donation, following the theory of cognition (Art. 1319, CC), is perfected only upon the
moment the donor knows of the acceptance by the donee. Furthermore, if the acceptance is made in a
separate instrument, the donor shall be notified in an authentic form, and this step shall be noted in
both instruments.
Acceptance of the donation by the donee is, therefore, indispensable; its absence makes the
donation null and void (Pea vs. Court of Appeals, 193 SCRA 717 [1991]).
It has been said that:
x x x Title to immovable property does not pass from the donor to the donee by
virtue of a deed of donation until and unless it has been accepted in a public instrument
and the donor duly notified thereof. The acceptance may be made in the very same
instrument of donation. If the acceptance does not appear in the same document, it must
be made in another. Solemn words are not necessary; it is sufficient if it shows the
intention to accept. But in this case it is necessary that formal notice thereof be given to
the donor, and the fact that due notice has been given must be noted in both instruments
(that containing the offer to donate and that showing the acceptance). Then and only
then is the donation perfected. If the instrument of donation has been recorded in the
registry of property, the instrument that shows the acceptance should also be recorded.
Where the deed of donation fails to show the acceptance, or where the formal notice of
the acceptance, made in a separate instrument, is either not given to the donor or else
not noted in the deed of donation and in the separate acceptance, the donation is null
and void. (Lagazo vs. Court of Appeals, 287 SCRA 18, G.R. No. 112796, March 5, 1998;
Sumipat vs. Banga, G.R. No. 155810, August 13, 2004; JLT Agro, Inc. vs. Balansag, 453
SCRA 211 [2005])
Void donation.
If the mother of minors signed a deed of donation of properties belonging to her children, the
same is void. The legal maxim nemo dat quod non habet applies to this instance as Nakila only has
usufructuary right equal to the share of her children. (SOFIA PENDEJITO VDA. DE MONTEROSO, et al. vs.
COURT OF APPEALS, et al., G.R. No. 113199, April 30, 2008, J. Velasco, Jr.)
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Donation of movable must be in writing; subject of donation is money; effect.


The contract is one of loan, not a donation if there was a contract to sell over a property owned
by the GSIS but due to failure to pay the amortization she sought for financial assistance from her
brother who paid the balance. The contention that there was payment out of generosity, hence there
was a donation is not correct.
There was no compliance with the formal requisite that it be in writing, hence, there can be no
donation. She never presented a copy of the written agreement evidencing the same. In Moreno-Lentfer
v. Wolff, 484 Phil. 552 [2004], it was said that a donation must comply with the mandatory formal
requirements set forth by law for its validity. When the subject of donation is purchase money, Article
748 of the NCC is applicable. Accordingly, the donation of money as well as its acceptance should be in
writing. Otherwise, the donation is invalid for non-compliance with the formal requisite prescribed by
law. (Carinan v. Sps. Cueto, G.R. No. 198636, October 8, 2014, Reyes, J).
Designation of donation as mortis causa is not controlling.
A donation by the spouses to their children and granddaughter denominated as Donation
Mortis Causa stating that it is irrevocable which had no attestation clause, and had only two (2)
witnesses and accepted is a donation inter vivos. The designation that it is a Donation Mortis Causa is
not controlling. If a donation by its terms is inter vivos, this character is not altered by the fact that the
donor styles it mortis causa. (Concepcion v. Concepcion, 91 Phil. 823 (1952)).
Characteristics of donation mortis causa.
In Austria-Magat v. Court of Appeals, 426 SCRA 263 (2002), it was held that irrevocability is a
quality absolutely incompatible with the idea of conveyances mortis causa, where revocability is
precisely the essence of the act. A donation mortis causa has the following characteristics:
1.
It conveys no title or ownership to the transferee before the death
of the transferor; or, what amounts to the same thing, that the
transferor should retain the ownership (full or naked) and control of
the property while alive;
2.
That before his death, the transfer should be revocable by the
transferor at will, ad nutum; but revocability may be provided for
indirectly by means of a reserved power in the donor to dispose of
the properties conveyed; and
3.
That the transfer should be void if the transferor should survive the
transferee.
(Aluad v. Aluad, G.R. No. 176943, October 17, 2008, 569 SCRA 697; Del Rosario v.
Ferrer, et al., G.R. No. 187056, September 20, 2010).
Since the donation in this case was one made inter vivos, it was immediately operative and
final. The reason is that such kind of donation is deemed perfected from the moment the donor
learned of the donees acceptance of the donation. The acceptance makes the donee the absolute
owner of the property donated. (Heirs of Sevilla v. Sevilla, 450 SCRA 598 (2003)).
Donation of real property must be in a public instrument.
There is no question that the donation in question is invalid because it involves an immovable
property and the donation was not made in a public document as required by Article 633 of the old Civil
Code (now Art. 749, NCC), but it does not follow that said donation may not serve as basis of
acquisitive prescription when on the strength thereof the donee has taken possession of the property
adversely and in the concept of an owner. (Espique v. Espique, 99 Phil. 448 [1956]; Pensader v.
Pensader, 47 Phil. 959 [1949]).
After the donation was made, the donee has been in adverse, continuous, open, public,
peaceful and uninterrupted, and in the concept of an owner. Thus, by virtue of acquisitive prescription,
the donee became the owner even not in the form prescribed by law. (Bautista, et als. V. Poblete, et al.,
G.R. No. 141007, September 13, 2005).
Effect if donor is suffering from schizophrenia.
Donation is valid even if the donor has schizophrenia. A person suffering from such sickness is
presumed capable of attending to his property rights. There is no total loss of control of his mental
faculties. Persons suffering from the disease have gradual onset of symptoms which may become
increasingly bizarre as the disease progresses. The condition improves or worsens in cycles. Sometimes
the sufferers appear to be relatively normal. Some may appear strange because they speak in a
monotone, have odd speech habits, appear to have no emotional feelings. Administration of medicines
helps correct the patient. (Catalan v. Basa, July 31, 2007).
Grounds for revocation of donation by reason of ingratitude.
They are:
(a) When the donee committed an offense against the person, honor or property of the donor,
or of his wife or children under his parental authority;
(b) When the donee imputes to the donor any criminal offense, or any act involving moral
turpitude, even though he should prove it, unless the crime itself is committed against him,
his wife or children under his authority;
(c) When the donee unduly refuses him support when the donee is legally or morally bound to
give support to the donor. (Art. 765)
Period to file the action for revocation.
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The action for revocation of a donation on the grounds set forth in Article 760 must be filed
within four (4) years from the birth of the first child or from his legitimation, recognition or adoption, or
from the judicial declaration of filiation, or from receipt of information regarding the appearance of the
child believed dead. (Art. 763, NCC). The action cannot be renounced; it is transmissible to the heirs.
(See also Roman Catholic Archbishop of Manila, et al. vs. CA, et al., G.R. Nos. 77425 and 77450, June
30, 1991)
Effect if a donation provides for automatic revocation.
By the very expressed provision in the deed of donation itself that the violation of the condition
thereof would render ipso facto null and void the deed of donation, there would be no legal necessity
anymore to have the donation judicially declared null and void for the reason that the very deed of
donation itself declares it so. For were it otherwise, and that the donors and the donee contemplated a
court action during the execution of the deed of donation to have the donation judicially rescinded or
declared null and void should the condition be violated, then the phrase reading would render ipso
facto null and void would not appear in the deed of donation. (Roman Catholic Archbishop of Manila, et
al. v. CA, et al., G.R. No. 77425 and Roman Catholic Archbishop of Manila, et al. v. CA, G.R. No. 77450,
June 30, 1991).
NUISANCE
A structure if declared illegal does not mean it is a nuisance per se.
The fact that the owner of a building was given an exemption from constructing an arcade is an
indication that the wing walls of the building are not nuisance per se. The wing walls do not per se
immediately and adversely affect the safety of persons and property. The fact that an ordinance may
declare a structure illegal does not necessarily make that structure a nuisance.
Article 694 of the Civil Code defines nuisance as any act, omission, establishment, business,
condition or property, or anything else that (1) injures or endangers the health or safety of others; (2)
annoys or offends the senses; (3) shocks, defies or disregards decency or morality; (4) obstructs or
interferes with the free passage of any public highway or street, or any body of water; or, (5) hinders or
impairs the use of property. A nuisance may be per se or per accidens. A nuisance per se is that which
affects the immediate safety of persons and property and may summarily be abated under the
undefined law of necessity. (Tolentino v. Bustamante, G.R. No. 182567, July 13, 2009, 592 SCRA 552;
Tayabas v. People, 517 SCRA 448 (2007)).
Cold storage is not nuisance per se.
The business of a cold storage or ice plant is a legitimate calling, trade or business, hence, it is
not a nuisance per se. It is legitimate industry, beneficial to the people and conducive to their health
and comfort. A nuisance is, according to Blackstone, anything that worketh hurt, inconvenience or
damage. The Supreme Court went further by saying that nuisance arises from pursuing particular
trades or industries in populous neighbourhoods; from acts of public indecency; keeping disorderly
houses; houses of ill-fame, and gambling houses. (Salao v. Santos, 7 Phil. 547; Iloilo Ice Cold Storage v.
Iloilo, 24 Phil. 461; AC Enteprises Inc. v. Frabelle Properties, Corp., G.R. No. 166744, November 2, 2006).
Swimming pool not an attractive nuisance.
As a general rule, a swimming pool is not an attractive nuisance. Not all bodies of water can be
considered as attractive nuisance. Hence, under American Law:
The attractive nuisance doctrine, generally, is not applicable to bodies of water,
artificial as well as natural, in the absence of some unusual condition or artificial feature
other than the mere water and its location.
There are numerous cases in which the attractive nuisance doctrine has been
held not to be applicable to ponds or reservoirs, pools of water, streams, canals, dams,
ditches, culverts, drains, cesspools or sewer pools x x x. (C.J.S., p. 476, et seq., citing
decisions of California, Georgia, Idaho, Illinois, Kansas, Iowa, Louisiana, Mississippi,
Missouri, Montana, Oklahoma, Pennsylvania, Tennessee, Texas, Nebraska, Wisconsin)
The reason why a swimming pool or a pond or a reservoir of water is not considered an
attractive nuisance was lucidly explained by the Indiana Appellate Court as follows:
Nature has created streams, lakes and pools which attract children. Lurking in
their waters is always the danger of drowning. Against this danger, children are early
instructed so that they are sufficiently presumed to know the danger. And if the owner of
private property creates an artificial pool on his own property, merely duplicating the
work of nature without adding any new danger, x x x he is not liable because of having
created an attractive nuisance. (Anderson vs. Reith-Riley Const. Co., 44 N.E. 2d, 184,
185; 112 Ind. App., 170; Hidalgo Enterprises, Inc. vs. Balandan, et al.,supra, pp. 490-491)
Attractive nuisance.
The principal reason for the doctrine of attractive nuisance is that the condition or appliance in
question, although its danger is apparent to those of age, is so enticing or alluring to children of tender
years as to induce them to approach, get on or use it, and this attractiveness is an implied invitation to
such children. (65 C.J.S., p. 458; Hidalgo Enterprises, Inc. v. Balandan, et al., L-3422, June 13, 1952).
SUCCESSION
Will of a foreigner can be probated in the Philippines.
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Our laws do not prohibit the probate of wills executed by foreigners abroad although the same
have not as yet been probated and allowed in the countries of their execution. A foreign will can be
given legal effects in our jurisdiction. Article 816 of the Civil Code states that the will of an alien who is
abroad produces effect in the Philippines if made in accordance with the formalities prescribed by the
law of the place where he resides, or according to the formalities observed in his country.
Section 1, Rule 73 of the 1997 Rules of Civil Procedure provides that if the decedent is an
inhabitant of a foreign country, the RTC of the province where he has an estate may take cognizance of
the settlement of such estate. Sections 1 and 2 of Rule 76 of the Rules of Court further state that the
executor, devisee, or legatee named in the will, or any other person interested in the estate, may at
any time after the death of the testator, petition the court having jurisdiction to have the will allowed,
whether the same be in his possession, or not, or is lost or destroyed.
Reprobate or re-authentication of a will already probated and allowed in a foreign country is
different from that probate where the will is presented for the first time before a competent court.
Reprobate is specifically governed by Rule 77 of the Rules of Court. Reprobate cannot be made to apply
in the present case. In reprobate, the local court acknowledge as binding the findings of the foreign
probate court, provided its jurisdiction over the matter can be established. (In Re: In the Matter of the
Petition to Approve the Will of Ruperta Palagans, G.R. No. 169144, January 26, 2014).
Witnesses should sign attestation clause.
The purpose of the law in requiring that the witnesses should sign at the bottom of the
attestation clause is to safeguard against possible interpolation or omission of one or some of its pages
and to prevent any increase or decrease in the pages. The failure to state the number of pages equates
with the absence of an averment on the part of the instrumental witnesses as to how many pages
consisted the will, the execution of which they had ostensibly just witnessed and subscribed to.
Following Canedas v. CA, 222 SCRA 781 [1993], there is substantial compliance with this requirement if
the will states elsewhere in it how many pages it is comprised of, as was the situation in Singson and
Taboada. However, in this case, there could have been no substantial compliance with the requirements
under Article 805 since there is no statement in the attestation clause or anywhere in the will itself as
to the number of pages which comprise the will. (Azuela v. CA, et al., G.R. No. 122880, April 12, 2006).
Signature at attestation clause & pages; significance.
The law (Art. 805) segragates that the instrumental witnesses sign each page of the will, from
the requisite that the will be attested and subscribed by the instrumental witnesses. The respective
intents behind these two classes of signature are distinct from each other. The signature on the left
hand corner of every page signify, among others, that the witnesses are aware that the page they are
signing forms part of the will. On the other hand, the signatures to the attestation clause establish that
the witnesses are referring to the statements contained in the attestation clause itself. Indeed, the
attestation clause results in separate and apart from the disposition of the will. An unsigned attestation
clause results in an unattested will. Even if the instrumental witnesses signed the left hand margin of
the page containing the unsigned attestation clause, such signatures cannot demonstrate these
witnesses undertakings in the clause, since the signatures that do appear on the page were directed
towards a wholly different avowal.
It is the attestation clause which contains the utterances reduced into writing of the
testamentary witnesses themselves. It is the witnesses, and not the testator, who are required under
Art 805 to state the number of pages used upon which the will is written; the facts that the testator had
signed the will and every page thereof; and that they witnessed and signed the will and all the pages
thereof in the presence of the testator and of one another. The only proof in the will that the witnesses
have stated these elemental facts would be their signatures on the attestation clause. (Azuela v. CA, et
al., G.R. No. 122880, April 12, 2006).
Signed in the presence of.
The phrase en presencia de nosotros or in our presence coupled with the signatures
appearing on the will itself and after the attestation clause could only mean that: (1) the testator
subscribed to and professed before the three witnesses that the document was his last will, and (2) the
testator signed the will at the left margin of each page of the will in the presence of these three
witnesses. (Testate Estate of the Late Alipio Abada v. Alipio Abaja, et al., G.R. No. 147145, January 31,
2005).
Meaning of the term presence.
It is not required that the witnesses actually saw the testator affix his signature in the will
because the phrase in the presence does not necessarily require actual seeing, but only the
possibility of seeing without physical obstruction. In Jaboneta vs. Gustilo, 5 Phil. 541, it was said that if
a witness 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.
Forgetfulness not equivalent to being unsound mind
The state of being forgetful does not necessarily make a person mentally unsound so as to
render him unfit to execute a will. (Torres & Lopez de Bueno v. Lopez, 48 Phil. 772 (1926); Sancho v.
Abella, 728 Phil. 728 (1933)). Forgetfulness is not equivalent to being of unsound mind. Besides, Article
799 of the New Civil Code states that to be of sound mind, it is not necessary that the testator be in full
possession of all his reasoning faculties, or that his mind be wholly unbroken, unimpaired, or
unshattered by disease, injury or other cause. It shall be sufficient if the testator was able at the time of
making the will to know the nature of the estate to be disposed of, the proper objects of his bounty,
and the character of the testamentary act. A testator is presumed to be of sound mind at the time of
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the execution of the will (Art. 800, NCC) and the burden to prove otherwise lies on the oppositor. Article
800 of the New Civil Code states that the burden of proof to show that the testator was of unsound
mind at the time of the execution of the will lies in the oppositors. (Baltazar, et al. v. Laxa, G.R. No.
174489, April 11, 2012, Del Castillo, J).
Effect if a holographic will does not comply with the requirement that in case of insertion,
cancellation, erasure and alteration, the testator must authenticate the same by his full
signature.
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 words erased, corrected or interlined. Manresa gave
an identical commentary when he said la omision de la salvedad no anula el testamento, segun la
regla de jurisprudencia establecida en la sentencia de 4 de Abril de 1895. (Kalaw vs. Relova, 132 SCRA
237 [1984]).
Thus, unless the unauthenticated alterations, cancellations or insertions were made on the date
of the holographic will or on testators signature, their presence does not invalidate the will itself. The
lack of authentication will only result in disallowance of such changes. (Ajero vs. CA, et al.,supra).
Concept of institucion sub modo; its requisites.
Substitucion sub modo is what is otherwise known as a modal substitution. This occurs when
any or all of the following are present:
1. The testator states the object of the institution;
2. The testator states the purpose or application of the property left by the testator;
3. The testator states the charge imposed by the testator upon the heir. (Johnny Rabadilla vs.
CA, et al., G.R. No. 113725, June 29, 2000)
Concept of disposition captatoria.
It is any disposition made upon the condition that the heir shall make some provision in his will
in favor of the testator or of any other person. (Art. 875, NCC)
Barrier between legitimate and illegitimate.
An illegitimate child is not entitled to inherit from the legitimate relatives of his father (Art. 992).
This is due to the barrier between legitimates and illegitimates (Diaz vs. IAC, 150 SCRA 645 [1987];
Pascual vs. Bautista, et al., G.R. No. 84240, March 25, 1992). An illegitimate child has no right to inherit
ab intestato from the legitimate children and relatives of his father or mother; nor shall such children or
relatives inherit in the same manner from the illegitimate child (Art. 992, NCC; Manuel, et al. vs. Hon.
Nicodemo Ferrer, et al., G.R. No. 117246, Aug. 21, 1995, 247 SCRA 476). The barrier refers to intestacy,
but there is nothing in the law that forbids both from instituting the other in his will.
Ampon, not entitled to inherit.
A mere ampon is not entitled to inherit from the one who took him and raised him as a child,
because the adoption was without the benefit of a formal or judicial adoption, hence, not a compulsory
or legal heir. (Manuel, et al. vs. Ferrer, et al., G.R. No. 117246, August 21, 1995, citing Lim vs. IAC, G.R.
No. 69679, Oct. 18, 1988, 166 SCRA 451)
The concept of barrier between legitimates and illegitimates in the rules of succession.
It is that basic postulate in Article 992 of the Civil Code known as the principle of absolute
separation between the legitimate family and the illegitimate family. The doctrine rejects succession ab
intestato in the collateral line between legitimate relatives, on the one hand, and illegitimate relatives,
on other hand, although it does not totally disavow such succession in the direct line. Since the rule is
predicated on the presumed will of the decedent, it has no application, however, on testamentary
dispositions.
In a series of cases, the SC applied the iron curtain and ruled that Article 992 of the New Civil
Code x x x prohibits absolutely a succession ab intestato between the illegitimate child and the
legitimate children and relatives of the father or mother of said legitimate child. They may have a
natural tie of blood, but this is not recognized by law for the purposes of Article 992. Between the
legitimate family and the illegitimate family there is presumed to be an intervening antagonism and
incompatibility. The illegitimate child is disgracefully looked down upon by the legitimate family; the
legitimate family is, in turn, hated by the illegitimate child; the latter considers the privileged condition
of the former, and the resources of which it is thereby deprived; the former, in turn, sees in the
illegitimate child nothing but the product of sin, palpable evidence of a blemish broken in life; the law
does no more than recognize this truth, by avoiding further grounds of resentment. (Grey vs. Fabie, 40
O.G. [First S] No. 3, p. 196, citing 7 Manresa 110; Diaz vs. Intermediate Appellate Court, 150 SCRA 645;
and De la Puerta vs. Court of Appeals, 181 SCRA 861)
Illegitimate child; no right of representation.
Under Article 992 of the Civil Code, an illegitimate child has no right to inherit ab intestato from
the legitimate children and relatives of his father or mother; in the same manner, such children or
relatives shall not inherit from the illegitimate child. In Diaz v. Intermediate Appellate Court, G.R. No.
66574, February 21, 1990, 182 SCRA 427, 438, it was ruled that the right of representation is not
available to illegitimate descendants of legitimate children in the inheritance of a legitimate
grandparent. Article 838 of the Civil Code dictates that no will shall pass either real or personal
property unless the same is proved and allowed in accordance with the Rules of Court. It has been
clarified in Gallanosa v. Arcangel, No. L-29300, June 21, 1978, 83 SCRA 676, 683, that in order that a
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will may take effect, it has to be probated, legalized or allowed in the proper testamentary proceeding.
The probate of the will is mandatory. It appears that such will remained ineffective considering that
the records are silent as to whether it had ever been presented for probate, and had been allowed by a
court of competent jurisdiction. (Alejandra Arado Heirs, etc. v. Anacleto Alarcon, et al., G.R. No. 163362,
July 8, 2015, Bersamin, J).
LACHES
Concept of laches.
Laches is defined as the failure or neglect, for an unreasonable and unexplained length of time,
to do that whichby the exercise of due diligencecould or should have been done earlier. Verily, laches
serves to deprive a party guilty of it to any judicial remedies. Its elements are: (1) conduct on the part
of the defendant, or of one under whom the defendant claims, giving rise to the situation which the
complaint seeks a remedy; (2) delay in asserting the complainant's rights, the complainant having had
knowledge or notice of the defendant's conduct as having been afforded an opportunity to institute a
suit; (3) lack of knowledge or notice on the part of the defendant that the complainant would assert the
right in which the defendant bases the suit; and (4) injury or prejudice to the defendant in the event
relief is accorded to the complainant, or the suit is not held barred. (DEPARTMENT OF EDUCATION,
DIVISION OF ALBAY v. CELSO OATE, G.R. No. 169501, June 8, 2007, Velasco, Jr., J.; ASSOCIATED LABOR
UNIONS(ALU) and DIVINE WORD UNIVERSITY EMPLOYEES UNION-ALU(DWUEU-ALU) v. CA, THE ROMAN
CATHOLIC ARCHBISHOP OF PALO, LEYTE(RCAP) and DIVINE WORD UNIVERSITY OF TACLOBAN(DWUT),
G.R. No. 156882, October 31, 2008, VELASCO, JR., J.)
Laches is not concerned only with the mere lapse of time. The following elements
must be present in order to constitute laches:
(1)
conduct on the part of the defendant, or of one under whom he claims, giving rise to the
situation of which complaint is made for which the complaint seeks a remedy;
(2)
delay in asserting the complainants rights, the complainant having had knowledge or
notice, of the defendants conduct and having been afforded an opportunity to institute
a suit;
(3)
lack of knowledge or notice on the part of the defendant that the complainant would
assert the right on which he bases his suit; and
(4)
injury or prejudice to the defendant in the event relief is accorded to the complainant, or
the suit is not held to be barred. (Heirs of Anacleto B. Nieto v. Municipality of
Meycauayan, Bulacan, G.R. No 150654, December 13, 2007, 540 SCRA 100; Arroyo v.
Bocago Inland Dev. Corp., et al., G.R. No. 167880, November 14, 2012, Peralta, J).
In Labrador vs. Perlas, G.R. No. 173900, August 9, 2010, 627 SCRA 265, it was ruled that as a
registered owner, petitioner has a right to eject any person illegally occupying his property. This right is
imprescriptible and can never be barred by laches. In Bishop v. Court of Appeals, it was likewise said
that even if it be supposed that they were aware of the petitioners' occupation of the property, and
regardless of the length of that possession, the lawful owners have a right to demand the return of their
property at any time as long as the possession was unauthorized or merely tolerated, if at all. This right
is never barred by laches.
Social justice and equity cannot be used to justify the court's grant of property to one at the
expense of another who may have a better right thereto under the law. These principles are not
intended to favor the underprivileged while purposely denying another of his right under the law.
OBLIGATIONS AND CONTRACTS
Mere meeting is not demand.
The mere request by the creditor for the debtor to go to creditors office to discuss the
settlement of their account is not a demand to pay. In spite of the lack of demand made, however, the
creditor proceeded with the foreclosure proceedings. It should have first made a demand on the
spouses before proceeding to foreclose the real estate mortgage, that demand was made before the
foreclosure was effected is essential. If demand was made and duly received by the respondents and
the latter still did not pay, then they were already in default and foreclosure was proper. However, if
demand was not made, then the loans had not yet become due and demandable. This meant that
debtor had not defaulted in their payments and the foreclosure was premature. Foreclosure is valid only
when the debtor is in default in the payment of his obligation. (GENERAL MILLING CORPORATION v. SPS.
LIBRADO RAMOS and REMEDIOS RAMOS, G.R. No. 193723, July 20, 2011, Velasco, Jr., J).
Rescission is the remedy if there is a breach of contract.
The right of rescission of a party to an obligation under Article 1191 of the Civil Code is
predicated on a breach of faith by the other party who violates the reciprocity between them. The
breach contemplated in the said provision is the obligors failure to comply with an existing obligation.
When the obligor cannot comply with what is incumbent upon it, the obligee may seek rescission and in
the absence of any just cause for the court to determine the period of compliance, the court shall
decree the rescission.
As both parties failed to comply with their respective reciprocal obligations, the liability of the
first infractor shall be equitably tempered by the courts. If it cannot be determined which of the parties
first violated the contract, the same shall be deemed extinguished, and each shall bear his own
damages. (Art. 1192, NCC).

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No damages shall be awarded to any party in accordance with the rule under Article 1192 of the
Civil Code that in case of mutual breach and the first infractor of the contract cannot exactly be
determined, each party shall bear his own damages. (Fong v. Duenas, G.R. No. 185592, June 15, 2015,
Brion., J).
Substantial breach as basis of rescission.
For rescission of a contract to prosper the breach must be substantial and fundamental as to
defeat the objective of the parties. (Song Fo and Co. v. Hawaiian Phil. Co., 33 SCRA 1). If the breach on
the part of Y is only a simple one it should not be made to defeat the objective of the parties in entering
into the contract because the law is not concerned with trifles. (Filoil Refinery Corp. v. Mendoza, June
15, 1987).
Rescission under Article 1191, NCC and Art. 1385, NCC rescission is based on breach. In Article
1385, NCC, it is based on lesion. It is principal action under Article 1191, NCC but subsidiary under
Article 1385, NCC. (Congregation of the Religious of the Virgin Mary, et al. v. Orola, et al., G.R. No.
169790, April 30, 1998).
No presumption of solidary liability of 2 persons.
The verbal assurance that Deyto would be solidarily liable and the alleged guarantee made by
Deyto to Angs checks are not sufficient to hold her solidarily liable. Well-entrenched is the rule that
solidary obligation cannot be lightly inferred. There is a solidary liability only when the obligation
expressly so states, when the law so provides or when the nature of the obligation so requires.
In this case, there is an attempt to recover from Deyto simply because Ang has already
absconded, but this attempt must fail since the contract was only between Ang and Manlar.
As a general rule, a contract affects only the parties to it, and cannot be enforced by or against a
person who is not a party thereto. It is a basic principle in law that contracts can bind only the parties
who had entered into it; it cannot favor or prejudice a third person. Under Article 1311 of the Civil
Code, contracts take effect only between the parties, their assigns and heirs. Thus, Manlar may sue
Ang, but not Deyto, was not a party to the rice supply contract. (Manlar Rice Mill, Inc. v. Deyto, et al.,
G.R. No. 191189, January 29, 2014).
Rules when a third person pays the obligation of another.
(a) If payment was made with the knowledge and consent of the debtor, the third person can
ask for reimbursement. Aside from that, he can be subrogated to rights such as those
arising from a guaranty, penalty clause or mortgage. (Art. 1237, NCC)
(b) If the payment was made without the knowledge or against the will of the debtor, there can
be a right of reimbursement, to the extent of the benefit in favor of the debtor. (Arts. 1236
and 1237, NCC)
(c) If payment is made by a 3rd person who does not intend to be bound, it is deemed to be a
donation; it needs the consent of the debtor because nobody can be compelled to accept
the liberality of another. (Art. 1238, NCC)
The reason for the rule is that payment made by a third person without the intention to be
reimbursed with such payment is considered as a donation. The law, however, requires the acceptance
by the debtor because no one can be compelled to accept the liberality of another. It is a rule that, for a
donation to be valid, it must be accepted by the donee.
Legal compensation cannot apply if one of the obligations is not fixed or merely contingent.
There can be no compensation between two persons if the obligations are not liquidated or
fixed as the payment by one is dependent upon a contingency, that is the payment by a third person to
it. Compensation is a mode of extinguishing obligations whereby two persons in their capacity as
principals are mutual debtors and creditors of each other with respect to equally liquidated and
demandable obligations to which no retention or controversy has been timely commenced and
communicated by third parties. (See Mavest (U.S.A.), Inc. v. Sampaguita Garment Corporation, G.R. No.
127454, September 21, 2005, 470 SCRA 440). The requisites of compensation are provided under
Article 1279 of the Civil Code which reads as follows:
Art. 1279. In order that compensation may be proper, it is necessary:
(1) That each one of the obligors be bound principally, and that he be
at the same time a principal creditor of the other;
(2) That both debts consist in a sum of money, or if the things due are
consumable, they be of the same kind, and also of the same
quality if the latter has been stated;
(3) That the two debts be due;
(4) That they be liquidated and demandable;
(5) That over neither of them there be any retention or controversy,
commenced by third persons and communicated in due time to the
debtor.
In this case, legal compensation cannot take place in order to effectively offset (a) its own
obligation to return the funds it previously received from DBP with DBPs assumed obligations under the
Assumption Agreement, the obligations are not yet due and they are not liquidated. Since DBPs
assumed obligations to Union Bank for remittance of the lease payments are contingent on the prior
payment thereof by (FW) to DBP, it cannot be said that both debts are due (requisite 3 of Article 1279 of
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the Civil Code). Any deficiency that DBP had to make up for the full satisfaction of the assumed
obligations cannot be determined until after the satisfaction of Foodmasters obligation to DBP. In this
regard, it cannot be concluded that the same debt had already been liquidated, and thereby became
demandable (requisite 4 of Article 1279 of the Civil Code). (Union Bank v. DBP, G.R. No. 191555, January
20, 2014).
Casino chips can be used as payment of obligations.
Casino chips can be used and transacted outside of the casino even as payment of an
obligation. Though casino chips do not constitute legal tender, there is no law which prohibits their use
or trade outside of the casino which issues them. In any case, it is not unusual nor is it unlikely that
respondent could be paid by a client at the formers car shop with the casino chips in question; said
transaction, if not common, is nonetheless not unlawful. These chips are paid for anyway; petitioner
would not have parted with the same if their corresponding representative equivalent in legal tender,
goodwill, or otherwise was not received by it in return or exchange. Given this premise that casino
chips are considered to have been exchanged with their corresponding representative value it is with
more reason that petitioner should prove convincingly and persuasively that the chips it confiscated
were indeed stolen from it; if so, any Tom, Dick or Harry in possession of genuine casino chips is
presumed to have paid for their representative value in exchange therefor. If petitioner cannot prove its
loss, then Article 559 cannot apply; the presumption that the chips were exchanged for value remains.
(Subic Bay Resorts & Casinos, Inc. v. Fernandez, G.R. No. 193426, September 29, 2014, Del Castillo, J).
Written contract; meaning.
The term written contract includes the minutes of the meeting of the board of directors of a
corporation, which minutes were adopted by the parties although not signed by them. (PNB v. Aznar, et
al., G.R. No. 171805, May 30, 2011, Leonardo-de Castro, J). The contention that since the minutes were
not signed, the same was only an oral contract, hence, the 4-year period to enforce it applies is not
correct.
The period is ten (10) years, because under the law, actions upon a written contract must be
brought within 10 years from the time the right of action accrued. (Article 1144, NCC).
The modification appears in the minutes of the special meeting of the Board of Directors of
Lepanto held on August 21, 1940, it having been made upon the authority of its President, and in said
minutes the terms of modification had been specified. This is sufficient to have the agreement
considered, for the purpose of applying the statute of limitations, as a written contract even if the
minutes were not signed by the parties (3 A.L.R., 2d, p. 831). It has been held that a writing containing
the terms of a contract if adopted by two persons may constitute a contract in writing even if the same
is not signed by either of the parties (3 A.L.R., 2d, pp. 812-813). Another authority says that an
unsigned agreement the terms of which are embodied in a document unconditionally accepted by both
parties is a written contract (Corbin on Contracts, Vol. I, p. 85).
The Minutes which was approved on March 14, 1961 is considered as written contract. (PNB v.
Aznar, et al., G.R. No. 171805, May 30, 2011, Leonardo-de Castro, J).
Nature of money placement.
If there is money placement made with a bank, the relationship between a bank (Allied) and a
client (Lim Sio Wan) is one of debtor-creditor. A money market placement is a simple loan or mutuum.
(ALLIED BANKING CORPORATION vs. LIM SIO WAN, et al., G.R. No. 133179, March 27, 2008, Velasco, Jr.,
J.).
Consignation when proper.
Consignation shall be made by depositing the things due at the disposal of judicial authority,
before whom the tender of payment shall be proved, in a proper case, and the announcement of the
consignation in other cases."
Moreover, in order that consignation may be effective, the debtor must show that: (1) there was
a debt due; (2) the consignation of the obligation had been made because the creditor to whom tender
of payment was made refused to accept it, or because s/he was absent or incapacitated, or because
several persons claimed to be entitled to receive the amount due or because the title to the obligation
had been lost; (3) previous notice of the consignation had been given to the person interested in the
performance of the obligation; (4) the amount due was placed at the disposal of the court; and (5) after
the consignation had been made, the person interested was notified of the action.
Respondent did not comply with the provisions of law particularly with the fourth and fifth requirements
specified above for a valid consignation. In her complaint for consignation and specific performance,
respondent only prayed that she be allowed to make the consignation without placing or depositing the
amount due at the disposal of the court of origin. Verily, respondent made no valid consignation. ( B.E.
SAN DIEGO, INC. v. ROSARIO ALZUL, G.R. No. 169501, June 8, 2007, Velasco, Jr., J.)
CONTRACTS
Unconscionable interest.
Imposing 5% monthly interest, whether compounded or simple, is unconscionable. Even if there
was such an agreement that interest will be compounded the 5% monthly rate, be it simple or
compounded, written or verbal, is void for being too exorbitant, thus running afoul of Article 1306 of
the New Civil Code. As case law instructs, the imposition of an unconscionable rate of interest on a
money debt, even if knowingly and voluntarily assumed, is immoral and unjust. It is tantamount to a
repugnant spoliation and an iniquitous deprivation of property, repulsive to the common sense of man.
It has no support in law, in principles of justice, or in the human conscience nor is there any reason
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whatsoever which may justify such imposition as righteous and as one that may be sustained within
the sphere of public or private morals. (SPOUSES TAGUMPAY N. ALBOS and AIDA C. ALBOS v. SPOUSES
NESTOR M. et al., G.R. No. 210831. November 26, 2014. THIRD DIVISION. Velasco, JR., J.)
Effect of qualified acceptance of offer; receipt of payments and additional demands.
Consent is manifested by the meeting of the offer and the acceptance upon the thing and the
cause which are to constitute the contract. (Article 1319, Civil Code). The offer must be certain, and the
acceptance, whether express or implied, must be absolute. (Articles 1319 and 1320, Civil Code). An
acceptance is considered absolute and unqualified when it is identical in all respects with that of the
offer so as to produce consent or a meeting of the minds. (Traders Royal Bank v. Cuison Lumber Co.,
Inc., G.R. No. 174286, June 5, 2009, 588 SCRA 690m, 701, 703).
There was no such meeting of the minds between the parties on the matter of
termination because the petitioners acceptance of the respondents offer to terminate was
not absolute. (Talampas, Jr. v. Moldez Realty, Inc., G.R. No. 170134, June 17, 2015, Brion, J).
A qualified acceptance or one that involves a new proposal constitutes a counteroffer and a
rejection of the original offer. A counter-offer is considered in law, a rejection of the original offer and an
attempt to end the negotiation between the parties on a different basis. Consequently, when
something is desired which is not exactly what is proposed in the offer, such acceptance is
not sufficient to guarantee consent because any modification or variation from the terms of
the offer annuls the offer. The acceptance must be identical in all respects with that of the offer so
as to produce consent or meeting of the minds. (Manila Metal Container Corporation v. Philippine
National Bank, G.R. No. 166862, December 20, 2006, 511 SCRA 444, 465-466).
Remuneratory donation; form required.
If the owner of a property executed a contract transferring her right over the said property to
remunerate his ten (10) years of service to her the contract is a remuneratory donation. The contract,
as well as the evidence presented during the trial, are silent as to the value of the burden, hence,
instead of the law on donations, the rules on contract should govern the subject contract because the
donation is onerous as the burden is imposed upon the donee of a thing with an undetermined value. It
is not necessary that the contract be in a public instrument if it involves immovable property, properly
citing Pada-Kilario v. Court of Appeals, 379 phil. 515, 527 [2002], which states that the requirement of
Article 1358 of the Civil Code that acts which have for their object the creation, transmission,
modification or extinguishment of real rights over immovable property, must appear in a public
document, is only for convenience, non-compliance with which does not affect the validity or
enforceability of the acts of the parties as among themselves. (Reyes v. Asuncion, G.R. No. 196083,
November 1, 2015, Peralta, J).
STATUTE OF FRAUDS
Statute of Frauds, its application.
The Statute of Frauds expressed in Article 1403, par. 2 of the Civil Code applies only to
executory contracts, i.e. those where no performance has yet been made. Stated a bit differently, the
legal consequence of non-compliance with the Statute does not come into play where the contract in
question is completed, executed or partially consummated. The Statute of Frauds, in context, provides
that a contract for the sale of real property or of an interest therein shall be unenforceable unless the
sale or some note or memorandum thereof is in writing and subscribed by the party or his agent.
However, where the verbal contract of sale has been partially executed through the partial payments
made by one party duly received by the vendor, as in the present case, the contract is taken out of the
scope of the Statute. (ANTHONY ORDUA, et al. v. EDUARDO J. FUENTEBELLA, et al., G.R. No. 176841,
June 29, 2010, Velasco, Jr., J.)
Statute of frauds not applicable to contracts with right of first refusal.
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 unenforceable 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.(Rosencor Development Corporation vs. Inquing, G.R.
No. 140479, March 8, 2001)
Sale of property without authority is unenforceable.
When the Supreme Bishop executed the contract of sale of petitioners lot despite the
opposition made by the laymens committee, he acted beyond his powers, hence, the contract is
unenforceable as it was entered into the name of another person by one who has been given no
authority or legal representation, or who has acted beyond his power and it was not ratified.
In Mercado v. Allied Banking Corporation, 555 Phil. 411 [2007], it was ruled that unenforceable
contracts are those which cannot be enforced by a proper action in court, unless they are ratified,
because either they are entered into without or in excess of authority or they do not comply with the
statute of frauds or both of the contracting parties do not possess the required legal capacity. (Iglesia
Filipina Independiente v. Heirs of Bernardino Taeza, G.R. No. 179597, February 3, 2014, Peralta, J).
VOID CONTRACTS

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A forged deed is a nullity; it passes no right; it is held in trust.


The heirs of a decedent whose signature in a deed of extrajudicial settlement and sale was
forged can file an action to nullify such contract, because the deed is void, for lack of consent, hence,
subject to attack anytime. It is recognized in our jurisprudence that a forged deed is a nullity and
conveys no title. An action to declare the inexistence of a void contract does not prescribe.
When there is a showing of such illegality, the property registered is deemed to be simply held
in trust for the real owner by the person in whose name it is registered, and the former then has the
right to sue for the reconveyance of the property. The action for the purpose is also imprescriptible, and
as long as the land wrongfully registered under the Torrens system is still in the name of the person who
caused such registration, an action in personam will lie to compel him to reconvey the property to the
real owner.
While a certificate of title was issued in respondents favor, such title could not vest upon them
ownership of the entire property; neither could it validate a deed which is null and void. Registration
does not vest title; it is merely the evidence of such title. Our land registration laws do not give the
holder any better title than what he actually has. (Sps. Fernando, et al. v. Fernando, G.R. No. 191889,
January 31, 2011)
ESTOPPEL
Three (3) kinds of estoppel.
There are three kinds of estoppels, to wit: (1) estoppel in pais; (2) estoppel by deed; and (3)
estoppel by laches. Under the first kind, a person is considered in estoppel if by his conduct,
representations, admissions or silence when he ought to speak out, whether intentionally or through
culpable negligence, causes another to believe certain facts to exist and such other rightfully relies
and acts on such belief, as a consequence of which he would be prejudiced if the former is permitted to
deny the existence of such facts. Under estoppel by deed, a party to a deed and his privies are
precluded from denying any material fact stated in the deed as against the other party and his privies.
Under estoppel by laches, an equitable estoppel, a person who has failed or neglected to assert a right
for an unreasonable and unexplained length of time is presumed to have abandoned or otherwise
declined to assert such right and cannot later on seek to enforce the same, to the prejudice of the other
party, who has no notice or knowledge that the former would assert such rights and whose condition
has so changed that the latter cannot, without injury or prejudice, be restored to his former state. (Co
Chien v. Sta. Lucia Realty & Development, Inc., G.R. No. 162090, January 31, 2007, 513 SCRA 570, 581;
Jose Go, et al. v. Bangko Sentral ng Pilipinas, et al., G.R. No. 202262, June 8, 2015, Bersamin, J).
Tenant cannot deny the title of the lessor due to estoppel; exception.
Having admitted the existence of a lessor-lessee relationship, a lessee is barred from denying
the lessors title of better right of possession as a lessor. Under Rule 131, Sec. 2, the tenant is not
permitted to deny the title of his landlord at the time of the commencement of the relationship of
landlord and tenant between them. The rule is not absolute.
As long as the lessor-lessee relationship between the lessee and lessor exists, the former, as
lessee cannot by any proof, however strong, overturn the conclusive presumption that the lessor has
valid title to or better right of possession to the subject lease premises than they have.
The exception is in Tamio v. Ticzon, G.R. No. 154895, November 18, 2004, where the lessor
committed fraud against the lessee by pretending to be the owner of the leased premises when in
truth, he was not. It would unjustly enrich the lessor if the lessee were required to pay the rent to him.
TRUST
Concept of trust.
Trust is the right to the beneficial enjoyment of property, the legal title to which is vested in
another. It is a fiduciary relationship that obliges the trustee to deal with the property for the benefit of
the beneficiary. Trust relations between parties may either be express or implied. An express trust is
created by the intention of the trustor or of the parties. An implied trust comes into being by operation
of law.
Express trusts, sometimes referred to as direct trusts, are intentionally created by the direct and
positive acts of the settlor or the trustor - by some writing, deed, or will or oral declaration. It is created
not necessarily by some written words, but by the direct and positive acts of the parties. This is in
consonance with Article 1444 of the Civil Code, which states that "[n]o particular words are required for
the creation of an express trust, it being sufficient that a trust is clearly intended."
In other words, the creation of an express trust must be manifested with reasonable certainty
and cannot be inferred from loose and vague declarations or from ambiguous circumstances
susceptible of other interpretations. (PNB v. Aznar, et al., G.R. No. 171805, May 30, 2011, Leonardo-de
Castro, J).
Implied trust converted to express trust.
If the owner of a parcel of land, transferred the same to her daughter to assist them in
procuring a loan from the GSIS and her title was cancelled and a new one was issued under the name
of her child and husband through a letter, where, she said that the property still belonged to her the
transfer was a case of an express trust.
While in the beginning, an implied trust was merely created between the mother and the child,
the execution of the September 21, 1970 letter settled, once and for all, the nature of the trust
established between them as an express one, their true intention irrefutably extant thereon. ( Go v. The

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Estate of the Later Felisia de Buenaventura, etc., G.R. No. 211972; Guerrero, et al. v. The Estate of the
Late Felisa de Buenaventura, etc., G.R. No. 212045, June 22, 2015, Perlas-Bersamin, J).
Trust is created if property is registered under anothers name due to fraud; Action for
reconveyance is the proper remedy.
An action for specific performance to recover a real property covered by a TCT was brought
alleging fraud in the registration of the same is not a proper remedy.
The case for specific performance with damages instituted was effectively an attack on the
validity of respondents Torrens title over the subject lot. It is evident that, ultimately, the objective of
such claim is to nullify the title to the property in question, which, in turn, challenger the judgment
pursuant to which the title was decreed. This is a collateral attack that is not permitted under the
principle of indefeasibility of Torrens title. Section 48 of Presidential Decree No. 1529, otherwise known
as the Property Registration Decree.
A collateral attack transpires when, in another action to obtain a different relief and as an
incident to the present action, an attack is made against the judgment granting the title while a direct
attack (against a judgment granting the title) is an action whose main objective is to annul, set aside, or
enjoin the enforcement of such judgment if not yet implemented, or to seek recovery if the property
titled under the judgment had been disposed of. (Urieta Vda. de Aguilar v. Alfaro, G.R. No. 164402, July
5, 2010, 623 SCRA 130, 143-144). The issue on the validity of title, i.e., whether or not it was
fraudulently issued, can only be raised in an action expressly instituted for that purpose.
The appropriate legal remedy that should be availed of is an action for reconveyance. Proof of
actual fraud is not required as it may be filed even when no fraud intervened such as when there is
mistake in including the land for registration. (Campos v. Ortega, et al., G.R. No. 171286, June 2, 2014,
Peralta, J).
When an action for reconveyance based on resulting trust prescribes.
An action for reconveyance resulting from fraud prescribes four years from the discovery of the
fraud, which is deemed to have taken place upon the issuance of the certificate of title over the
property, and if based on an implied or a constructive trust it prescribes ten (10) years from the alleged
fraudulent registration or date of issuance of the certificate of title over the property. (Philippine
Economic Zone Authority (PEZA) v. Fernandez, 411 Phil. 107, 119 [2001]). However, an action for
reconveyance based on implied or constructive trust is imprescriptible if the plaintiff or the person
enforcing the trust is in possession of the property. In effect, the action for reconveyance is an action to
quiet title to the property, which does not prescribe. (Yared v. Tiongco, G.R. No. 161360, October 19,
2011, 659 SCRA 545; Campos v. Ortega, et al., G.R. No. 171286, June 2, 2014, Peralta, J).
SALES
Where seller promises to execute a deed of absolute sale after payment, the same is a
contract to sell.
If the contract states that as soon as the total amount of the property has been paid and the
Certificate of Title has been issued, an absolute deed of sale shall be executed accordingly, it is actually
in the nature of a contract to sell and not one of sale. (See Tan v. Benolirao, G.R. No. 153820, October
16, 2009, 604 SCRA 36, 48-49; Ver Reyes v. Salvador, Sr., G.R. No. 139047 and 139365, September 11,
2008, 564 SCRA 456, 476-481). It has been consistently ruled that where the seller promises to execute
a deed of absolute sale upon the completion by the buyer of the payment of the purchase price, the
contract is only a contract to sell even if their agreement is denominated as a Deed of Conditional Sale.
This treatment stems from the legal characterization of a contract to sell, that is, a bilateral contract
whereby the prospective seller, while expressly reserving the ownership of the subject property
exclusively to the prospective buyer upon fulfillment of the condition agreed upon, such as, the full
payment of the purchase price. In a contract to sell, ownership is retained by the vendor and is not to
pass to the vendee until full payment of the purchase price. (Ursal v. CA, G.R. No. 142411, October 14,
2005, 473 SCRA 52, 65; Coronel v. CA, 331 Phil. 294, 310 [1996]; Sps. Roque v. Aguado, et al., G.R. No.
193787, April 7, 2014, Perlas-Bernabe, J).
No right to recover deficiency under Art. 1484, NCC; when.
Under the law, in a sale on installment of a movable, if the vendor has availed himself of the
right to foreclose the chattel mortgage, he shall have no further action against the purchaser to recover
the unpaid balance of the purchase price. Any agreement to the contrary is void. In other words, in all
proceedings for the foreclosure of the chattel mortgage executed over the chattel which has been sold
on instalment, the mortgage is limited to the property included in the mortgage. The scheme adopted
by the seller of asking for foreclosure and the payment of the unpaid balance is a flagrant
circumvention of the prohibition of the law. By praying for the foreclosure of the mortgage over the
thing, it renounced whatever claim it may have under the promissory note. (Magna Financial Services
Group, Inc. v. Elias Colorina, G.R. No. 158635, December 9, 2005).
Ownership is acquired by delivery.
Ownership of the thing sold is acquired by delivery. It is settled that a perfected contract of sale
cannot be challenged on the ground of the non-transfer of ownership of the property sold at the time of
the perfection of the contract, since it is consummated upon delivery of the property to the vendee. It
is through tradition or delivery that the buyer acquires ownership of the property sold. As provided in
Article 1498 of the New Civil Code, when the sale is made through a public instrument, the execution
thereof is equivalent to the delivery of the thing which is the object of the contract, unless the contrary
appears or can be inferred. The recording of the sale with the Register of Deeds and the issuance of the
certificate of title in the name of the buyer over the property merely bind third parties to the sale. As
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between the seller and the buyer, the transfer of ownership takes effect upon the execution of a public
document covering the real property. Long before the sellers secured a Torrens title over the property,
the buyers had been in actual possession of the property and had designated Barte as their overseer.
(Heirs of Jesus Mascunana v. CA, et al., G.R. No. 158646, June 23, 2005, Callejo, J).
Mirror doctrine.
Although it is recognized principle that a person dealing on a registered land need not go
beyond its certificate of title, it is also a family settled rule that where there are circumstances which
would put a party on guard and prompt him to investigate or inspect the property being sold to him,
such as the presence of occupants/tenants thereon, it is, of course, expected from the purchaser of
valued piece of land to inquire first into the status or nature of possession of the occupants, i.e.,
whether or not the occupant possess the land en concepto de dueno, in concept of owner. As is the
common practice in the real estate industry, an ocular inspection of the premises involved is a
safeguard a cautious and prudent purchaser usually takes. Should he find out that the land he intends
to buy is occupied by anybody else other than the seller who, as in this case, is not in actual
possession, it would then be incumbent upon the purchaser to verify the extent of the occupants
possessory rights. The failure of a prospective buyer to take such precautionary steps would mean
negligence on his part and would thereby preclude him from claiming or invoking the rights of a
purchaser in good faith. (Sps. Mathay v. Court of Appeals, 356 Phil. 870 [1998]; Mercado, et al., Allied
Banking Corp., G.R. No. 171460, July 27, 2007).
Perfected contract of sale despite reservation of title.
A contract of sale was perfected when the seller accepted the buyers proposal. The mere
reservation of title in the invoice did not novate the contract absent a showing of the intention to
novate it. Novation is never presumed and the animus novandi, whether totally or partially must
appear by express agreement of the parties, or by their acts that are too clear and unequivocal to be
mistaken. The mere fact that the invoice was received by the representative of the buyer, cannot by
itself prove animus novandi since he was not authorized to do so. The signature merely proved that the
fact of delivery and as matter of judicial notice, invoices are generally issued at the consummation
stage of the contract and not its perfection, and have been even treated as documents which are not
actionable per se, although they may prove sufficiently delivery. Thus, absent any clear indication that
the title reservation stipulation was actually agreed upon, the same can be considered as imposition on
the part of the seller which has no effect on the nature of the parties original agreement as a contract
of sale. Perforce, the obligations arising thereto, among others, ACE Foodss obligation to pay the
purchase price as well as to accept the delivery of the goods, remain enforceable and subsisting. (Ace
Foods, Inc. v. Micro Pacific Technologies, Co., Ltd., G.R. No. 200602, December 11, 2013).
Delivery makes the vendee the owner.
Although that sale appeared to be merely verbal, and payment therefor was to be made on
installment, it was a partially consummated sale, with the buyer paying the initial purchase price and
seller surrendering possession. That the parties intended for ownership to be transferred may be
inferred from their lack of any agreement stipulating that ownership of the property is reserved by the
seller and shall not pass to the buyer until the latter has fully paid the purchase price. (Art. 1478, NCC).
The fact is, the seller even delivered to the buyer the owner's duplicate copy of the title. The Civil Code
states that ownership of the thing sold is transferred to the vendee upon the actual or constructive
delivery of the same. (Arts. 1477, 1496, NCC). And the thing is understood as delivered when it is
placed in the control and possession of the vendee. (Art. 1497, NCC). Payment of the purchase price is
not essential to the transfer of ownership as long as the property sold has been delivered; and such
delivery (traditio) operated to divest the vendor of title to the property which may not be regained or
recovered until and unless the contract is resolved or rescinded in accordance with law. (Philippine
National Bank v. Court of Appeals, 338 Phil. 795, 822 (1997), citing Sampaguita Pictures, Inc. v.
Jalwindor Manufacturers, Inc. 182 Phil. 16, 22 (1979), and Pingol v. Court of Appeals, G.R. No. 102909,
September 6, 1993, 226 SCRA 118, 128; Sps. Badilla v. Bragat, G.R. No. 187013, April 22, 2015, Peralta,
J).
Sale with pacto de retro 30-day period to repurchase applies if there is a claim that the
contract was a loan with mortgage.
Paragraph 3 of Article 1606 covers only a situation where the alleged vendor a retro claims,
in good faith, that their (the vendor and the vendee) real intention (to the contract) was a loan with
mortgage.
Article 1606 is intended to cover suits where the seller claims that the real intention
was a loan with equitable mortgage but decides otherwise. The seller, however, must entertain
a good faith belief that the contract is an equitable mortgage. In Felicen, Sr., et al. v. Orias, et
al., it was said:
The application of the third paragraph of Article 1606 is
predicated upon the bona fides of the vendor a retro. It must
appear that there was a belief on his part, founded on facts
attendant upon the execution of the sale with pacto de retro,
honestly and sincerely entertained, that the agreement was in
reality a mortgage, one not intended to affect the title to the
property ostensibly sold, but merely to give it as security for a
loan or obligation. In that event, if the matter of the real nature of the
contract is submitted for judicial resolution, the application of the rule is
meet and proper: that the vendor a retro be allowed to repurchase the
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property sold within 30 days from rendition of final judgment declaring


the contract to be a true sale with right to repurchase. Conversely, if it
should appear that the parties agreement was really one of sale
transferring ownership to the vendee, but accompanied by a
reservation to the vendor of the right to repurchase the property and
there are no circumstances that may reasonably be accepted as
generating some honest doubt as to the parties intention, the
proviso is inapplicable. x x x If the rule were otherwise, it would be
within the power of every vendor a retro to set at naught a pacto de
retro, or resurrect an expired right of repurchase, by simply instituting an
action to reform the contract known to him to be in truth a sale with
pacto de retro into an equitable mortgage. x x x The rule would thus be
made a tool to spawn, protect and even reward fraud and bad faith, a
situation surely never contemplated or intended by the law.
x x x where the proofs established that there could be no
honest doubt as to the parties intention, that the transaction
was clearly and definitely a sale with pacto de retro, the Court
adjudged the vendor a retro not to be entitled to the benefit of
the third paragraph of Article 1606. (Heirs of Antero Soliva v.
Severino Soliva, et al., G.R. No. 159611, April 22, 2015, Brion, J citing
Claravall v. Lim, G.R. No. 152695, July 25, 2011, 654 SCRA 301, 311-312,
citing Felicen, Sr. v. Orias, 240 Phil. 550 (1987); Heirs of Vda. De Macoy v.
Court of Appeals, G.R. No. 95871, February 13, 1992; and Agan v. Heirs of
Spouses Andres Nueva and Diosdada Nueva, 463 Phil. 834 (2003)).
The real intention of the parties was a Pacto de Retro sale, not an equitable mortgage, hence,
reliance on paragraph 3, Article 1606 of the Civil Code is misplaced and his argument on this point
cannot prosper.
Right to repurchase is good only for 10 years.
The right to repurchase cannot exceed ten (10) years. In cases of conventional redemption
when the vendor a retro reserves the right to repurchase the property sold, the parties to the sale must
observe the parameters set forth by Article 1606 of the New Civil Code, which states that the right
referred to in Article 1601, in the absence of an express agreement, shall last four years from the date
of the contract. Should there be an agreement, the period cannot exceed ten years. However, the
vendor may still exercise the right to repurchase within thirty days from the time final judgment was
rendered in a civil action on the basis that the contract was a true sale with right to repurchase.
Thus, depending on whether the parties have agreed upon a specific period within which the
vendor a retro may exercise his right to repurchase, the property subject of the sale may be redeemed
only within the limits prescribed by the aforequoted provision. (Cebu State College of Science &
Technology (CSCST) v. Misterio, et al., G.R. No. 179025, June 17, 2015, Peralta, J).
As stated in Yadao vs. Yadao (20 Phil. Rep., 260): "A pacto de retro is, in a certain aspect, the
suspension of the title to the land involved. It was the intention of the legislature to limit the
continuance of such a condition, with the purpose that the title to the real estate in
question should be definitely placed, it being, in the opinion of the legislature, against
public policy to permit such an uncertain condition relative to the title to real estate to
continue for more than ten years." (Cebu State College of Science & Technology (CSCST) v.
Misterio, et al., G.R. No. 179025, June 17, 2015, Peralta, J).
Right to repurchase cannot be indefinite.
Courts have frowned upon agreements indicating indefinite stipulations for the exercise of the
right to repurchase and restricted the redemption period to ten (10) years from the date of the contract
of sale, in consonance with the provisions of the Civil Code.
Accordingly, when vendors a retro were granted the right to repurchase properties sold at any
time they have the money, in the month of March of any year, or at any time after the first year,
the Court had not hesitated in imposing the ten (10)-year period, the expiration of which effectively
bars redemption of the subject properties. There have been numerous occasions wherein the SC
invalidated stipulations permitting the repurchase of property only after the lapse of at least ten (10)
years from the date of the execution of the contract for being in contravention of the limitation
mandated by the Civil Code provision. Waivers of such period were likewise held to be void for being
against public policy. (Cebu State College of Science & Technology (CSCST) v. Misterio, et al., G.R. No.
179025, June 17, 2015, Peralta, J).
The Court deemed it necessary to keep within the ten (10)-year period those instances where
parties agree to suspend the right until the occurrence of a certain time, event, or condition, insofar as
the application of the four (4)-year period in the first paragraph of Article 1606 Civil Code would prolong
the exercise of the right beyond ten (10) years. Thus, in Rosales v. Reyes, it was held that in cases
where the four (4)-year period would extend the life of the contract beyond ten (10) years, the vendor
a retro will only have the remainder of the said ten (10)-year period to redeem the property, in line with
the manifest spirit of the law. When, for instance, the contract provides that the right may only be
exercised after seven (7), eight (8), or nine (9) years after the execution of the sale, the vendor a retro
may only redeem the property before the expiration of the ten (10)-year period from the date of the
sale. In line with this, Umale v. Fernandez, et. al., pronounces that the period of redemption agreed
upon by the parties may be extended after the four (4)-year period so long as the total period does not

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exceed ten (10) years from the date of the contract. (Cebu State College of Science & Technology
(CSCST) v. Misterio, et al., G.R. No. 179025, June 17, 2015, Peralta, J).
Void title can be the root of a valid title if transferred to innocent purchaser for value.
A forged deed of sale is null and void and conveys no title, for it is a well-settled principle that
no one can give what one does not have; nemo dat quod non habet. Once can sell only what one owns
or is authorized to sell, and the buyer can acquire no more right than what the seller can transfer
legally. (Consolidated Rural Bank, Inc. v. Court of Appeals, G.R. No. 132161, January 17, 2005, 448 SCRA
347, 363). Due to the forged Deed of Absolute Sale the buyer acquired no right over the subject
property which he could convey to his daughter. All the transactions subsequent to the falsified sale
between him and his daughter are likewise void.
However, it has also been consistently ruled that a forged or fraudulent document may become
the root of a valid title, if the property has already been transferred from the name of the owner to that
of the forger, (Lim v. Chuatoco, G.R. No. 161861, March 11, 2005, 453 SCRA 308), and then to that of
an innocent purchaser for value. (Camper Realty Corp. v. Pajo-Reyes, et al., 646 Phil. 689 [2010]; Rufloe
v. Burgos, supra.; citing Cayana v. Court of Appeals, G.R. No. 125607, March 18, 2004, 426 SCRA 10,
22). This doctrine emphasizes that a person who deals with registered property in good faith will
acquire good title from a forger and be absolutely protected by a Torrens title. This is because a
prospective buyer of a property registered under the Torrens system need not go beyond the title,
especially when she has not notice of any badge of fraud or defect that would place her on guard. In
view of such doctrine, the Court now resolves the second issue of whether or not Maria is an innocent
purchaser for value. (Tolentino, et al. v. Sps. Latagan, et al., G.R. No.179874, June 22, 2015, Peralta, J).
Notarial act of rescission; refund of full payment of cash surrender value; cancellation after
30 days from receipt of notice and payment of cash surrender value.
The cancellation of the contract by the seller must be in accordance with Section 3(b) of the
Maceda Law, which requires the notarial act of rescission and the refund to the buyer of the full
payment of the cash surrender value of the payments made on the property. The actual cancellation of
the contract takes place after thirty (30) days from receipt by the buyer of the notice of cancellation or
the demand for rescission of the contract by a notarial act and upon full payment of the case surrender
value to the buyer. (Sps. Noynay v. Citihomes Builders & Dev. Corp., Inc., G.R. No. 204160, September
22, 2014, Mendoza, J, reiterating Pagtalunan v. Manzano, 559 Phil. 658 [2007]).
The transfer of the subject property is a pactum commissorium; contrary to morals.
The transfer of a property under the name of the buyer of a 4-hectare lot was sold for only
P12,000.00 where the buyer never took possession of the property sold cannot be allowed as it would
amount to condoning the prohibited practice of pactum comissorium. Article 2088 of the Civil Code
clearly provides that a creditor cannot appropriate or consolidate ownership over a mortgaged property
merely upon failure of the mortgagor to pay a debt obligation any stipulation to the contrary is null and
void. (Montevirgen v. Court of Appeals, No. L-44943, March 17, 1982, 112 SCRA 641).
The essence of pactum commissorium is that ownership of the security will pass to the creditor
by the mere default of the debtor. Such arrangements as contrary to morals and public policy. (Guerrero
v. Ynigo, et al, 96 Phil. 37, 41-42 (1954)).
The only right of a mortgagee in case of non-payment of debt secured by mortgage would be to
foreclose the mortgage and have the encumbered property sold to satisfy the outstanding
indebtedness. The mortgagor's default does not operate to automatically vest on the mortgagee the
ownership of the encumbered property, for any such effect is against public policy, as earlier indicated.
(Guanzon vs. Argel, No. L-27706, June 16, 1970, 33 SCRA 474, 478-479; Sps. Solitarios v. Sps. Jaque,
G.R. No. 199852, November 12, 2014).
Effect if a property subject of a mortgage is sold by the mortgagor.
The sale or transfer of the mortgaged property cannot affect or release the mortgage; thus the
purchaser or transferee is necessarily bound to acknowledge and respect the encumbrance. The
mortgage on the property may still be foreclosed despite the transfer because under the law, the
creditor may claim from a third person in possession of the mortgaged property, the payment of the
part of the credit secured by the property which said third person possesses, in terms and with the
formalities which the law establishes. (Art. 2129, NCC).
Since the second mortgage, has not yet been discharged, the said mortgage subsists and is still
enforceable. However, in buying the subject property with notice that it was mortgaged, only undertook
to pay such mortgage or allow the subject property to be sold upon failure of the mortgage creditor to
obtain payment from the principal debtor once the debt matures. The buyer did not obligate herself to
replace the debtor in the principal obligation, and could not do so in law without the creditors consent.
Under the law, novation which consists in subsisting a new debtor in the place of the original one, may
be made even without the knowledge or against the will of the latter, but not without the consent of the
creditor. Payment by the new debtor gives him the rights mentioned in articles 1236 and 1237. (Art.
1293, NCC; Pablo Garcia v. Villar, G.R. No. 158891, June 27, 2012, Leonardo-de Castron, J).
PD 957
Mortgage of title must be with the approval of HLURB; invalidity is not of the whole
mortgage.
A unit buyer has no standing to seek for the complete nullification of the entire mortgage,
because he has an actionable interest only over the unit he has bought. Hence, the mortgage was
nullified only insofar as it affected the unit buyer. (Philippine National Bank v. Lim, the Court reverted
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to the previous ruling in Far East Bank, G.R. No. 171677, January 30, 2013, 689 SCRA 523, 543, citing
Manila Banking Corporation v. Rabina, G.R. No. 145941, December 16, 2008, 574 SCRA 16, 23).
The recent view espoused in Philippine National Bank is in accord with law and equity. While a
mortgage may be nullified if it was in violation of Section 18 of P.D. No. 957, such nullification applies
only to the interest of the complaining buyer. It cannot extend to the entire mortgage. A buyer of a
particular unit or lot has no standing to ask for the nullification of the entire mortgage. Since buyer has
an actionable interest only over its unit, it is but logical to conclude that it has no standing to seek for
the complete nullification of the subject mortgage and the HLURB was incorrect when it voided the
whole mortgage. (United Overseas Bank of the Phil. v. The Board of Commissioners-HLURB, et al., G.R.
No. 182133, June 23, 2015, Peralta, J).
Purpose of prior approval of HLURB.
The prior approval requirement is intended to protect buyers of condominium units from
fraudulent manipulations perpetrated by unscrupulous condominium sellers and operators, such as
their failure to deliver titles to the buyer or titles free from lien and encumbrances. This is pursuant to
the intent of P.D. No. 957 to protect hapless buyers from the unjust practices of unscrupulous
developers which may constitute mortgages over condominium projects sans the knowledge of the
former and the consent of the HLURB.
Thus, failure to secure the HLURB'S prior written approval as required by P.D. No. 957 will not
annul the entire mortgage between the condominium developer and the creditor bank, otherwise the
protection intended for condominium buyers will inadvertently be extended to the condominium
developer even though, by failing to secure the government's prior approval, it is the party at fault.
To rule otherwise would certainly affect the stability of large-scale mortgages, which is prevalent
in the real estate industry. To be sure, mortgagee banks would be indubitably placed at risk if
condominium developers are empowered to unilaterally invalidate mortgage contracts based on their
mere failure to secure prior written approval of the mortgage by the HLURB, which could be easily
caused by inadvertence or by deliberate intent. (United Overseas Bank of the Phil. v. The Board of
Commissioners-HLURB, et al., G.R. No. 182133, June 23, 2015, Peralta, J).
LEASE
Liability of sublessee.
In case of sublease, the sublessee may be liable to the lessor in the following instances:
1. All acts which refer to the use and preservation of the thing leased in the manner stipulated
between the lessor and the lessee. (Art. 1651, NCC);
2. The sublessee is subsidiarily liable to the lessor for any rent due from the lessee. However, the
sublessee shall not be responsible beyond the amount of rent due from him, in accordance with
the terms of the sublease, at the time of the extrajudicial demand by the lessor. (Art. 1652,
NCC). Furthermore, there must be a judgment against the lessee evicting the latter from the
premises where he cannot pay the rentals and the sublessee is in possession. The mere failure
of the lessee to pay the rentals does not make the sublessee subsidiarily liable. (Wheelers Club
Intl., Inc. vv. Bonifacio, Jr., June 30, 2005).
Extension of lease cannot be done if lessee committed grounds for ejectment; extension is
a matter of equity.
In asking for an extension of lease under Article 1687, the lessee lost sight of the restriction
provided in Article 1675 of the Civil Code. It states that a lessee that commits any of the grounds for
ejectment cited in Article 1673, including non-payment of lease rentals and devoting the leased
premises to uses other than those stipulated, cannot avail of the periods established in Article 1687.
(LL & Co. Dev. & Agro-Industrial Corp. v. Huang Chao Chun. 428 Phil. 665 (2002)
Moreover, the extension in Article 1687 is granted only as a matter of equity. The law simply
recognizes that there are instances when it would be unfair to abruptly end the lease contract causing
the eviction of the lessee. It is only for these clearly unjust situations that Article 1687 grants the court
the discretion to extend the lease. An extension will only benefit the wrongdoer and punish the longsuffering property owner. (Lo Chua v. CA, 408 Phil. 877 (2001); Guiang v. Samano, G.R. No. 50501, April
22, 1991, 196 SCRA 114; Umale, et al. v. ASB Realty Corp., G.R. No. 181126, June 15, 2011).
When there is implied renewal of a contract of lease.
An implied new lease or tacita reconcluccion will set in when the following requisites are found
to exist: (a) the term of the original contract of lease has expired; (b) the lessor has not given the
lessee a notice to vacate; (c) the lessee continued enjoying the thing leased for fifteen days with the
acquiescence of the lessor. (Paterno v. CA, 339 Phil. 154 (1997); Samelo v. Manotok Services, Inc., G.R.
No. 170509, June 27, 2012, Brion, J). If the lessor does not notify the lessee of the non-renewal of the
contract, the inaction of the lessor, there can be no inference that it intended to discontinue the lease
contract (Bowe v. CA, G.R. No. 95771, March 19, 1993, 220 SCRA 158).
Period of the lease in an impliedly renewed contract.
In case of an impliedly renewed contract, the period is not the same as that of the original. It
depends upon the manner of payment of the rents. Since the rent is paid on a monthly basis, the period
of lease is considered to be from month to month, in accordance with Article 1687 of the Civil Code. A
lease from month to month is considered to be one with a definite period which expires at the end of
each month upon a demand to vacate by the lessor. (Arquelda v. Phil. Veterans Bank, 385 Phil. 1200
(2000)). When the lessor sent a notice to vacate to the lessee, the tacita reconduccion was aborted,
and the contract is deemed to have expired at the end of that month. A notice to vacate constitutes an
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express act on the part of the lessor that it no longer consents to the continued occupation by the
lessee of its property. (Tagbilaran Integrated Sellers Assn. v. CA, 486 Phil. 386 (2004)). After such
notice, the lessees right to continue in possession ceases and her possession becomes one of detainer.
(Lim v. CA, G.R. Nos. 84154-55, July 20, 2010; Samelo v. Manotok Services, Inc., G.R. No. 170509, June
27, 2012, Brion, J).
Lease with option to buy.
If there is a lease contract with option to buy and it was exercised before it was sold, the sale
cannot be valid because the right of first refusal was exercised before the contract of lease expired and
before it was sold to PUP by the lessor.
An option is a contract by which the owner of the property agrees with another person that the
latter shall have the right to buy the formers property at a fixed price within a certain time. It is a
condition offered or contract by which the owner stipulates with another that the latter shall have the
right to buy the property at a fixed price within a certain time, or under, or in compliance with certain
terms and conditions; or which gives to the owner of the property the right to sell or demand a sale
(Eulogio v. Apeles, G.R. No. 167884, January 20, 2009, 576 SCRA 561, citing Tayag v. Lacson, G.R. No.
134971, March 25, 2004, 426 SCRA 282, 304). It binds the party, who has given the option, not to enter
into the principal contract with any other person during the period designated, and, within that period,
to enter into such contract with the one to whom the option was granted, if the latter should decide to
use the option. (Carceller v. Court of Appeals, G.R. No. 124791, February 10, 1999, 302 SCRA 718, 724;
Polytechnic Univ. of the Phils. v. Golden Horizon Realty Corp., G.R. No. 183612; National Dev. Co. v.
Golden Horizon Realty Corp., G.R. No. 184260, March 15, 2010)
There is a consideration in the grant of a right of first refusal.
Basic is the rule that a party to a contract cannot unilaterally withdraw a right of first refusal
that stands upon valuable consideration. It is not correct to say that there is no consideration for the
grant of the right of first refusal if such grant is embodied in the same contract of lease. Since the
stipulation forms part of the entire lease contract, the consideration for the lease includes the
consideration for the grant of the right of first refusal. In entering into the contract, the lessee is in
effect stating that it consents to lease the premises and to pay the price agreed upon provided
the lessor also consents that, should it sell the leased property, then, the lessee shall be given the right
to match the offered purchase price and to buy the property at that price.
Not even the avowed public welfare or the constitutional priority accorded to education, invoked
by petitioner PUP in the Firestone case, would serve as license for the Court, and any party for that
matter, to destroy the sanctity of binding obligations. While education may be prioritized for legislative
and budgetary purposes, it is doubtful if such importance can be used to confiscate private property
such as the right of first refusal granted to a lessee. (Polytechnic Univ. of the Phils. v. Golden Horizon
Realty Corp., G.R. No. 183612; National Dev. Co. v. Golden Horizon Realty Corp., G.R. No. 184260,
March 15, 2010)
PARTNERSHIP
Effect of sharing of gross returns.
To regard the petitioners as having formed an unregistered partnership would result in
oppressive taxation. Their original purpose was to divide the lots for residential purposes, but they were
compelled to resell because of the high cost of construction. Article 1769[3] of the NCC provides that:
The sharing of gross returns does not of itself establish 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. There must be an unmistakable intention to form a partnership or joint venture. (Obillos v.
CIR, et al., 135 SCRA 436; Pascual v. CIR, 166 SCRA 560).
Effect of sharing of profits.
As early as Tan Eng Kee v. CA, 396 Phil. 68 (2000), it has been ruled that a demand for periodic
accounting is evidence of a partnership (citing Art. 1769, NCC). Elfledo received shares in the profits of
the business which is a prima facie evidence that he was a partner. There was no evidence presented
by petitioners to prove that the receipt of share did not amount to partnership. Bare allegation is not
proof. If it were true that it was Jose Lim and not Elfledo who was the partner, then upon his death, the
partnership should have been dissolved and its assets liquidated. On the contrary, these were not done
but instead its operation continued under the helm of Elfledo and without any participation from the
heirs of Jose Lim. (Heirs of Jose Lim v. Juliet Villa Lim, G.R. No. 172690, March 3, 2010, Nachura, J.)
Rules in the management of the partnership and removal of managers.
(1) The partner who has been appointed manager in the articles of partnership may execute all
acts of administration despite the opposition of his partners, unless he should act in bad faith;
and his power is irrevocable without just or lawful cause. The vote of the partners representing
the controlling interest shall be necessary for such revocation of power.
A power granted after the partnership has been constituted may be revoked at any time. (Art.
1800, NCC)
(2) If two or more partners have been intrusted with the management of the partnership without
specification of their respective duties, or without a stipulation that one of them shall not act
without the consent of all the others, each one may separately execute all acts of
administration, but if any of them should oppose the acts of the others, the decision of the
majority shall prevail. In case of a tie, the matter shall be decided by the partners owning the
controlling interest. (Art. 1801, NCC)
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(3) In case it should have been stipulated that none of the managing partners shall act without the
consent of the others, the concurrence of all shall be necessary for the validity of the acts, and
the absence or disability of any one of them cannot be alleged, unless there is imminent
danger of grave or irreparable injury to the partnership. (Art. 1802, NCC)
(4) When the manner of management has not been agreed upon, the following rules shall be
observed:
(a) All the partners shall be considered agents and whatever any one of them do alone shall
bind the partnership, without prejudice to the provisions of Article 1801.
(b) None of the partners may, without the consent of the others, make any important
alteration in the immovable property of the partnership, even if it may be useful to the
partnership. But if the refusal of consent by the other partners is manifestly prejudicial to
the interest of the partnership, the courts intervention may be sought. (Art. 1803, NCC)
The principle of delectus personarum.
Under the principle of delectus personarum, it is required that for a partner to associate another
with him in his share in the partnership, the consent of all the partners is necessary. This is because of
the mutual trust among the partners and that this is a case of subjective novation. There is subjective
novation when there is a change in the parties to a contract. Their consent thereto is necessary in order
to bind them. (See Art. 1804, NCC)
Effect if a partner sold part of his share of the partnership.
A conveyance by a partner of his whole interest in the partnership does not of itself dissolve the
partnership, or, as against the other partners in the absence of agreement, entitle the assignee, during
the continuance of the partnership, to interfere in the management or administration of the partnership
business or affairs, or to require any information or account of partnership transactions, or to inspect
the partnership books; but it merely entitles the assignee to receive in accordance with his contract the
profits to which the assigning partner would otherwise be entitled. However, in case of fraud in the
management of the partnership, the assignee may avail himself of the usual remedies.
In case of a dissolution of the partnership, the assignee is entitled to receive his assignors
interest and may require an account from the date only of the last account agreed to by all the
partners. (Art. 1813, NCC)
Dissolution of partnership.
The dissolution of a partnership is the change in the relation of the parties ceasing to be
associated in the carrying on, as might be distinguished from the winding up of its business. Upon its
dissolution, the partnership continues and its legal personality is retained until the complete winding up
of its business culminating in its termination.
The dissolution of the partnership does not mean that the juridical entity is immediately
terminated and that the distribution of the assets to its partners should perfunctorily follow. On the
contrary, the dissolution simply effected a change in the relationship among the partners. The
partnership, although dissolved, continues to exist until its termination, at which time the winding up of
its affairs should have been completed and the net partnership assets are partitioned and distributed to
the partners. (Ortega, et al. v. CA, et al., ___ SCRA 529, citing Arts. 828-1829, NCC; Jesus Sy, et al. v. CA,
et al., G.R. 94285; Sy Yong Hu and Sons, et al., v. CA, et al., G.R. No. 94285, August 31, 1999, 111 SCAD
488).
Partnership at will.
A partnership that does not fix its term is a partnership at will. A law partnership is one such
partnership. The birth and life of a partnership at will is predicated on the mutual desire and consent of
the partners. The right to choose with whom a person wishes to associate himself is the very
foundation and essence of that partnership. Its continued existence is, in turn, dependent on the
constancy of that mutual resolve, along with each partners capability to give it, and the absence of a
cause for dissolution provided by the law itself. Verily, any one of the partners may, at his sole pleasure,
dictate a dissolution of the partnership at will. He must, however, act in good faith, not that the
attendance of bad faith can prevent the dissolution of the partnership but that it can result in a liability
for damages.
The dissolution of a partnership is the change in the relation of the parties caused by any
partner ceasing to be associated in the carrying on, as might be distinguished from the winding up, of
the business. (Art. 1828, NCC). Upon its dissolution, the partnership continues and its legal personality
is retained until the complete winding up of its business culminating in its termination. (Art. 1829,
NCC).
AGENCY
Contract of agency may be oral unless the law requires otherwise; requirement of SPA
refers to nature; not to form.
In the absence of any authorization, an agent could not enter into a contract of loan in behalf of
the principal. As held in Yasuma v. Heirs of De Villa, G.R. No. 150350, August 22, 2006, 499 SCRA 466,
472, involving a loan contracted by de Villa secured by real estate mortgages in the name of East
Cordillera Mining Corporation, in the absence of an SPA conferring authority on de Villa, there is no basis
to hold the corporation liable, the power to borrow money is one of those cases where corporate officers
as agents of the corporation need a special power of attorney. In the case at bar, no special power of
attorney conferring authority on de Villa was ever presented. x x x There was no showing that
respondent corporation ever authorized de Villa to obtain the loans on its behalf.
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In Gozun v. Mercado, G.R. No. 167812, December 19, 2006, 511 SCRA 305, 313-314, where it
was held that it is a general rule in the law of agency that, in order to bind the principal by a mortgage
on real property executed by an agent, it must upon its face purport to be made, signed and sealed in
the name of the principal, otherwise, it will bind the agent only. It is not enough merely that the agent
was in fact authorized to make the mortgage, if he has not acte din the name of the principal. (Alvin
Patrimonio v. Napoleon Gutierrez, et al., G.R. No. 187769, June 4, 2014, Brion, J).
Authority need not be in writing.
Article 1878 paragraph 7 of the Civil Code expressly requires a special power of authority before
an agent can loan or borrow money in behalf of the principal. The law does not state that the authority
be in writing. As long as the mandate is express, such authority may be either oral or written. It was
unequivocably declared in Lim Pin v. Liao Tian, et al., 200 Phil. 685 [1982], that the requirement under
Article 1878 of the Civil Code refers to the nature of the authorization and not to its form. Be that as it
may, the authority must be duly established by competent and convincing evidence other than the self
serving assertion of the party claiming that such authority was verbally given, thus:
The requirements of a special power of attorney in Article 1878 of the Civil Code
and of a special authority in Rule 138 of the Rules of Court refer to the nature of the
authorization and not its form. The requirements are met if there is a clear mandate from
the principal specifically authorizing the performance of the act. As early as 1906, this
Court in Strong v. Gutierrez-Repide (6 Phil. 680) stated that such a mandate may be
either oral or written, the one vital thing being that it shall be express. And more recently,
We stated that, if the special authority is not written, then it must be duly established by
evidence:
x x x the Rules require, for attorneys to compromise the litigation of their clients, a
special authority. And while the same does not state that the special authority be in
writing the Court has every reason to expect that, if not in writing, the same be duly
established by evidence other than the self-serving assertion of counsel himself that such
authority was verbally given him. (Home Insurance Company v. United States Lines
Company, et al., 21 SCRA 863; 866; Vicente v. Geraldez, 52 SCRA 210; 225; Alvin
Patrimonio v. Napoleon Gutierrez, et al., G.R. No. 187769, June 4, 2014, Brion, J).
Duty when dealing with agent.
The well-settled rule is that a person dealing with an assumed agent is bound to ascertain not
only the fact of agency but also the nature and extent of the agent's authority. (Lintonjua v. Fernandez,
471 Phil. 440, 458 [2004]). The law requires a higher degree of prudence from one who buys from a
person who is not the registered owner. He is expected to examine all factual circumstances necessary
for him to determine if there are any flaws in the title of the transferor, or in his capacity to transfer the
land. (Abad v. Guimba, 503 Phil. 321, 331-332 [2005]). In ascertaining good faith, or the lack of it, which
is a question of intention, courts are necessarily controlled by the evidence as to the conduct and
outward acts by which alone the inward motive may, with safety, be determined. Good faith, or want of
it, is not a visible, tangible fact that can be seen or touched, but rather a state or condition of mind
which can only be judged by actual or fancied token or signs. (Philippine National Bank v. Militar, 526
Phil. 788, 798 [2006]; Florentina Bautista-Spille v. Nicorp Management & Dev. Corp., et al., G.R. No.
214057, October 19, 2015, Mendoza, J).
Agent must act for and in behalf of principal, otherwise, act not binding on principal.
Mortgage executed by an authorized agent who signed in his own name without indicating that
he acted for and on behalf of his principal binds only the agent and not the principal.
In order to bind the principal by a deed executed by an agent, the deed must upon its face
purport to be made, signed and sealed in the name of the principal. In other words, the mere fact that
the agent was authorized to mortgage the property is not sufficient to bind the principal, unless the
deed was executed and signed by the agent for and on behalf of his principal. (Rural Bank of Bombon
(Camarines Sur), Inc. v. Court of Appeals, G.R. No. 95703, August 3, 1992, 212 SCRA 25, Gozun v.
Mercado, 540 Phil. 323 [2006], and Far East Bank and Trust Company (now Bank of the Philippine Island)
v. Cayetano, G.R. No. 179909, January 25, 2010, 611 SCRA 96; Philippine Sugar Estates Development
Co. v. Poizat, 48 Phil. 536 [1925]; Bucton v. Rural Bank of El Salvador, Inc., Misamis Oriental, et al., G.R.
No. 179625, February 24, 2014, Del Castillo J).
When act of an agent binding upon the principal even if he acted beyond the scope of his
authority.
Under Articles 1898 and 1910, NCC, an agents act, even if done beyond the scope of his
authority, may bind the principal if he ratifies them, whether expressly or tacitly. It must be stressed
though that only the principal, and not the agent, can ratify the unauthorized acts, which the principal
must have knowledge of.
Ratification in agency is the adoption or confirmation by one person of an act performed on his
behalf by another without authority. The substance of the doctrine is confirmation after conduct,
amounting to a substitute for a prior authority. Ordinarily, the principal must have full knowledge at the
time of ratification of all the material facts and circumstances relating to the unauthorized act of the
person who assumed to act as agent. Thus, if material facts were suppressed or unknown,
there can be no valid ratification and this regardless of the purpose or lack thereof in
concealing such facts and regardless of the parties between whom the question of
ratification may arise. Nevertheless, this principle does not apply if the principals ignorance of the
material facts and circumstances was willful, or that the principal chooses to act in ignorance of the
facts. However, in the absence of circumstances putting a reasonably prudent man on
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inquiry, ratification cannot be implied as against the principal who is ignorant of the facts .
(Country Bankers Insurance Corp. v. Keppel Cebu Shipyard, et al., G.R. No. 166044, June 18, 2012,
Leonardo-de Castro, J).
Effect if agent acts beyond scope of authority.
Under the agreement between the plaintiffs and the defendant, the right to sell or dispose of
the properties of the principal by the agent is unequivocally confined to payment of the obligations and
liabilities of petitioners to EIB and none other. Thus, when the agent sold the principals shares to buy
back the KKP shares, the agent acted beyond the ambit of its authority as agent. Such act is surely
illegal and does not bind petitioners as principals. (PACIFIC REHOUSE CORPORATION et al. vs EIB
SECURITIES, INC., G.R. No. 184036, October 13, 2010, VELASCO, JR., J.)
DEPOSIT
Nature of liability of banks; one imbued with public interest.
The business of banking is impressed with public interest and great reliance is made on the
banks sworn profession of diligence and meticulousness in giving irreproachable service. Like a
common carrier whose business is imbued with public interest, a bank should exercise extraordinary
diligence to negate its liability to the depositors. (Solidbank Corporation/Metropolitan Bank and Trust
Company v. Tan, G.R. No. 167346, April 2, 2007, 520 SCRA 123, 129-130). In this instance, the bank is
sorely remiss in the diligence required in treating with its client, Gonzales. It may not wantonly exercise
its rights without respecting and honoring the rights of its clients. Art. 19, NCC applies. (Arlegui v. CA,
378 SCRA 322 (2002); Gonzales v. PCIB, et al., G.R. No. 180257, February 23, 2011).
Deposit in hotels.
If upon arrival of guest at a hotel, the guest gave notice to the doorman and parking attendant
of the hotel when he entrusted the ignition of his car to the latter, and there is loss of the car, the
hotelkeeper is liable because there was a contract of deposit with the hotelkeeper. The contract of
deposit was perfected from the owners delivery, when he handed over the keys to his vehicle with the
parking attendant with the obligation of safely keeping and returning it. Hence, it is liable for damages
for the loss of the car. (Durban Apartments Corp. v. Pioneer Insurance & Surety Corp., G.R. No. 179419,
January 12, 2011, (Abad, J)).
Nature of rent of safety deposit box.
It is a special kind of deposit since the primary function is still the safekeeping of funds,
documents, and other objects. The renting out of the safety deposit boxes is not independent from, but
related to or in conjunction with, the function of safekeeping. (CA Agro-Industrial Dev. Corp. vs. CA, et
al., G.R. No. 90027, March 3, 1993; Sia vs. CA, et al., G.R. No. 102970, May 13, 1993, 222 SCRA 24)
Liability of hotel keeper.
Under the law, the hotel-keeper cannot free himself from responsibility by posting notices to the
effect that he is not liable for the articles brought by the guest. Any stipulation between the hotelkeeper and the guest whereby the responsibility of the former as set forth in Articles 1998 to 2001 is
suppressed or diminished shall be void. (Art. 2003, NCC).
Article 2003 was incorporated in the New Civil Code as an expression of public policy precisely.
The hotel business like the common carriers business is imbued with public interest. Catering to the
public, hotel-keepers are bound to provide not only lodging for hotel guests and security to their
persons and belongings. The twin duty constitutes the essence of the business. The law in turn does
not allow such duty to the public to be negated or diluted by any contrary stipulation in so-called
undertakings that ordinarily appear in prepared forms imposed by hotel-keepers on guests for their
signature. (YHT Realty Corp., et al. v. CA, et al., G.R. No. 126780, February 17, 2005).
Effect if there are two (2) agents.
When two persons contract with regard to the same thing, one of them with the agent and the
other with the principal, and the two contracts are incompatible with each other, that of prior date shall
be preferred, without prejudice to the provisions of Article 1544. (Art. 1916, NCC)
Article 1544, NCC contemplates of a double sale situation. Under said law, whoever registers
the document first in good faith, he being a buyer in good faith and for value, has a preferred right.
If the spouse had a joint account in a bank and they executed a survivorship agreement
which provides that upon the death of one, all the money in the account becomes the
property of the other, the same is valid.
The survivorship agreement is not a conveyance mortis causa which should be embodied in a
will. Here, the monies were conjugal funds which transfer to either spouse was an aleatory contract
subject to an uncertain event which is the death of either. It is a contract with a term, the term being
the death of one. It falls squarely within the definition of an aleatory contract under Art. 2010. By an
aleatory contract, one of the parties or both reciprocally bind themselves to give or to do something in
consideration of what the other shall give or do upon the happening of an event which is uncertain, or
which is to occur at an indeterminate time. (Vitug vs. CA, 183 SCRA 755 [1990])
GUARANTY/MORTGAGE
Distinction between the liability of the guarantor from that of a surety.

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A surety is responsible for the debts payment at once if the principal debtor makes default,
whereas a guarantor pays only if the principal debtor is unable to pay.
A surety is an insurer of the debt, whereas a guarantor is an insurer of the solvency of the
debtor. A suretyship is an undertaking that the debt shall be paid; a guaranty, an undertaking that the
debtor shall pay. Stated differently, a surety promises to pay the principals debt if the principal will not
pay, while a guarantor agrees that the creditor, after proceeding against the principal, may proceed
against the guarantor if the principal is unable to pay. A surety binds himself to perform if the principal
does not, without regard to his ability to do so. A guarantor, on the other hand, does not contract that
the principal will pay, but simply that he is able to do so. In other words, a surety undertakes directly
for the payment and is so responsible at once if the principal debtor makes default, while a guarantor
contracts to pay if, by the use of due diligence, the debt cannot be made out of the principal debtor .
(Palmares v. CA, 351 Phil. 664 [1998]; Trade Investment Dev. Corp. of the Phils., et al. v. Asia Paces
Corp., et al., G.R. No. 187403, February 12, 2014).
Pactum commissorium.
Under the law, the creditor cannot appropriate the things given by way of pledge or mortgage,
or dispose of them. Any stipulation to the contrary is void. (Art. 2088, NCC; Phil. Phosphate Fertilizer
Corp. v. Kamalig Resources, Inc., G.R. No. 165608, December 13, 2007). This stipulation is contrary to
the nature of a true pacto de retro sale since in such sale, ownership of the property sold is
immediately transferred to the vendee a retro upon execution of the sale, subject only to the
repurchase of a vendor a retro within the stipulated period. Undoubtedly, the aforementioned
stipulation is a pactum commissorium because it enables the mortgagee to acquire ownership of the
mortgaged properties without need of any foreclosure proceedings which is a nullity being contrary to
the provisions of Article 2088 of the Civil Code. (Lumayag, et al. v. Heirs of Jacinto Nemeno, et al., G.R.
No. 162112, July 3, 2007).
Reason for the prohibition against pactum commissorium.
The prohibition against pactum commissorium is intended to protect the debtor, pledgor or
mortgagor against being over-reached by the creditor who holds a piece of property, the value of which
is more valuable than the amount of the debt. Furthermore, when the security of the debt is also
money deposited in a bank, the amount of which is less than the debt, it is not illegal for the creditor to
encash the time deposit certificate to pay the debtors obligation.
In addition to the requisites stated in Article 2085, it is indispensable, in order that a mortgage
may be validly constituted, that the document in which it appears be recorded in the Registry of
Property. If the instrument is not recorded, the mortgage is nevertheless binding between the parties.
(Art. 2125, NCC; Yau Chu v. CA, September 26, 1989).
Mortgagor may sell the property mortgaged without the consent of the mortgagee;
applicability of Recto Law (Art. 1484).
The mortgagor may sell the thing mortgaged, but, when a mortgagor sells the mortgaged
property to a third person, the creditor may demand from such third person the payment of the
principal obligation. The reason for this is that the mortgage credit is a real right, which follows the
property wherever it goes, even if its ownership changes. Article 2129 of the Civil Code gives the
mortgagee, the option of collecting from the third person in possession of the mortgaged property in
the concept of owner (Teoco v. Metrobank, G.R. No. 162333, December 23, 2008, 575 SCRA 82). The
mortgagor-owners sale of the property does not affect the right of the registered mortgagee to
foreclose on the same even if its ownership had been transferred to another person. The latter is
bound by the registered mortgage on the title he acquired.
The contract cannot absolutely forbid the mortgagor, as owner of the mortgaged property, from
selling the same while her loan remained unpaid. Such stipulation contravenes public policy, being an
undue impediment or interference on the transmission of property. (Cinco v. CA, G.R. No. 151903,
October 9, 2009, 603 SCRA 108; Sps. Antonio & Leticia Vega v. SSS, et al., G.R. No. 181672, September
20, 2010)
Concept of blanket mortgage clause or a dragnet clause.
A blanket mortgage clause, also known as a dragnet clause is one which is specifically
phrased to subsume all debts of past or future origins. Mortgages of this character enable the parties to
provide continuous dealings, the nature or extent of which may not be known or anticipated at the
time, and they avoid the expense and inconvenience of executing a new security on each new
transaction. A dragnet clause operates as a convenience and accommodation to the borrowers as it
makes available additional funds without their having to execute additional security documents,
thereby saving time, travel, loan closing costs, costs of extra legal services, recording fees, et cetera.
Indeed, it has been settled in a long line of decisions that mortgages given to secure future
advancements are valid and legal contracts (Mojica vs. CA, G.R. No. 94247, September 11, 1991, 201
SCRA 517),and the amounts named as consideration in said contracts do not limit the amount for which
the mortgage may stand as security if from the four corners of the instrument the intent to secure
future and other indebtedness can be gathered. (China Banking Corp. vs. CA, 333 Phil. 158 [1996];
Prudential Bank vs. Don A. Alviar, et al., G.R. No. 150197, July 28, 2005)
Exceptions to blanket mortgage clause; other obligations secured by other different
securities.
The foreclosure should be limited for the amount of 250,000. because the other obligations
were secured by other securities. The mortgage with such a clause will not secure a note that
expresses that it is secured by another security. When the mortgagor takes another loan for which
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another security was given, it could not be inferred that such loan was made in reliance solely on the
original security with the dragnet clause, but rather, on the new security given. It is therefore improper
for the bank to foreclose the mortgaged properties because of non-payment of all the three promissory
notes for there is a need to respect the existence of the other securities given for other loans.
(Prudential Bank vs. Alviar, et al., G.R. No. 150197, July 28, 2005)
MUTUUM INTERESTS
Interest rate is now 6% per annum.
There has been a change in the rules on interest from 12% per annum to 6% per annum in view
of the amendment to Circular No. 905 Series of 1982. The landmark case of Eastern Shipping Lines, Inc.
v. CA, G.R. No. 97412, July 12, 1994, 234 SCRA 78 is no longer controlling in view of the recent ruling in
Dario Nacar v. Gallery Frames and/or Felipe Bordey, Jr., G.R. No. 189871, August 13, 2013, Peralta, J.
Compounding of interest must be in writing.
The compounding of interest should be in writing. As mandated by the foregoing provision,
payment of monetary interest shall be due only if: (1) there was an express stipulation for the payment
of interest; and (2) the agreement for such payment was reduced in writing. Thus, the collection of
interest without any stipulation thereof in writing is prohibited by law.
The first requirementthat there be an express stipulation for the payment of interestis not
sufficiently complied with, for purposes of imposing compounded interest on the loan. The requirement
does not only entail reducing in writing the interest rate to be earned but also the manner of earning
the same, if it is to be compounded. Failure to specify the manner of earning interest, however, shall
not automatically render the stipulation imposing the interest rate void since it is readily apparent from
the contract itself that the parties herein agreed for the loan to bear interest. Instead, in default of any
stipulation on the manner of earning interest, simple interest shall accrue. (SPOUSES TAGUMPAY N.
ALBOS and AIDA C. ALBOS v. SPOUSES NESTOR M. EMBISAN, et al., G.R. No. 210831. November 26,
2014. THIRD DIVISION. Velasco, JR., J; TING TING PUA v. SPOUSES BENITO LO BUN TIONG and CAROLINE
SIOK CHING TENG, G.R. No. 198660, October 23, 2013, Velasco, Jr., J.)
2.5% interest per month; unconscionable; void.
If the parties have agreed to pay monthly interest at the rate of 2.5%, this is unconscionable. In
Castro v. Tan, 620 Phil. 239, (2009) the willingness of the parties to enter into a relation involving an
unconscionable interest rate is inconsequential to the validity of the stipulated rate:
The imposition of an unconscionable rate of interest on a money debt, even if
knowingly and voluntarily assumed, is immoral and unjust. It is tantamount to a
repugnant spoliation and an iniquitous deprivation of property, repulsive to the common
sense of man. It has no support in law, in principles of justice, or in the human
conscience nor is there any reason whatsoever which may justify such imposition as
righteous and as one that may be sustained within the sphere of public or private
morals. (citing Ibarra v. Aveyro, 37 Phil. 273, 282 (1917)).
The imposition of an unconscionable interest rate is void ab initio for being contrary to morals,
and the law. (CIVIL CODE, Art. 1306).
Stipulated interest of 3% or more is excessive; void.
A contract of loan secured by mortgage was entered into with a stipulated interest of 3% per
month is not valid.
It is void because it is excessive, iniquitous, unconscionable and exorbitant, hence, illegal, and void for
being contrary to morals. In Agner v. BPI, Inc., it was ruled that settled is the principle that stipulated
interest rates of three percent (3%) per month and higher are excessive, iniquitous, unconscionable,
and exorbitant. While Central Bank Circular No. 905-82 which took effect on January 1, 1983, (as
amended by Cir. No. 799) effectively, removed the ceiling on interest rates for both secured and
unsecured loans, regardless of maturity, nothing in the said circular could possibly be read as granting
carte blanche authority to lenders to raise interest rates to levels which would either enslave their
borrowers or lead to a hemorrhaging of their assets. Since the stipulation on the interest rate is void for
being contrary to morals, if not against the law, it is as if there was no express contract on said interest
rate; thus, the interest rate may be reduced as reason and equity demand. (Marilag v. Martinez, G.R.
No. 201892, July 22, 2015, Perlas-Bernabe, J).
Effect if there is lack of a written stipulation to pay interest on the loaned amount.
Well-settled is the rule that if there is no express stipulation on interest, no interest shall be due.
(De La Paz v. L & J Dev. Co., G.R. No. 183360, September 8, 2014, Del Castillo). Under Article 1956 of the
Civil Code, no interest shall be due unless it has been expressly stipulated in writing. Jurisprudence on
the matter also holds that for interest to be due and payable, two conditions must concur: (a) express
stipulation for the payment of interest; and (b) the agreement to pay interest is reduced in writing.
If the parties did not put down in writing their agreement, no interest is due. The collection
without stipulation in writing is prohibited by law. (Siga-an v. Villanueva, 596 Phil. 760, 769 [2009]; Sun
Life of Canada (Phils.), Inc. v. Sandra Tan Kit, et al., G.R. No. 183272, October 15, 2014, Del Castillo;
Federal Builders, Inc. v. Foudnation Specialsts, Inc., G.R. No. 194507, September 8, 2014).
Escalation clause valid; when.
The credit document issued by a bank allows it to increase or decrease interest rates within the
limits allowed by law at any time depending on whatever policy it may adopt in the future is not valid.
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Such stipulation and similar ones were declared in violation of Article 1308 of the Civil Code. The
very same stipulations found in the credit agreement and the promissory notes prepared and issued by
the respondent were again invalidated.
In Spouses Almeda v. Court of Appeals, 326 Phil. 309 [1996], the SC said:
The binding effect of any agreement between parties to a contract is premised on
two settled principles: (1) that any obligation arising from contract has the force of law
between the parties; and (2) that there must be mutuality between the parties based on
their essential equality. Any contract which appears to be heavily weighed in favor of one
of the parties so as to lead to an unconscionable result is void. Any stipulation regarding
the validity or compliance of the contract which is left solely to the will of one of the
parties, is likewise, invalid.
Escalation clauses are not basically wrong or legally objectionable so long as they are not solely
potestative but based on reasonable and valid grounds. Here, as clearly demonstrated above, not only
are the increases of the interest rates on the basis of the escalation clause patently unreasonable and
unconscionable, but also there are no valid and reasonable standards upon which the increases are
anchored. (Philippine National Bank v. Court of Appeals, 273 Phil. 789, 796-797, 799 [1991]; Philippine
National Bank v. Court of Appeals, G.R. No. 107569, November 8, 1994, 238 SCRA 20; Sps. Sitos v. PNB,
G.R. No. 181405, July 2, 2014).
QUASI-DELICT and DAMAGES
Employer is liable for the loss of cargo due to acts of its employees.
If there is a contract for the delivery of cargo, but there was failure to deliver because the
employees were instrumental in the hijacking or robbery of the shipment the employer is liable for the
acts of the employees. The employer should be made answerable for damages. Whenever an
employees negligence causes damage or injury to another, there instantly arises a presumption juris
tantum that the employer failed to exercise diligentissimi patris families in the selection (culpa in
eligiendo) or supervision (culpa in vigilando) of its employees. (Tan v. Jam Transit, Inc., G.R. No. 183198,
November 25, 2009, 605 SCRA 659, 675, citing Delsan Transport Lines, Inc. v. C & A Construction,
Inc., 459 Phil. 156 (2003)). To avoid liability for a quasi-delict committed by its employee, an employer
must overcome the presumption by presenting convincing proof that he exercised the care and
diligence of a good father of a family in the selection and supervision of his employee. In this regard,
Loadmasters failed. (Loadmasters Customs Services, Inc. v. Glodel Brokerage Corp., et al., G.R. No.
179446, January 10, 2011).
Effect if there are several causes for the resulting damages of goods that are supposed to
be delivered by a party.
The extent of the respective liabilities of several parties if the cause of loss is due to their
negligence is that, they are solidarily liable.
Each wrongdoer is liable for the total damage suffered. Where there are several causes for the
resulting damages, a party is not relieved from liability, even partially. It is sufficient that the
negligence of a party is an efficient cause without which the damage would not have resulted. It is no
defense to one of the concurrent tortfeasors that the damage would not have resulted from his
negligence alone, without the negligence or wrongful acts of the other concurrent tortfeasor.
Employer is liable for negligent act of employee acting within scope of assigned tasks.
Under Article 2180 of the New Civil Code, employers are liable for the damages caused by their
employees acting within the scope of their assigned tasks. Once negligence on the part of the
employee is established, a presumption instantly arises that the employer was remiss in the selection
and/or supervision of the negligent employee. To avoid liability for the quasi-delict committed by its
employee, it is incumbent upon the employer to rebut this presumption by presenting adequate and
convincing proof that it exercised the care and diligence of a good father of a family in the selection
and supervision of its employees. (Lampesa v. De Vera, et. al., supra note 11, at 20-21, citing Syki v.
Begasa, 460 Phil. 381, 386 [2003]; R. Transport Corp. v. Yu, G.R. No. 174161, February 18, 2015,
Peralta, J).
Effect if suit is based on tort.
If an action is based on tort or quasi-delict under Article 2176, in relation to Article 2180 of the
New Civil Code, as such, the liability for which employer is being made responsible actually arises not
from a pre-existing contractual relation between employer and the deceased, but from a damage
caused by the negligence of its employee, the employer cannot escape its solidary liability for the
liability of the employer for the negligent conduct of its subordinate is direct and primary, subject only
to the defense of due diligence in the selection and supervision of the employee. (Rafael Reyes
Trucking Corporation v. People of the Philippines, 386 Phil. 41, 57 [2000]).
Indeed, it is for the better protection of the public for both the owner of record and the actual
operator to be adjudged jointly and severally liable with the driver. (Zamboanga Transportation
Company, Inc. v. Court of Appeals, 141 Phil. 406, 413 [1969], citing the Decision of Court of Appeals
Justice Fred Ruiz Castro, citing Dizon v. Octavio, et al., 51 O.G. No. 8, 4059-4061; Castanares v. Pages,
CA-G.R. No. 21809-R, March 8, 1962; Redado v. Bautista, CA G.R. No. 19295-R, Sept. 19, 1961; Bering v.
Noeth, CA-G.R. No. 28483-R, April 29, 1965). The principle of holding the registered owner liable for
damages notwithstanding that ownership of the offending vehicle has already been transferred to
another is designed to protect the public and not as a shield on the part of unscrupulous transferees of

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the vehicle to take refuge in, inorder to free itself from liability arising from its own negligent act. (R.
Transport Corp. v. Yu, G.R. No. 174161, February 18, 2015, Peralta, J).
Liability of registered owner of vehicle although not the actual operator; reasons.
The registered-owner rule has remained good law in this jurisdiction considering its impeccable
and timeless rationale, as enunciated in the 1957 ruling in Erezo, et al. v. Jepte, 102 Phil. 103, 108-109
[1975] where the Court pronounced:
Registration is required not to make said registration the operative act by which
ownership in vehicles is transferred, as in land registration cases, because the
administrative proceeding of registration does not bear any essential relation to the
contract of sale between the parties (Chinchilla vs. Rafael and Verdaguer, 39 Phil. 888),
but to permit the use and operation of the vehicle upon any public highway (section 5
[a], Act No. 3992, as amended.) The main aim of motor vehicle registration is to identify
the owner so that if any accident happens, or that any damage or injury is caused by the
vehicle on the public highways, responsibility therefor can be fixed on a definite
individual, the registered owner. Instances are numerous where vehicles running on
public highways caused accidents or injuries to pedestrians or other vehicles without
positive identification of the owner or drivers, or with very scant means of identification.
It is to forestall these circumstances, so inconvenient or prejudicial to the public, that
the motor vehicle registration is primarily ordained, in the interest of the determination
of persons responsible for damages or injuries caused on public highways. (King vs.
Brenham Automobile Co., 145 S.W. 278, 279; Metro Manila Transit Corp. v. Cuevas, G.R.
No. 167797, June 15, 2015, Bersamin, J)
x x x It is well settled that in case of motor vehicle mishaps, the registered
owner of the motor vehicle is considered as the employer of the tortfeasordriver, and is made primarily liable for the tort committed by the latter under Article
2176, in relation with Article 2180, of the Civil Code. (Filcar Transport Services v.
Espinas, G.R. No. 174156, June 20, 2012, 674 SCRA 117, 128-130).
Remedy of registered owner.
Although the registered-owner rule might seem to be unjust towards MMTC, the law did not
leave it without any remedy or recourse. According to Filcar Transport Services v. Espinas,14 MMTC
could recover from Minas Transit, the actual employer of the negligent driver, under the principle of
unjust enrichment, by means of a cross-claim seeking reimbursement of all the amounts that it could
be required to pay as damages arising from the drivers negligence. A cross-claim is a claim by one
party against a co-party arising out of the transaction or occurrence that is the subject matter either of
the original action or of a counterclaim therein, and may include a claim that the party against whom it
is asserted is or may be liable to the cross-claimant for all or part of a claim asserted in the action
against the cross-claimant. (Metro Manila Transit Corp. v. Cuevas, G.R. No. 167797, June 15, 2015,
Bersamin, J).
Liability of hotelkeeper for the death of a guest.
The hotelkeeper is liable for damages in case of death of a guest inside his room occasioned by
trespassers. The hotel business is imbued with public interest. Catering to the public, hotelkeepers are
bound to provide not only lodging for their guests but also security to the persons and belongings of
their guests. The twin duty constitutes the essence of the business. (YHT Realty Corp. v. CA, G.R. No.
126780, February 17, 2005, 451 SCRA 638). Applying by analogy Article 2000, Article 2001, and Article
2002 of the Civil Code (all of which concerned the hotelkeepers degree of care and responsibility as to
the personal effects of their guests), it was held that there is much greater reason to apply the same if
not greater degree of care and responsibility when the lives and personal safety of their guests are
involved. Otherwise, the hotelkeepers would simply stand idly by as strangers have unrestricted access
to all the hotel rooms on the pretense of being visitors of the guests, without being held liable should
anything untoward befall the unwary guests. That would be absurd, something that no good law would
ever envision. (Makati Shang-ri La Hotel & Resort, Inc. v. Harper, et al., G.R. No. 189998, August 29,
2012, Bersamin, J).
Res ipsa loquitur.
Literally, res ipsa loquitur means the thing speaks for itself. It is the rule that the fact of the
occurrence of an inquiry, taken with the surrounding circumstances, may permit an inference or raise a
presumption of negligence, or make out a plaintiffs prima facie case, and present a question of fact for
defendant to meet with an explanation. (Ramos v. CA, G.R. No. 124354, December 29, 1999, 321 SCRA
584). Stated differently, where the thing which caused the injury, without the fault of the injured, is
under the exclusive control of the defendant and the injury is such that it should not have occurred if
he, having such control used proper care, it affords reasonable evidence, in the absence of explanation
that the injury arose from the defendants want of care, and the burden of proof is shifted to him to
establish that he has observed due care and diligence. (Africa v. Caltex (Phils.) Inc., 123 Phil. 280).
The requisites for the applicability of the doctrine of res ipsa loquitur are: (1) the occurrence of
an injury; (2) the thing which caused the injury was under the control and management of the
defendant; (3) the occurrence was such that in the ordinary course of things, would not have happened
if those who had control or management used proper care; and (4) the absence of explanation by the
defendant. Of the foregoing requisites, the most instrumental is the control and management of the
thing which cause the injury.
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The element of control and management of the thing which caused the injury are wanting in
the case. Hence, the doctrine of res ipsa loquitur will not lie. (Professional Services, Inc. v. Agana, G.R.
No. 126297; Agana v. Juan Fuentes, G.R. No. 126467; Ampil v. Agana, G.R. No. 127590, January 31,
2007).
Effect if a driver was driving at a speed beyond the rate of speed required by law, at the
time of a vehicular accident.
He is presumed negligent. (Section 35, R.A. No. 4136). Under the New Civil Code, unless there is
proof to the contrary, it is presumed that a person driving a motor vehicle has been negligent if at the
time of the mishap, he was violating any traffic regulation. (Art. 2185, NCC). The driver's violation of the
traffic rules does not erase the presumption that he was the one negligent at the time of the collision.
Even apart from statutory regulations as to speed, a motorist is expected to exercise ordinary care and
drive at a reasonable rate of speed commensurate with all the conditions encountered (Caminos, Jr.
v. People, G.R. No. 147437, May 8, 2009, 587 SCRA 348, 361, citing Foster v. ConAgra Poultry Co., 670
So.2d 471) which will enable him to keep the vehicle under control and, whenever necessary, to put the
vehicle to a full stop to avoid injury to others using the highway. (Nunn v. Financial Indem. Co., 694
So.2d 630; Filipinas Synthetic Fiber Corp. v. Wilfredo delos Santos, et al., G.R. No. 152033, March 16,
2011).
Banks are required to exercise higher degree of diligence in dealing with the accounts of
clients.
A bank can be held liable for damages due to its negligence if it honors a check issued dated
5/3/0/92. It is a defective one. The proximate cause of the damage done in debiting a check dated
5/3/0/92 was the banks negligence in debiting the account prior to the date as appearing in the check
which resulted in the subsequent dishonour of several checks.
If, indeed, the bank was confused on whether the check was dated May 3 or May 30 because of
the / which allegedly separated the number 3 from the 0, petitioner should have required
respondent drawer to countersign the said / in order to ascertain the true intent of the drawer before
honoring the check. As a matter of practice, bank tellers would not receive nor honor such checks
which they believe to be unclear, without the counter-signature of its drawer. The bank should have
exercised the highest degree of diligence required of it by ascertaining from the respondent the
accuracy of the entries therein, in order to settle the confusion, instead of proceeding to honor and
receive the check.
The diligence required of banks, therefore, is more than that of a good father of a family.
(Samsung Construction Company Philippines, Inc. v. Far East Bank and Trust Company, G.R. No.
129015, August 13, 2004, 436 SCRA 402, 421) In every case, the depositor expects the bank to treat
his account with the utmost fidelity, whether such account consists only of a few hundred pesos or of
millions. The bank must record every single transaction accurately, down to the last centavo, and as
promptly as possible. This has to be done if the account is to reflect at any given time the amount of
money the depositor can dispose of as he sees fit, confident that the bank will deliver it as and to
whomever he directs. (Metropolitan Bank and Trust Company v. Cabilzo, G.R. No. 154469, December 6,
2006, 510 SCRA 259, 270) From the foregoing, it is clear that petitioner bank did not exercise the
degree of diligence that it ought to have exercised in dealing with its client. (Equitable Bank v. Tan, G.R.
No. 165339, August 23, 2010).
DAMAGES
Compensatory damages for loss of capacity to earn; when recoverable.
Under Article 2206 of the Civil Code, the heirs of the victim are entitled to indemnity for loss of
earning capacity. Compensation of this nature is awarded not for loss of earnings, but for loss of
capacity to earn. The indemnification for loss of earning capacity partakes of the nature of actual
damages which must be duly proven by competent proof and the best obtainable evidence thereof.
Thus, as a rule, documentary evidence should be presented to substantiate the claim for damages for
loss of earning capacity. By way of exception, damages for loss of earning capacity may be awarded
despite the absence of documentary evidence when (1) the deceased is self-employed and earning less
than the minimum wage under current labor laws, in which case, judicial notice may be taken of the
fact that in the deceased's line of work no documentary evidence is available; or (2) the deceased is
employed as a daily wage worker earning less than the minimum wage under current labor laws. (Jose
v. Angeles, G.R. No. 187899, October 23, 2013, 708 SCRA 506; People v. Villar, G.R. No. 202708, April
13, 2015, Del Castillo, J).
Death due to crime; amount of damages.
When death occurs due to a crime, the following damages may be awarded: (1) civil indemnity
ex delicto for the death of the victim; (2) actual or compensatory damages; (3) moral damages; ( 4)
exemplary damages; and ( 5) temperate damages. (People v. Nelmida, G.R. No. 184500, September 11,
2012, 680 SCRA 386, 437).
Prevailing jurisprudence pegs the amount of civil indemnity and moral damages awarded to the
heirs of the victim of Parricide at P75,000.00 each. (People v. Tibon, 636 Phil. 521, 533 (2010)). The
temperate damages awarded by the RTC in the amount of P30,000.00 should be decreased to
P25,000.00 to also conform with the latest jurisprudence. It is fitting to additionally award exemplary
damages in the sum of P30,000.00 considering the presence of the qualifying circumstance of
relationship. (People v. Guting, G.r. No. 205412, September 9, 2015, Leonardo-De Castro, J).
Award of damages.
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Nominal damages are recoverable where a legal right is technically violated and must be
vindicated against an invasion that has produced no actual present loss of any kind. Its award is thus
not for the purpose of indemnification for a loss but for the recognition and vindication of a right. In the
present case, Gonzales had the right to be informed of the accrued interest and most especially, for the
suspension of his COHLA. For failure to do so, the bank is liable to pay nominal damages.
Moreover, the failure to give prior notice when required constitutes a breach of contract and is a
clear violation of Art. 21 of the Code which entitles the client to an award for moral damages. Even in
the absence of malice or bad faith, a depositor still has the right to recover reasonable moral damages,
if the depositor suffered mental anguish, serious anxiety, embarrassment, and humiliation. (EUSEBIO
GONZALES v. PCIB, et al., G.R. No. 180257, February 23, 2011, Velasco, J.)
Evidence necessary to recover compensatory damages.
The evidence to prove compensatory damages must be satisfactory.
Actual damages cannot be presumed and courts, in making an award, must point out specific
facts which could afford a basis for measuring whatever compensatory or actual damages are borne.
(Canada v. All Commodities Marketing Corporation, 590 Phil. 3452, 350 [2008] citing B.F. Metal
(Corporation) v. Sps. Rolando M. Lomotan, G.R. No. 170813, April 16, 2008, 551 SCRA 618). An award of
actual damages is dependent upon competent proof of the damages suffered and the actual amount
thereof. The award must be based on the evidence presented, not on the personal knowledge of the
court; and certainly not on flimsy, remote, speculative and unsubstantial proof. (Manila Electric
Company (MERALCO) v. Castillo, supra. citing Quisumbing v. Manila Electric Company, G.R. No. 142943,
April 3, 2002, 380 SCRA 195, 211-212).
In the absence of competent proof on the amount of actual damages suffered, a party is entitled
to received temperate damages. (Manila Electric Company (MERALCO) v. Castillo, supra., citing Duenas
v. Guce-Africa, G.R. No. 165679, October 5, 2009, 603 SCRA 11, 22). Article 2224 of the New Civil Code
provides that: Temperate or moderates damages, which are more than nominal but less than
compensatory damages, may be recovered when the court finds that some pecuniary loss has been
suffered but its amount cannot, from the nature of the case, be proved with certainty. The amount
thereof is usually left to the sound discretion of the courts but the same should be reasonable, bearing
in mind that temperate damages should be more than nominal but less than compensatory.
Considering the concomitant circumstances prevailing in this case, temperate damages in the amount
of P350,000.00 is deemed equitable. (International Container Terminal Services, Inc. v. Chua, G.R. No.
195031, March 26, 2014, Peralta, J).
LAND REGISTRATION
Land registration court has no jurisdiction over land already decreed under the name of
another.
An application for registration over a portion of a big lot covered by a TCT may not be granted.
A land registration court has no jurisdiction to order the registration of land already decreed in the
name of another in an earlier land registration case. Issuance of another decree covering the same land
is, therefore, null and void. (Top Management Programs Corporation v. Fajardo, G.R. No. 150462, June
15, 2011, 652 SCRA 18, 37, and Mercado v. Valley Mountain Mines Exploration, Inc., G.R. Nos. 141019,
164281, and 185781, November 23, 2011, 661 SCRA 13, 44).
The rationale behind the Torrens System is that the public should be able to rely on a registered
title. The Torrens System was adopted in this country because it was believed to be the most effective
measure to guarantee the integrity of land titles and to protect their indefeasibility once the claim of
ownership is established and recognized. The real purpose of the Torrens System is to quiet title to land
and to stop forever any question as to its legality. Once a title is registered, the owner may rest secure,
without the necessity of waiting in the portals of the court, or sitting on the "mirador su casa" to avoid
the possibility of losing his land. (Ingusan v. Heirs of Reyes, 558 Phil. 50, 61 [2007]; Francisco v. Rojas,
et al., G.R. No. 167120, April 23, 2014, Peralta, J).
A Certificate of Title cannot be subject to collateral attack.
It is settled in this jurisdiction that the issue of the validity of title can only be assailed in an
action expressly instituted for such purpose. (Ingusanl, Miguel v. Heirs of Aureliano I. Reyes, 558 Phil.
60 (2007), citing Caraan v. Court of Appeals, 551 Phil. 172 (2005); and Spouses Apostol v. Court of
Appeals, 476 Phil. 414 (2004)). A certificate of title cannot be attacked collaterally. This rule is provided
under Section 48 of PD 1529 which states that a certificate of title shall not be subject to collateral
attack. It cannot be altered, modified, or canceled except in a direct proceeding in accordance with law.
(Wee v Mardo, G.R. No. 202414, June 4, 2014, Mendoza, J).
SUBSEQUENT REGISTRATION
Bernardo knew that Bolos never acquired possession over the lot. In his direct testimony,
Bernardo admitted that he knew of the prior compromise agreement entered by Locsin with Aceron
which recognized Locsin as the registered owner of the land. Having knowledge of the foregoing facts,
Bernardo and Carlos should have been impelled to investigate the reason behind the arrangement. If
Bolos already acquired ownership of the property as early as 1979, it should have been her who
entered into a compromise agreement with Aceron in 1993, not her predecessor-in-interest, Locsin,
who, theoretically, had already divested herself of ownership thereof. The transfer to Spouses Guevara
was also suspicious since there was no deed evidencing the sale. It appeared that the mortgage was a
mere ploy to make it appear that the Sps. Guevara exercised acts of dominion over the subject
property when in fact the Spouses had lack of interest in protecting themselves in the case.
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The circumstances, taken altogether, strongly indicate that Carlos and the spouses Guevara
failed to exercise the necessary level of caution expected of a bona fide buyer. An innocent purchaser
for value is one who buys the property of another without notice that some other person has a right to
or interest in it, and who pays a full and fair price at the time of the purchase or before receiving any
notice of another persons claim. (ENRIQUETA M. LOCSIN v. BERNARDO HIZON, et al., G.R. No. 204369,
September 17, 2014, Velasco Jr., J.)
CONFIRMATION OF IMPERFECT TITLE
PD 1529 merely requires the property sought to be registered as already alienable and
disposable at the time the application for registration of title is filed. The required possession is not be
reckoned from the time of the declaration of the property as alienable and disposable. Since Section
48(b) merely requires possession since June 12, 1945 and does not require that the lands should have
been alienable and disposable during the entire period of possession, the possessor is entitled to
secure judicial confirmation of his title thereto as soon as it is declared alienable and disposable.
(REPUBLIC OF THE PHILIPPINES v. IGLESIA NI CRISTO, et al., G.R. No. 180067, June 30, 2009, VELASCO,
JR., J.)

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