CIVILization Flashcards
Newspaper of General Circulation
To be a newspaper of general circulation, it is enough that it is published for the dissemination of local news and general information; that it has a bona fide subscription list of paying subscribers; and that it is published at regular intervals. The newspaper must not also be devoted to the interests or published for the entertainment of a particular class, profession, trade, calling, race or religious denomination. The newspaper need not have the largest circulation so long as it is of general circulation. (Perez vs. Perez, G.R. No. 143768, March 28, 2005)
May procedural laws be given retroactive effect?
Yes. Procedural laws may be given retroactive effect to actions pending and undetermined at the time of their passage, there being no vested rights in rules of procedure.
Do interpretations of law made by courts have retroactive effect?
Yes. Interpretations of law made by courts necessarily always have a “retroactive” effect. The Supreme Court (SC), in construing the law, merely declares what a particular provision has always meant. It does not create new legal obligations. The SC does not have the power to legislate.
The general rule that a rule of procedure can be given retroactive effect admits of exceptions, such as
a. where the rule itself expressly; or
b. by necessary implication provides that pending actions are excepted from its operation; or
c. where to apply it to pending proceedings would impair vested
rights.
Rights may be waived, unless the waiver is
Contrary to:
a. law
b. public order
c. public policy
d. morals or
e. good customs
or prejudicial to a third person with a right to be recognized by law
For there to be a valid waiver, the following requisites are essential:
(1) that the person making
the waiver possesses the right
(2) that he has the capacity and power to dispose of the right
(3) that the waiver must be clear and unequivocal although it may be made expressly or impliedly, and
(4) that the waiver is not contrary to law, public policy, public order, morals, good customs or prejudicial to a third person with a right recognized by law.
Pro hac vice
Pro hac vice means a specific decision does not constitute a precedent because the decision is for the specific case only, not to be followed in other cases. A pro hac vice decision violates statutory law — Article 8 of the Civil Code — which states that “judicial decisions applying or interpreting the laws or the Constitution shall form part of the legal system of the Philippines.”
The decision of the Court in this case cannot be pro hac vice because by mandate of the law every decision of the Court forms part of the legal system of the Philippines. If another case comes up with the same facts as the present case, that case must be decided in the same way as this case to comply with the constitutional mandate of equal protection of the law. Thus, a pro hac vice decision also violates the equal protection clause of the Constitution. Knights of Rizal vs. DMCI Homes, Inc., G.R. No. 213948, April 25, 2017
A year is composed of
Under the Administrative Code of 1987, a year is composed of 12 calendar months. Needless to state, under the Administrative Code of 1987, the number of days is irrelevant.
Forum non conveniens
Under the doctrine of forum non conveniens, a Philippine court in a conflict-of-laws case may assume jurisdiction if it chooses to do so, provided, that the following requisites are met:
(1) that the Philippine Court is one to which the parties may conveniently resort to;
(2) that the Philippine Court is in a position to make an intelligent decision as to the law and the facts; and
(3) that the Philippine Court has or is likely to have power to enforce its decision.
Doctrine of processual presumption
Under the doctrine of processual presumption, the party invoking the application of a foreign law has the burden of proving the law. The foreign law is treated as a question of fact to be properly pleaded and proved as the judge or labor arbiter cannot take judicial notice of a foreign law. However, where a foreign law is not pleaded or, even if pleaded, is not proved, the presumption is that foreign law is the same as ours. (In the Matter of the Testate Estate of Aida A. Bambao, Linda A. Kucskar v. Sekito Jr., G.R. No. 237449, December 2, 2020)
Is the effect of foreign judgment automatic?
No. The effect of a foreign judgment is not automatic. To extend the effect of a foreign judgment in the Philippines, Philippine courts must determine if the foreign judgment is consistent with domestic public policy and other mandatory laws.
Thus, the Philippine State may require, for effectivity in the Philippines, recognition by Philippine courts of a foreign judgment affecting its citizen, over whom it exercises personal jurisdiction relating to the status, condition and legal capacity of such citizen.
Rule of lex nationalii
A foreign judgment relating to the status of a marriage affects the civil status, condition and legal capacity of its parties. Article 15 of the Civil Code 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.”
Lex loci rei sitae
All matters concerning the title and disposition of real property are determined by what is known as the lex loci rei sitae, which can alone prescribe the mode by which a title can pass from one person to another, or by which an interest therein can be gained or lost.
It is a universal principle that real or immovable property is exclusively subject to the laws of the country or state where it is located. The reason is found in the very nature of immovable property — its immobility. Immovables are part of the country and so closely connected to it that all rights over them have their natural center of gravity there.
This general principle includes all rules governing the descent, alienation and transfer of immovable property and the validity, effect and construction of wills and other conveyances. This principle even governs the capacity of the person making a deed relating to immovable property, no matter what its nature may be. Thus, an instrument will be ineffective to transfer title to land if the person making it is incapacitated by the lex loci rei sitae, even though under the law of his domicile and by the law of the place where the instrument is actually made, his capacity is undoubted. Orion Savings Bank vs. Suzuki, G.R. No. 205487,
November 12, 2014
Lex contractus
The doctrine of lex contractus or lex loci contractus means the “law of the place where a contract is executed or to be performed.” Hasegawa vs. Kitamura, G.R. No. 149177, November 23, 2007
Lex fori
On this note, we highlight that matters of remedy and procedure such as those relating to the service of process upon a defendant are governed by the lex fori or the internal law of the forum, which is the State of California in this case. This Court is well aware that foreign laws are not a matter of judicial notice. Like any other fact, they must be alleged and proven. Mercantile
Insurance Co., Inc. vs. Yi, G.R. No. 234501, March 18, 2019
Lex loci delicti
This is in consonance with the lex loci delicti commisi theory in determining the situs of a tort, which states that the law of the place where the alleged wrong was committed will govern the action. Navida vs. Dizon, Jr., G.R. No. 125078, May 30, 2011
Lex loci solutionis
Philippine law is definite as to what governs the formal or extrinsic validity of contracts. The first paragraph of Article 17 of the Civil Code provides that “[t]he forms and solemnities of contracts shall be governed by the laws of the country in which they are executed” (i.e., lex loci celebrationis).
Established mode of settling conflict of laws situations on matters pertaining to substantive content of contracts
In contrast, there is no statutorily established mode of settling conflict of laws situations on matters pertaining to substantive content of contracts. It has been noted that three (3) modes have emerged: (1) lex loci contractus or the law of the place of the making; (2) lex loci solutionis or the law of the place of performance; and (3) lex loci intentionis or the law intended by the parties. Saudi Arabian Airlines (Saudia) vs. Rebesencio, G.R. No. 198587, January 14, 2015
For Philippine courts to recognize a foreign judgment relating to the status of a marriage where one of the parties is a citizen of a foreign country, the petitioner needs to
For Philippine courts to recognize a foreign judgment relating to the status of a marriage where one of the parties is a citizen of a foreign country, the petitioner only needs to prove the foreign judgment as a fact under the Rules of Court.
To be more specific, a copy of the foreign judgment may be admitted in evidence and proven as a fact under the Rules of Court. Petitioner may prove the Japanese Family Court judgment through (1) an official publication or (2) a certification or copy attested by the officer who has custody of the judgment. If the office which has custody is in a foreign country such as Japan, the certification may be made by the proper diplomatic or consular officer of the Philippine foreign service in Japan and authenticated by the seal of office. Fujiki vs. Marinay, G.R. No. 196049, June 26, 2013
Once a foreign judgment is admitted and proven in a Philippine court, it can only be repelled on _____
Once a foreign judgment is admitted and proven in a Philippine court, it can only be repelled on grounds external to its merits.
Section 48 of the Rules of Court states that “the judgment or final order may be repelled by evidence of a want of jurisdiction, want of notice to the party, collusion, fraud, or clear mistake of law or fact.”
Thus, Philippine courts exercise limited review on foreign judgments. Courts are not allowed to delve into the merits of a foreign judgment.
Article 19 of the Civil Code
Article 19 of the Civil Code provides that every person in the exercise of his rights and in the performance of his duties must act with justice, give everyone his due, and observe honesty and good faith.
Article 19, known to contain what is commonly referred to as the principle of abuse of rights, sets certain standards which may be observed not only in the exercise of one’s rights but also in the performance of one’s duties. In this regard, case law states that “a right, though by itself legal because it is recognized or granted by law as such, may nevertheless become the source of some illegality.
When a right is exercised in a manner which does not conform with the norms enshrined in Article 19 and results in damage to another, a legal wrong is thereby committed for which the wrongdoer must be held responsible.”
Article 19 is the general rule which governs the conduct of human relations. By itself, it is not the basis of an actionable tort. Article 19 describes the degree of care required so that an actionable tort may arise when it is alleged together with Article 20 or Article 21. Lomarda and Raso vs. Fudalan, G.R. No. 246012, June 17, 2020
Carolyn and Joselito are lovers. During their relationship, Joselito had drinking and gambling habits. With a promise to reform, Carolyn married Joselito and gave birth to their children. During the marriage, Joselito physically and verbally abused Carolyn and their children, and he spent time gambling and drinking instead of providing for the needs of the family. She filed for Petition for Declaration of Nullity of Marriage and presented the testimony of Dr. Soriano who diagnosed Joselito with a defective superego and Antisocial-Dependent Personality Disorder based on the narration of Carolyn and Mamerto, Joselito’s father who disclosed his behavior as a child. Is the testimony of Dr. Soriano enough to prove that the psychological incapacity of Joselito has juridical antecedence?
Yes. Article 36 explicitly requires the psychological incapacity to be existing at the time of the celebration of the marriage, even if such incapacity becomes manifest only after its solemnization. Proof of juridically antecedent psychological incapacity may consist of testimonies describing the environment where the supposedly incapacitated spouse lived that may have led to a particular behavior. Here, Dr. Soriano concluded that Joselito’s gross neglect of his responsibilities, immaturity, disregard of his partner’s needs and feelings, and abusive behavior are symptoms of a disorder called Antisocial-Dependent Personality Disorder which existed prior to his marriage with Carolyn. The diagnosis was based on the statements of Carolyn and Mamerto. The clear and understandable causation between Joselito’s condition pre-existing before his marriage and its incapacitating nature regarding the performance of the essential marital covenants clearly proved the juridical antecedence requirement. (Mutya-Sumilhig v. Sumilhig, G.R. No. 230711, August 22, 2022)
Carolyn and Joselito are lovers. During their relationship, Joselito had drinking and gambling habits. With a promise to reform, Carolyn married Joselito and gave birth to their children. During the marriage, Joselito physically and verbally abused Carolyn and their children, and he spent time gambling and drinking instead of providing for the needs of the family. She filed for Petition for Declaration of Nullity of Marriage and presented the testimony of Dr. Soriano who diagnosed Joselito with a defective superego and Antisocial-Dependent Personality Disorder based on the narration of Carolyn and Mamerto, Joselito’s father who disclosed his behavior as a child. Do the testimony and diagnosis of Dr. Soriano prove that the psychological incapacity of Joselito is incurable?
Yes. The psychological incapacity contemplated in Article 36 of the Family Code is incurable, not in the medical, but in the legal sense. This simply means that the incapacity is so enduring and persistent with respect to a specific partner, and contemplates a situation where the couple’s respective personality structures are so incompatible and antagonistic that the only result of the union would be the inevitable and irreparable breakdown of the marriage. There must be an undeniable pattern of such persisting failure to be a present, loving, faithful, respectful, and supportive spouse. There are no medications that may be taken or intervention that may be done as treatment for Joselito’s psychological incapacity to enable him to fulfill his obligations as husband to Carolyn because what is involved here is Joselito’s personality structure. Dr. Soriano’s assessment of Joselito’s condition was based on the information she gathered from Carolyn herself and Joselito’s father. (Mutya-Sumilhig v. Sumilhig, G.R. No. 230711, August 22, 2022)
Are the testimonies of the spouse, respondent’s father, and expert witness who diagnosed the respondent without the latter’s personal appearance enough to satisfy the totality of evidence rule to sustain a finding of the respondent’s psychological incapacity in a Petition for Declaration of Nullity of Marriage?
Yes. The narratives in an Article 36 petition are often solely those of petitioner and their witnesses, and frequently, all the trial court has by way of respondent’s version is the clinical narration of the factual basis of the expert report, which, in turn, typically arises from the examination of petitioner and other resource persons. There is probative value in the testimonies of expert witnesses who diagnosed a respondent without the latter’s personal appearance because there is no legal and jurisprudential requirement that the person to be declared psychologically incapacitated be personally examined by a physician. (Mutya-Sumilhig v. Sumilhig, G.R. No. 230711, August 22, 2022)
In his Petition for Declaration of Nullity of Marriage, Antonio claimed that he and his wife Maribel are both psychologically incapacitated to comply with their basic marital obligations. Antonio allegedly has affairs with other women. He engages in womanizing and gambling, returning home in the early hours. In the Psychiatric Evaluation, the psychiatrist described Antonio as the ambitious but disconcerted son of a businessman, who had 11 children with four other women. He had a series of short-lived relationships before he met Maribel. Would Antonio’s acts of infidelity be an indication of psychological incapacity and, therefore, sufficient grounds to declare a marriage void?
Yes. To be considered as a form of psychological incapacity, infidelity must satisfy the requirements of (1) gravity or severity, (2) antecedence, and (3) legal incurability or persistence during the marriage. Antonio’s failure to show sincere remorse for his blatant infidelity and the lack of desire to fix his ways to save their marriage clearly amount to psychological incapacity, which is grave in nature. His chronic infidelity is not only comprised of multiple illicit amorous relations as his affairs are not casual mistakes as these were shown to be deeply rooted in his psychopathology which was in place even before his marriage. Further, Antonio’s incapacity is incurable. It is persistent throughout the marriage and is specifically directed at his wife Maribel. (Quiogue v. Quiogue, G.R. No. 203992, August 22, 2022)
What are the varying guidelines for determining the existence of psychological incapacity as a ground to declare a marriage void, as discussed in the recent case of Tan-Andal v. Andal?
First, the psychological incapacity must have juridical antecedence because Article 36 explicitly requires it to exist at the time of the marriage celebration, even if such incapacity becomes manifest only after its solemnization. Such a requirement does not require proof that the psychological incapacity stems from a medically-identified mental or psychological incapacity. Psychological incapacity has always been a legal concept — it is neither a mental incapacity nor a personality disorder in a strict medical sense. Proof of juridically antecedent psychological incapacity may consist of testimonies describing the environment where the supposedly incapacitated spouse lived that may have led to a particular behavior. Second, the psychological incapacity must also be grave to distinguish it from “mild characterological peculiarities, mood changes, occasional emotional outbursts” generally brought about by human nature and the natural dynamics of every personal relationship. Finally, psychological incapacity must be incurable in the legal sense, meaning, the incapacity is so enduring and persistent with respect to a specific partner, and contemplates a situation where the couple’s respective personality structures are so incompatible and antagonistic that the only result of the union would be the inevitable and irreparable breakdown of the marriage. (Dedicatoria v. Dedicatoria, G.R. No. 250618, July 20, 2022)
The DENR awarded lots to former military officers, including the respondents, in December 1996 and November 1998. But the respondents were unable to introduce any improvements because the Philippine Navy and the Golf Club were already occupying the lands. The golf course was developed only in 1976. The respondents filed an accion reinvindicatoria against the Philippine Navy and the Golf Club before the RTC. Can the Philippine Navy and the Golf Club invoke the exclusionary clause in Proclamation No. 461 (issued in 1965), and claim that the land developed as a golf course is not included in the alienable and disposable lots in the AFP Officer’s Village?
No. The exclusionary clause applies only to areas that are being used or earmarked for public or quasi-public purposes. Here, the golf course did not yet exist at the time Proclamation No. 461 was issued in 1965. The golf course was developed only in 1976. As such, the empty land, on which the golf course now stands, remains part of the alienable and disposable public land of the AFP Officers’ Village. The exclusionary clause cannot comprehend the golf course which was non-existent at the time the proclamation was issued. There is no basis to identify whether the empty land is being used for public or quasi-public purposes. Moreover, no subsequent law or proclamation earmarked the land for the construction of the golf course. (Philippine Navy Golf Club, Inc. et. al, v. Abaya, et.al., G.R. No. 235619, July 13, 2020)
Petitioners filed a complaint for quieting of title against Concepcion. The complaint is grounded upon their claims of ownership over the disputed properties and insists that Concepcion’s acts of instituting tenants and receiving a share from the produce of the land cloud their title. Are the petitioners correct in filing an action for quieting of title?
No. Petitioners’ cause of action is grounded upon their claims of ownership, which they argue to have been clouded by Concepcion’s exercise of proprietary rights — instituting tenants and collecting rentals and products. What they perceive as clouds over their title were Concepcion’s intrusive acts of dominion over the properties. Physical intrusion is not a ground for quieting of title. With an allegation of a violation of a right, petitioners do not seek a declaratory relief or mere removal of cloud over their title. Ultimately, they seek to recover full possession of the properties as an element of their ownership, which was disturbed by Concepcion’s physical intrusion. Thus, petitioners’ claims and arguments clearly speak of an accion reivindicatoria — a suit to recover full possession of a parcel of land as an element of ownership. (Spouses Velarde v. Heir of Candari, G.R. No. 190057, October 17, 2022)
Spouses Patenia owned a 9,600-square meter lot situated in Tagum City and registered under Transfer Certificate of Title No. T-168688. After Spouses Patenia’s death, their children discovered that TCT No. T-168688 has been cancelled by virtue of a Deed of Donation dated January 18, 2002 that their parents supposedly executed in favor of the respondents. The children argued that the donation is void because the notary public failed to require the parties to sign the notarial register. Is the Deed of Donation void for failing to comply with the legal formalities required of such a document?
No. There is nothing in the law that obligates the parties to a notarized document to sign the notarial register. This requirement was subsequently included only the 2004 Rules on Notarial Practice which provides that a notary public should not notarize a document unless the signatory to the document is in the notary’s presence personally at the time of the notarization, and personally known to the notary public or otherwise identified through competent evidence of identity. At the time of notarization, the signatory shall sign or affix with a thumb or mark the notary public’s notarial register. The present deed of donation, however, was executed and acknowledged before the notary public on January 18, 2002, when there is no rule yet that requires the parties to sign the notarial register. (Rowena Patenia-Kinatac-an v. Enriqueta Patenia-Decena, G.R. No. 238325, June 15, 2020)
On various dates beginning 2000, Nida purchased on credit from Libra Fishing crude oil and other petroleum products. As payment for the July 26, 2000, November 12, 2000, and November 27, 2000 purchases, Nida issued three checks which were dishonored by the drawee banks. On May 15, 2013, Regina, the sole proprietor of Libra Fishing, demanded payment for the outstanding balance but Nida failed to heed the demand. On June 4, 2013, Regina filed a complaint for a sum of money against Nida. Nida argued that Regina’s action had prescribed. Regina counters that the prescriptive period should be reckoned from the date of last partial payment of the outstanding debt by the debtor, or from the date of extrajudicial demand. Does issuing checks transform an agreement into a written contract, thereby subjecting it to a prescriptive period of 10 years?
No. The checks issued did not convert their agreement into a written contract. To be a written contract, all its terms must be in writing, and, a contract partly in writing and partly oral is, in legal effect, an oral contract. Also, the three checks are not the kind of “writing” or “written agreement” contemplated by law for the 10-year limitation to apply. A “writing” for the payment of money sued in an action, within the meaning of the ten-year statute of limitations, is one which contains either an express promise to pay or language from which a promise to pay arises by fair implication. Nothing in the three dishonored checks indicate any promise to pay. Clearly, no written contract was executed by the parties, instead they verbally agreed for Nida to sell the petroleum products of Regina. (Regina Q. Alba vs. Nida Arollado, G.R. No. 237140, October 05, 2020)
Philippine Reclamation Authority (PRA) entered into an Amended Joint Venture Agreement (JVA) with Central Bay Reclamation and Development Corporation (Central Bay), formerly known as AMARI, a private corporation, to develop three reclaimed islands with a combined titled area of 157.84 hectares known as the Freedom Islands. The agreement provided that Central Bay will acquire and own 77.34 hectares of the Freedom Islands and 290.156 hectares of still submerged areas of the Manila Bay. Is the JVA valid?
No. The JVA is not valid since the Amended JVA seeks to transfer to AMARI, a private corporation, ownership of 77.34 hectares of the Freedom Islands, such transfer is void for being contrary to Section 3, Article XII of the 1987 Constitution which prohibits private corporations from acquiring any kind of alienable land of the public domain. Since the Amended JVA also seeks to transfer to AMARI ownership of 290.156 hectares of still submerged areas of Manila Bay, such transfer is void for being contrary to Section 2, Article XII of the 1987 Constitution which prohibits the alienation of natural resources other than agricultural lands of the public domain. (Central Bay Reclamation and Development Corporation vs. Commission on Audit, G.R. No. 252940, April 5, 2022)
Aida, a naturalized American citizen, executed a Last Will and Testament in California where she nominated her cousin, Cosme, as a special independent executor over her assets located in the Philippines. She died in California and left behind an adopted minor child and a sister. Cosme filed a petition for the allowance of the will in the Philippines, which was opposed by Aida’s sister. The Court found no copy of the pertinent California law presented as evidence pursuant to the requirements of the rules and does not comply with the Philippine laws. Is the will executed by Aida in California valid and can be allowed in the Philippines?
No. Article 816 of the Civil Code states that the will of an alien who is abroad produces effect in the Philippines if made with the formalities prescribed by the law of the place in which he resides, or according to the formalities observed in his country, or in conformity with those which this Code prescribes. Here, Aida is a naturalized American citizen and that she executed the will in California, USA where she was residing at the time of her death. As such, the Philippine courts must examine the formalities of Aida’s will in accordance with California law. However, the Philippines does not take judicial notice of foreign laws, hence, they must not only be alleged; they must be proven. No copy of the pertinent California law presented as evidence pursuant to the requirements of the rules. (In the Matter of the Testate Estate of Aida A. Bambao, Linda A. Kucskar v. Sekito Jr., G.R. No. 237449, December 2, 2020)
Elena borrowed P1.4 Million from China Banking Corporation (China Bank) to increase the working capital of her general merchandising business. On April 3, 1990, Elena and her common-law husband and business partner Daniel executed a Real Estate Mortgage (REM) over a parcel of land. Later, the REM was amended several times increasing the loan. The amendments contained a “blanket mortgage clause” stating that the REM would secure the payment of obligations already incurred or which may be subsequently incurred. China Bank filed a petition for foreclosure of the REM with the RTC alleging that Elena and Daniel obtained P5 Million succeeding loan accommodations. Elena argued that the REM only covered the loan secured on April 3, 1990 and its amendments. Are the amendments to the REM void for being contracts of adhesion?
No. The amendments contained a blanket mortgage clause which subsumes all debts of past or future origins and makes additional funds available to a borrower without the need to execute separate security documents, thus, saving time, costs, and other resources. Jurisprudence recognizes the validity of this clause but its terms must still be judiciously examined. Here, the amendments are contracts of adhesion which are not entirely prohibited. The one adhering is free to give his consent inasmuch as he is also free to reject it completely. In this case, it was China Banking Corporation which drafted and prepared the standard forms on which Elena and Daniel adhered into by merely affixing their signatures. Corollarily, any ambiguity in the provisions of these documents must be interpreted against China Banking Corporation. (Elena R. Quiambao vs. China Banking Corporation, G.R. No. 238462, May 12, 2021)
Lydia offered to sell her entire lot in Boracay to Ulysses, but Ulysses only agreed to buy a portion of the area. Ulysses drafted a Deed of Absolute Sale over the 800-square meter lot for a beach resort which the parties signed. Upon payment of the purchase price, Ulysses discovered that the land described in the deed of sale refers to the elevated and rocky portion and not the flat area which he bought and occupied. Lydia convinced Ulysses to buy an additional 400-square meter portion of the lot under the condition that the first contract be amended. Ulysses asked Lydia to prepare the amended deed of sale but she refused because of the unpaid balance. Ulysses filed against Lydia an action for specific performance and damages before the trial court, claiming that the first contract is distinct from the additional 400-square meter lot. The trial court ordered the reformation of the Deed of Absolute Sale and ordered them to execute another contract of sale in favor of Ulysses. Is the trial court correct in its order?
Yes. If the contract is reduced into writing, it is considered as containing all the terms agreed upon and is presumed to set out the true covenant of the parties. However, equity orders the reformation of a written instrument when the real intention of the contracting parties are not expressed by reason of mistake, fraud, inequitable conduct or accident. In an action for reformation, the court does not attempt to make another contract for the parties but the instrument is made or construed to express or conform to their real intention. Specifically, an action for reformation of instrument may prosper only upon the concurrence of the following requisites: (1) there must have been a meeting of the minds of the parties to the contract; (2) the instrument does not express the true intention of the parties; and (3) the failure of the instrument to express the true intention of the parties is due to mistake, fraud, inequitable conduct or accident. Here, all these requisites are present. There was a mistake in identifying the exact location of the lot in the first sale which caused the failure of the instrument to disclose the parties’ real agreement. (Ulysses Rudi V. Banico v. Lydia Bernadette M. Stager, G.R. No. 232825, September 16, 2020)
In a pacto de retro sale, would the failure of the vendee a retro to consolidate his title impair such title or ownership?
No. The essence of a pacto de retro sale is that title and ownership of the property sold are immediately vested in the vendee a retro, subject to the resolutory condition of repurchase by the vendor a retro within the stipulated period. Failure thus of the vendor a retro to perform said resolutory condition vests upon the vendee by operation of law absolute title and ownership over the property sold. As title is already vested in the vendee a retro, his failure to consolidate his title under Article 1607 of the Civil Code does not impair such title or ownership for the method prescribed is merely for the purpose of registering the consolidated title. (Spouses Velarde v. Heir of Candari, G.R. No. 190057, October 17, 2022)
On September 10, 1992, Ricardo sold his 1/4 undivided share in a parcel of land registered under the names of Hermelina, Ricardo, Lucina, and Victoria, to Spouses Nogra. Upon full payment, Ricardo and Spouses Nogra executed a Deed of Absolute Sale dated July 13, 2001. Hermelina claimed that she had no knowledge of this sale until they sought assistance from the barangay through conciliation proceedings. During these proceedings, Hermelina offered to redeem the property, Spouses Nogra refused to provide a copy of the DOAS and its details. On September 26, 2007, Ricardo gave them a copy of the DOAS. Subsequently, Hermelina then filed a Complaint for Annulment of Sale, Redemption before the RTC on October 16, 2007. Spouses Nogra argued that Hermelina’s exercise of redemption right occurred beyond the 30-day period stipulated in Article 1623 of the New Civil Code. Is this contention correct?
No. The written notice of sale is mandatory. The Court has long established the rule that notwithstanding actual knowledge of a co-owner, the latter is still entitled to a written notice from the selling co-owner in order to remove all uncertainties about the sale, its terms and conditions, as well as its efficacy and status. Mere actual knowledge of the sale is not sufficient to commence the running of the 30-day period absent all the necessary information pertinent for the proper exercise of the right. The 30-day redemption period under Article 1623 should be reckoned from Hermelina’s receipt of the Deed of Absolute Sale on September 26, 2007. Hermelina, therefore, validly exercised and enforced her right by filing the complaint for redemption on October 16, 2007, which is within the 30-day period under Article 1623. (Hermelina Rama And Baby Rama Lauron v. Spouses Medardo Nogra And Purita Nogra And Spouses Ricardo Rama And Mariles Rama, G.R. No. 219556, September 14, 2021)
What is a “blanket mortgage clause” or “dragnet clause”?
A “blanket mortgage clause” or “dragnet clause” subsumes all debts of past or future origins and makes additional funds available to a borrower without the need to execute separate security documents, thus, saving time, costs, and other resources. Jurisprudence recognizes the validity of this clause but its terms must still be judiciously examined. Thus, a mortgage containing a dragnet clause will not be extended to cover future advances, unless the document evidencing the subsequent advance refers to the mortgage as providing security therefor, or unless there are clear and supportive evidence to the contrary. (Elena R. Quiambao vs. China Banking Corporation, G.R. No. 238462, May 12, 2021)
Elena borrowed P1.4 Million from China Banking Corporation (China Bank) to increase the working capital of her general merchandising business. She executed a Real Estate Mortgage (REM) over a parcel of land. Later, the REM was amended several times increasing the loan. The amendments contained a “blanket mortgage clause” stating that the REM would secure the payment of obligations already incurred or which may be subsequently incurred. China Bank filed a petition for foreclosure of the REM with the RTC alleging that Elena and Daniel obtained P5 Million succeeding loan accommodations covered by eight promissory notes (PNs). Elena argued that the REM only covered the first loan but not her succeeding loans for P5 Million. Does the “blanket mortgage clause” in the latest amendment to the REM cover the P5 Million succeeding loans under the eight PNs?
No. A mortgage containing a dragnet clause will not be extended to cover future advances, unless the document evidencing the subsequent advance refers to the mortgage as providing security therefor, or unless there are clear and supportive evidence to the contrary. Jurisprudence recognizes the validity of this clause but its terms must still be judiciously examined. In a case, the foreclosure proceedings were declared void because there is uncertainty on whether the promissory notes were secured or not. It was not shown that the PNs are within the terms of the limited liability of the debtor. Here, the eight PNs likewise failed to allude to Elena and Daniel’s liability under the latest amendment to the REM. The PNs do not even make any reference to the REM as a security. The latest amendment to the REM cannot be interpreted to cover the P5,000,000.00 succeeding loans under the eight PNs for which the mortgage was foreclosed. (Elena R. Quiambao vs. China Banking Corporation, G.R. No. 238462, May 12, 2021)
During the settlement of the estate of Corona Jimenez, her children Danilo, Sonia, Vilma, Federico, and Chona (Jimenez siblings) discovered a Deed of Donation allegedly executed by Corona in favor of Damian (also Corona’s child) over the 532-square meter property. Damian mortgaged the property to Calubad and Keh. Jimenez siblings learned about the mortgage, but only Sonia registered her Affidavit of Adverse Claim, which was annotated at the back of the said TCT. Sonia was informed that the property was scheduled for auction. This prompted Jimenez siblings to file a complaint for the annulment of the Deed of Donation and TCT No. N-217728 and cancellation and annulment of the Deed of Real Estate Mortgage. The RTC sustained the validity of the TCT issued in the name of Calubad and Keh as they were found to be innocent mortgagees for value and good faith. Danilo argues that while Calubad and Keh may be mortgagees in good faith, they are not purchasers in good faith as they were aware of Sonia’s adverse claim when they purchased the property during the public auction. Is his contention correct?
No. Under the doctrine of “the mortgagee in good faith,” all persons dealing with property covered by a Torrens Certificate of Title, as buyers or mortgagees, are not required to go beyond what appears on the face of the title. The doctrine applies when the following requisites concur, namely: (a) the mortgagor is not the rightful owner of, or does not have valid title to, the property; (b) the mortgagor succeeded in obtaining a Torrens title over the property; (c) the mortgagor succeeded in mortgaging the property to another person; (d) the mortgagee relied on what appears on the title and there exists no facts and circumstances that would compel a reasonably cautious man to inquire into the status of the property; and (e) the mortgage contract was registered. All these requisites were satisfied in this case. Accordingly, Sonia’s adverse claim, which was annotated after the registered mortgage in favor of Calubad and Keh, cannot prevail over Calubad and Keh’s rights as mortgagees in good faith and purchasers in the foreclosure sale. Being mortgagees in good faith, they have a superior lien over that of Sonia, and their right to foreclose is reserved. Their knowledge of the adverse claim is of no moment because their right as mortgagees in good faith extends up to the time of the foreclosure sale and in their capacity as purchasers. (Danilo Santiago F. Jimenez v. Damian F. Jimenez, Jr., et.al., G.R. No. 228011, February 10, 2021)
Antonio and Remedios formed Metro Isuzu Corporation and secured loans from Westmont Bank through signed promissory notes (PNs). In 1995, Antonio executed a Real Estate Mortgage (REM) to secure a loan from Westmont Bank, covering conjugal properties. Remedios later filed a complaint alleging forgery of her signatures on loan documents, seeking to nullify the REM and amendment.The trial court declared the REM and amendment void, and the PNs without legal effect insofar as Remedios is concerned. Does the nullification of the subject deeds of mortgage affect the validity of the promissory notes?
No. A mortgage is merely an accessory agreement and does not affect the principal contract of loan. The mortgages, while void, can still be considered as instruments evidencing the indebtedness. Being merely accessory contracts, the nullity of the subject deeds of real estate mortgage on account of the forged signature of Remedios, does not result in the invalidation of the loan obligation of Antonio. (Strong Fort Warehousing Corporation vs. Remedios T. Banta, G.R. Nos. 222369 and 222502, November 16, 2020)
A City Government in Visayas entered into a compromise agreement with Spouses AAA in the purchase of the latter’s land so that the city government can construct a road over said land. The compromise agreement was approved by the RTC, and the City Council ratified said agreement. Months later, the City Council issued a Resolution withdrawing its ratification of said agreement as they found out the land is too big for the city’s needs. The City Council informed Spouses AAA that the City Government will not proceed anymore with said purchase. Can the City Government rescind the compromise agreement?
No. A compromise agreement is in the nature of both a contract and a judgment on the merits. As a contract, the compromise agreement can only be avoided on grounds of illegality, lack of consent, fraud or duress. In this case, the City Government and Spouses AAA freely and voluntarily entered into a compromise agreement. Moreover, the RTC approved the agreement and the city council ratified it. The parties knew exactly the rights and duties they assumed. It is settled that a compromise agreement, once stamped with judicial imprimatur, becomes more than a mere contract and acquires the force and effect of a judgment that is immediately final and executory. Thus, the City Government cannot, later, relieve itself of liability simply because the city council changed its position. (City Government of Tacloban v. Court of Appeals, G.R. No. 221554, February 3, 2021)
What is solutio indebiti and when may one be absolved from the liability to settle the disallowed transaction under this principle?
Under the principle of solutio indebiti, if something is received when there is no right to demand it, and it was unduly delivered through mistake, the obligation to return it arises. Under this principle, recipients may only be absolved from the liability to settle the disallowed transaction: (1) upon a showing that the disallowed amounts were genuinely given in consideration of services rendered; or (2) excused by the Court on the basis of undue prejudice, social justice considerations, and other bona fide exceptions depending on the purpose, nature, and amount of the disallowed transaction relative to the attending circumstances. (PSALM v. COA, G.R. No. 213425, April 27, 2021)
What are the essential elements that must be present for an accion in rem verso to prosper?
An accion in rem verso is considered merely an auxiliary action, available only when there is no other remedy on contract, quasi-contract, crime, and quasi-delict. In order that accion in rem verso may prosper, the essential elements must be present: (1) that the defendant has been enriched, (2) that the plaintiff has suffered a loss, (3) that the enrichment of the defendant is without just or legal ground, and (4) that the plaintiff has no other action based on contract, quasi-contract, crime or quasi-delict. (National Power Corporation vs. Benguet Electric Cooperative, G.R. No. 218378, June 14, 2021)
Almario, who was hired by Skanfil as a mess person on board M/V “DIMI” POS TOPAS, fell from a ladder while working. Consequently, he suffered injuries. He was brought to a hospital and was diagnosed with blunt head and back injuries and brain concussion. He was then repatriated and was referred to company-designated physicians. The physicians examined Almario and he was subsequently referred to other specialists to better address his concerns. The specialists treated, gave medications and assisted Almario in rehabilitation. After weeks of treatment and rehabilitation, he was cleared by the specialists and the company-designated physicians. Unconvinced, Almario consulted another physician who declared him permanently unfit to resume sea duties. He filed a complaint against Skanfil. Is Almario entitled to moral and exemplary damages, as well as attorney’s fees?
The award of moral and exemplary damages shall be deleted, but attorney’s fees must be retained. Moral damages are awarded as compensation for actual injury suffered and not as a penalty. The award is proper when the employer’s action was attended by bad faith or fraud, oppressive to labor, or done in a manner contrary to morals, good customs, or public policy.
Exemplary damages, on the other hand, are imposed not to enrich one party or impoverish another but to serve as a deterrent against or as a negative incentive to curb socially deleterious actions, and may only be awarded in addition to the moral, temperate, liquidated or compensatory damages. In contracts and quasi-contracts, the court may award exemplary damages if the defendant acted in a wanton, fraudulent, reckless, oppressive, or malevolent manner.
However, the award of attorney’s fees is proper. Article 2208 (8) of the Civil Code provides that attorney’s fees may be recovered “in actions for indemnity under workmen’s compensation and employer’s liability laws.”
NPC and BENECO entered into a Contract of Sale of Electricity and subsequently executed a Transition Contract whereby NPC will supply electric power and energy to BENECO at multiple points of delivery. NPC granted BENECO a 3% every month as long as BENECO’s account was fully paid and updated. However, BENECO’s employee studied BENECO’s operations and discovered its low system losses. It was found that NPC had been billing BENECO at half the correct amount of electricity delivered to it. NPC informed BENECO of its underbilling from 2000 to 2004 and requested BENECO to pay the amount. NPC argues that BENECO’s non-payment would constitute unjust enrichment. Is the NPC correct?
No. Unjust enrichment exists when a person unfairly retains a benefit, money, or property against the fundamental principles of justice, equity, and good conscience. To be applicable, (a) a person is benefited without a valid basis or justification, and (b) such benefit is derived at another’s expense or damage. Thus, for an action to prosper, he essential elements must be present: (1) that the defendant has been enriched, (2) that the plaintiff has suffered a loss, (3) that the enrichment of the defendant is without just or legal ground, and (4) that the plaintiff has no other action based on contract, quasi-contract, crime or quasi-delict. There is no unjust enrichment when the person who benefited has a valid claim to such benefit. In this case, NPC and BENECO executed a Contract of Sale of Electricity and a Transition Contract to govern their rights and obligations in the supply of electric power and energy. Therefore, any action that one may bring against the other shall be based on the provisions of their contract. (National Power Corporation vs. Benguet Electric Cooperative, G.R. No. 218378, June 14, 2021)
Breach of promise to marry
Under our laws, a breach of promise to marry per se is not actionable unless it would unjustifiably contradict good customs.
A mere breach of a promise to marry is not an actionable wrong, as long as it is not of such extent as would palpably and unjustifiably contradict good customs. In any case, the party seeking to recover damages must have acted in good faith. Here, petitioner called off the engagement after she had discovered respondent’s lies and deception. As the Court of Appeals found, respondent’s actions were tainted with fraud and deceit; he did not have the purest intentions in marrying petitioner. He lied about his marital status, and even hid his true name from petitioner. These acts suffice to justify the wedding’s cancellation. Finding out that one’s betrothed is still married to another person, and that they are not who they say they are, are reasons enough to conclude bad faith. Since respondent himself did not act in good faith, he cannot claim damages under the New Civil Code.
Unjust enrichment
There is unjust enrichment when: (1) A person is unjustly benefited; and (2) such benefit is derived at the expense of or with damages to another.
Thoughtless extravagance
Thoughtless extravagance in expenses for pleasure or display during a period of acute public want or emergency may be stopped by order of the courts at the instance of any government or private charitable institution. Civil Code, Article 25
Juridical capacity vs. Capacity to act
Article 37. Juridical capacity, which is the fitness to be the subject of legal relations, is inherent in every natural person and is lost only through death. Capacity to act, which is the power to do acts with legal effect, is acquired and may be lost.
Can a seller transfer title over a lot, through a Deed of Absolute Sale, to a person who has already died, as the deceased has no more civil personality or juridical capacity.
A seller cannot transfer title over a lot, through a Deed of Absolute Sale, to a person who has already died, as the deceased has no more civil personality or juridical capacity.
Juridical persons
Article 44. The following are juridical persons:
(1) The State and its political subdivisions;
(2) Other corporations, institutions and entities for public interest or purpose, created by law; their personality begins as soon as they have been constituted according to law;
(3) Corporations, partnerships and associations for private interest or purpose to which the law grants a juridical personality, separate and distinct from that of each shareholder, partner or member.
Residence
The term “residence” in Commonwealth Act No. 63 has already been interpreted to mean the actual or constructive permanent home otherwise known as legal residence or domicile. A place in a country or state where he lives and stays permanently, and to which he intends to return after a temporary absence, no matter how long, is his domicile.
In other words, domicile is characterized by animus manendi. “Residence” imports not only an intention to reside in a fixed place but also presence coupled with conduct indicative of such intention. So an alien who has been admitted into this country as a temporary visitor, either for business or pleasure, or for reasons of health, though actually present in this country cannot be said to have established his domicile here because the period of his stay is only temporary in nature and must leave when the purpose of his coming is accomplished.
If an American citizen who was born in New York, migrated to California, resided there for nine years, came to the Philippines in 1913, and very rarely re-turned to California and only for short visits, and who appears to have never owned or acquired a home or properties in that state – shall he be considered to have his domicile in the Philippines?
Yes. Aznar vs. Garcia, No. L-16749, January 31, 1963
Judicial declaration of an absentee spouse is necessary when
Judicial declaration of an absentee spouse necessary, when he has properties to be taken care of or administered by a representative or when the absentee’s spouse is asking separation or administration of property.
The need to have a person judicially declared an absentee is when he has properties which have to be taken care of or administered by a representative appointed by the Court (Article 384, Civil Code); the spouse of the absentee is asking for separation of property (Article 191, Civil Code) or his wife is asking the Court that the administration of all classes of property in the marriage be transferred to her (Article 196, Civil Code). The petition to declare the husband an absentee and the petition to place the management of the conjugal properties in the hands of the wife may be combined and adjudicated in the same proceedings.
Rationale for allowing Filipino spouse in a mixed marriage to re-marry after a decree of divorce
Marriage, being a mutual and shared commitment between two (2) parties, cannot possibly be productive of any good to the society where one is considered released from the marital bond while the other remains bound to it.
True, marriage is an inviolable social institution and must be protected by the State. But in cases like these, there is no more “institution” to protect as the supposed institution was already legally broken. Marriage, being a mutual and shared commitment between two parties, cannot possibly be productive of any good to the society where one is considered released from the marital bond while the other remains bound to it.
Formal Requisites of Marriage
The formal requisites of marriage are: (1) Authority of the solemnizing officer; (2) A valid marriage license except in the cases provided for in Chapter 2 of this Title; and (3) A marriage ceremony which takes place with the appearance of the contracting parties before the solemnizing officer and their personal declaration that they take each other as husband and wife in the presence of not less than two witnesses of legal age.
Art. 4. The absence of any of the essential or formal requisites shall render the marriage void ab initio, except as stated in Article 35(2). A defect in any of the essential requisites shall render the marriage voidable as provided in Article 45. An
irregularity in the formal requisites shall not affect the validity of the marriage but the party or parties responsible for the irregularity shall be civilly, criminally and administratively liable. Art.
35.
In which cases can a marriage license be legally waived?
A valid marriage license is a requisite of marriage under Article 53 of the Civil Code, and the absence thereof, save for marriages of exceptional character, renders the marriage void ab initio pursuant to Article 80(3).
A valid marriage license is a requisite of marriage under Article 53 of the Civil Code, and the absence thereof, save for marriages of exceptional character, renders the marriage void ab initio pursuant to Article 80(3).
“Under the Civil Code, marriages of exceptional character are covered by Chapter 2, Title III, comprising Articles 72 to 79. To wit, these marriages are: (1) marriages in articulo mortis or at the point of death during peace or war, (2) marriages in remote places, (3) consular marriages, (4) ratification of marital cohabitation, (5) religious ratification of a civil marriage, (6) Mohammedan or pagan marriages, and (7) mixed marriages.”
To reiterate, in any of the aforementioned marriages of exceptional character, the requirement of a valid marriage license is dispensed with.
The parties are exempted from complying with the required issuance of marriage license insofar as the subsequent religious ceremony is concerned. For this exemption to be applicable, it is sine qua non that: (1) the parties to the religious ceremony must already be married to each other in accordance with law (civil marriage); and (2) the ratifying ceremony is purely religious in nature.
Article 77 of the Civil Code provides: Art. 77. In case two (2) persons married in accordance with law desire to ratify their union in conformity with the regulations, rites, or practices of any church, sect, or religion, it shall no longer be necessary to comply with the requirements of Chapter 1 of this Title and any ratification made shall merely be considered as a purely religious ceremony.
The foregoing provision pertains to a religious ceremony performed with the purpose of ratifying a marriage which was solemnized civilly. In the eyes of the law, the marriage already exists; the subsequent ceremony is undertaken merely to conform to religious practices. Thus, the parties are exempted from complying with the required issuance of marriage license insofar as the subsequent religious ceremony is concerned. For this exemption to be applicable, it is sine qua non that: (1) the parties to the religious ceremony must already be married to each other in accordance with law (civil marriage); and (2) the ratifying ceremony is purely religious in nature.
Does paragraph 2 of Article 26 still apply if, in a mixed marriage, it is the Filipino spouse that initiates the divorce?
Yes. The purpose of paragraph 2 of Article 26 is to avoid the absurd situation where the Filipino spouse
remains married to the alien spouse who, after a foreign divorce decree that is effective in the country where it was rendered, is no longer married to the Filipino spouse. The provision is a corrective measure to address an anomaly where the Filipino spouse is tied to the marriage while the foreign spouse is free to marry under the laws of his or her country. Whether the Filipino spouse initiated the foreign divorce proceeding or not, a favorable decree dissolving the marriage bond and capacitating his or her alien spouse to remarry will have the same result: the Filipino
spouse will effectively be without a husband or wife. A Filipino who initiated a foreign divorce proceeding is in the same place and in like circumstance as a Filipino who is at the receiving end of an alien initiated proceeding. Therefore, the subject provision should not make a distinction.
In both instance, it is extended as a means to recognize the residual effect of the foreign divorce decree on Filipinos whose marital ties to their alien spouses are severed by operation of the latter’s national law.
Pending a petition for the declaration of absolute nullity of marriage, may the parties file a motion for the liquidation, partition, and distribution of the properties in the same proceeding?
Upon the filing of the Petition for Declaration of Nullity of Marriage, the trial court also acquired jurisdiction over matters incidental and consequential to the marriage.
Owing to the interrelatedness of the issues, a party to a petition for the declaration of absolute nullity of marriage may, in the same proceeding, file a motion for the liquidation, partition, and distribution of the properties of the spouses under Section 21 of A.M. No. 02-11-10-SC. Upon the filing of the Petition for Declaration of Nullity of Marriage, the trial court also acquired jurisdiction over matters incidental and consequential to the marriage.
Among these incidental and consequential matters is the settlement of the parties’ common properties, which entails a determination of which properties are included in and excluded from the co-ownership.
If a person is suffering from psychosis, is he automatically psychologically incapacitated to comply with the essential marital obligations?
No. That a person is suffering from a certain psychosis, such as schizophrenia, will not make them automatically psychologically incapacitated to comply with the essential marital obligations under Articles 68 to 71 of the Family Code.
This was clear in Tan-Andal vs. Andal, where this Court emphatically declared that psychological incapacity is a legal concept, not a medical one.
Psychological Incapacity
Instead of being a medical illness, psychological incapacity is “a durable or enduring aspect of a person’s personality, called ‘personality structure,’ which manifests itself through clear acts of dysfunctionality that undermines the family. The spouse’s personality structure must make it impossible for him or her to understand and, more important,
to comply with his or her essential marital obligations.” As a legal concept, psychological incapacity cannot be characterized as incurable. Instead, it is permanent relative to a specific partner. However, psychological incapacity can be grave, not in the sense that it is a serious or
dangerous mental illness, but that it excludes “mild characterological peculiarities, mood changes, occasional emotional outbursts.” The incapacity must be shown to be due to a genuinely serious psychic cause and, as explicitly required by the law, the incapacity must have existed
before or during the celebration of the marriage.
Do irreconcilable differences, conflicting personalities, emotional immaturity and irresponsibility,
physical abuse, habitual alcoholism, sexual infidelity or perversion, and abandonment, by themselves, warrant a finding of psychological incapacity under Article 36?
Article 36 of the Family Code contemplates downright incapacity or inability to take cognizance of and to assume the basic marital obligations. It is not enough to prove that a spouse failed to meet his responsibilities and duties as a married person; incapacity must be so enduring and persistent with respect to a specific partner, that the only result of the union would be the
inevitable and irreparable breakdown of the marriage. It must be stressed that an unsatisfactory marriage is not a null and void marriage.
Can the court consider drug addiction as psychological incapacity for declaration of nullity of marriage, and not for legal separation?
Yes.
While drug addiction is a ground for legal separation, the same will not prevent the Court from voiding the marriage where drug addiction is likewise a veritable manifestation of one’s psychological incapacity.
True, physical and verbal abuse, neglect and abandonment of spouse and children, or acts of infidelity including adultery or concubinage, each constitutes a ground for legal separation. But where each one of these grounds or a combination thereof, at the same time, manifest
psychological incapacity that had been existing even prior to marriage, the court may void the marriage on ground of psychological incapacity under Article 36 of the Family Code.
What is important is that the totality of evidence must support a finding of psychological incapacity.
Is expert testimony required to prove psychological incapacity?
Expert testimony or the testimony of a psychologist/psychiatrist is no longer required to prove psychological incapacity.
Ordinary witnesses who have been present in the spouses’ lives before they contracted marriage may testify on their observations as to the incapacitated spouse’s behavior.
What is important is that the totality of evidence is sufficient to support a finding of psychological incapacity.
Incurability requirement in psychological incapacity
With regard to the requisite of incurability, it must now be recognized that psychological incapacity is incurable only in the legal (not medical) sense in that the incapacity is “so enduring and persistent with respect to a specific partner, and contemplates a situation where the couple’s respective personality structures are so incompatible and antagonistic that the only result of the union would be the inevitable and irreparable breakdown of the marriage.”
In order for the said requisite to obtain, there must be “an undeniable pattern of a persisting failure to be a present, loving, faithful, respectful, and supportive spouse that must be established so as to demonstrate that there is indeed a psychological anomaly or incongruity in the spouse relative to the other.
Gravity in psychological incapacity
The requisite of gravity in psychological incapacity must be such that it is caused by a genuinely psychic cause, and not just “mild characterological peculiarities, mood changes or occasional emotional outbursts” nor mere “refusal, neglect, difficulty, much less ill will.”
As such, “a deeper and fuller assessment of the alleged incapacity must be done such that it is clearly and convincingly shown that the fulfillment of the essential marital obligations is not merely feigned or cumbersome but rather, practically impossible, because of the distinct
psychological makeup of the person relative to his or her spouse.”
Juridical antecedence in psychological antecedence
The requisite of juridical antecedence (which - to note - is explicitly necessitated by the phrase “at the time of the celebration of the marriage” in Article 36) means that the incapacity is determined to exist during the time of celebration.
While it may indeed be difficult - if not scientifically impossible - to determine the existence of psychological incapacity at the exact point in time that the couple exchanged their ‘I dos,’ it is sufficient, however, that the petitioner demonstrates, by clear and convincing evidence, that the incapacity, in all reasonable likelihood, already exists at the time of the marriage’s celebration.
To determine the reasonable likelihood of its existence at the time of the celebration of the marriage, the Court, in Tan-Andal, held that “proof of juridically antecedent psychological incapacity may consist of testimonies describing the environment where the supposedly incapacitated spouse lived that may have led to a particular behavior.”
The concept of juridical antecedence must be understood to include the ordinary experiences of the spouses not only prior to the marriage itself, but more importantly, during their “lived conjugal life” together since, as the law itself states, a marriage can be declared null and void under Article 36 “even if such incapacity becomes manifest only after its solemnization.”
As the parties have yet to assume any of the essential marital obligations prior to being married, the Court discerns that the experience of marriage itself is the litmus test of self-realization, reflecting one’s true psychological makeup as to whether or not he or she was indeed capable of assuming the essential marital obligations to his or her spouse at the time the marriage was entered into.
In determining that a person is psychologically incapacitated, following parameters are to be noted:
1) The psychological incapacity must be shown to have been existing at the time of the celebration of marriage;
2) Caused by a durable aspect of one’s personality structure, one that was formed prior to their marriage;
3) Caused by a genuinely serious psychic cause; and
4) Proven by clear and convincing evidence.
The Court meticulously reviewed and revised the Molina guidelines in the case of Tan-Andal vs. Andal (Tan-Andal). The guidelines, as modified by current case law, are summarized below:
1) The first Molina guideline states that “the burden of proof to show the nullity of the marriage belongs to the plaintiff. Any doubt should be resolved in favor of the existence, and continuation of the marriage, and against its dissolution and nullity. This is rooted in the fact that both our Constitution and our laws cherish the validity of marriage and unity
of the family.”
In addition to the foregoing guideline, the Court in Tan-Andal emphasized that there is a presumption of validity of marriage, and that such presumption can only be rebutted by a clear and convincing evidence. Hence, the plaintiff-spouse in an action to nullify a valid marriage based on Article 36 of the Family Code has the burden of proving his or her case with clear and convincing evidence.
2) The second Molina guideline which provides that “the root cause of the psychological incapacity must be (a) medically or clinically identified, (b) alleged in the complaint, (c) sufficiently proven by experts, and (d) clearly explained in the decision” was modified in the Tan-Andal case. In the Tan-Andal case, the Court categorically abandoned the requirement that psychological incapacity must be medically or clinically identified and proven through expert opinion as the term “psychological incapacity” does not refer to a mental incapacity or a personality disorder, to wit:
In light of the foregoing, this Court now categorically abandons the second Molina guideline. Psychological incapacity is neither a mental incapacity nor a personality disorder that must be proven through expert opinion. There must be proof, however, of the durable or enduring aspects of a person’s personality, called ‘personality structure,’ which manifests itself through clear acts of dysfunctionality that undermines the family.
The spouse’s personality structure must make it impossible for him or her to understand and, more important, to comply with his or her essential marital obligations.
Proof of these aspects of personality need not be given by an expert. Ordinary witnesses who have been present in the life of the spouses before the latter contracted marriage may testify on behaviors that they have consistently observed from the supposedly incapacitated spouse. From there, the judge will decide if these behaviors are indicative of a true and serious incapacity to assume the essential marital obligation.
Reiterating this Court’s pronouncement in Marcos vs. Marcos, the medical examination by an expert of the spouse concerned is no longer required as courts may rely on the totality of evidence to sustain a finding of psychological incapacity.
3) The third Molina guideline entails that “incapacity must be proven to be existing at ‘the time of the celebration of the marriage,”‘ which is also clearly stated in Article 36 of the Family Code. Although the “psychological incapacity” may not be perceivable at the time of the celebration of the marriage, such “psychological incapacity” must have attached at such moment, or prior thereto.
4) The fourth Molina guideline which requires that “such incapacity must also be shown to be medically or clinically permanent or incurable” has already been abandoned.
The case of Tan-Andal clarifies that “the psychological incapacity contemplated in Article 36 of the Family Code is incurable, not in the medical, but the legal sense”, and that the requirement of incurability means that “the incapacity is so enduring and persistent with respect to a specific partner, and contemplates a situation where the couple’s respective personality structures are so incompatible and antagonistic that the only result of the union would be inevitable and irreparable breakdown of marriage.” The Tan-Andal case further refers to the Concurring Opinion of Senior Associate Justice Perlas-Bernabe which provides that “an undeniable pattern of such persisting failure [to be a present, loving, faithful, respectful, and supportive spouse] must be established as to demonstrate that there is indeed a psychological anomaly or incongruity in the spouse relative to the other.”
5) The Tan-Andal case retains the fifth Molina guideline that requires that “[s]uch illness must be grave enough to bring about the disability of the party to assume the essential obligations of marriage”, but further provides that there must be a clear and convincing evidence showing that such incapacity is caused by a genuinely serious psychic cause. The Court, in the Molina case, further elaborates: Thus, ‘mild characterological peculiarities, mood changes, occasional emotional outbursts’ cannot be accepted as root causes. The illness must be shown as downright incapacity or inability, not a refusal, neglect or difficulty, much less ill will. In other words, there is a natal or supervening disabling factor
in the person, an adverse integral element in the personality structure that effectively incapacitates the person from really accepting and thereby complying with the obligations essential to marriage.
6) The sixth Molina guideline identifies the essential marital obligations to be the obligations “embraced by Articles 68 up to 71 of the Family Code as regards the husband and wife as well as Articles 220, 221 and 225 of the same Code in regard to parents and their children.
Such non-complied marital obligation(s) must also be stated in the petition, proven by evidence and included in the text of the decision.” The Tan-Andal case affirms that the obligation of the spouses to their children becomes part of their obligations to each other as spouses and, thus, failure to attend to their obligations to their children may be a ground to nullify the marriage of the parties. However, it must be clearly shown that such failure reflects on the capacity of at least one of the spouses.
7) The seventh Molina guideline which provides that the interpretations given by the National Appellate Matrimonial Tribunal of the Catholic Church in the Philippines, while not controlling or decisive, is persuasive is retained in the Tan-Andal case.
8) The eighth and final Molina guideline provides that “[t]he trial court must order the prosecuting attorney or fiscal and the Solicitor General to appear as counsel for the state.
No decision shall be handed down unless the Solicitor General issues a certification, which will be quoted in the decision, briefly stating therein his reasons for his agreement or opposition, as the case may be, to the petition. The Solicitor General, along with the prosecuting attorney, shall submit to the court such certification within fifteen (15) days from the date the case is deemed submitted for resolution of the court. The Solicitor General shall discharge the equivalent function of the defensor vinculi contemplated under Canon 1095.”
The Court allowed lay persons to prove psychological incapacity through evidence of a personality structure or psychic causes that manifest itself through clear acts of dysfunctionality that undermine the family. The types of evidence that a lay person may adduce for this purpose are
(i) the reputation of the incapacitated spouse being psychologically incapacitated - that is, the viewpoint of reasonable members of the spouses’ relevant communities;
(ii) the character of the incapacitated spouse relevant to or indicative of such incapacity,
(iii) the everyday behavior, acts or conduct of the incapacitated spouse,
(iv) the offended spouse’s own experience of neglect, abandonment, unrequited love, and infliction of mental distress, among others.
These types of evidence may establish circumstances probative of the dysfunctional acts inimical to the family. The relevant circumstances to be proven may include (i) instances of violence against women and their children as defined in Republic Act No. 9262 (RA 9262), (ii) zero probability of reconciliation between the spouses, and (iii) failure of the spouse or the spouses to perform his, her, or their marital duties and obligations in a manner clearly demonstrative of an utter insensitivity or inability to give meaning and significance to the marriage. The third category of circumstances refers to the characterization, i.e., clearly demonstrative of an utter insensitivity or inability to give meaning and significance to the marriage, that was once used to describe the personality disorder that gave rise to psychological incapacity.
This characterization may now be appropriated to capture the essence of the problematic personality structure or psychic causes that spawn psychological incapacity.
Embraced in this inclusive circumstance are such facts as (i) forms of addiction demonstrative of such insensitivity or inability, (ii) abandonment by one spouse of the other, or (iii) instances of mutual actual loss of trust, love, and respect for each other. Distinctive of these and other instances is the harsh reality that spouses coerced together in a meaningless marital relationship would only physically or psychologically endanger either or both of them as they cannot both move on to more productive relationships but be forced to live double or secret lives.
Under Article 2 of the Family Code, for consent to be valid, it must be
(1) freely given and (2) made in the presence of a solemnizing officer
A “freely given” consent requires that the contracting parties willingly and deliberately enter into the marriage. Consent must be real in the sense that it is not vitiated nor rendered defective by any of the vices of consent under Articles 45 and 46 of the Family Code, such as fraud, force, intimidation, and undue influence. Consent must also be conscious or intelligent, in that the parties must be capable of intelligently understanding the nature of, and both the beneficial or unfavorable consequences of their act. Their understanding should not be affected by insanity, intoxication, drugs, or hypnotism.
Effect if any of the essential requisites of marriage are inexistent
Article 4 of the Family Code provides that the absence of any essential requisite shall render a marriage void ab initio.
Fraud that would constitute a marriage void
Under Art. 46
(1) nondisclosure of a previous conviction involving moral turpitude;
(2) concealment by the wife of a pregnancy by another man;
(3) concealment of a sexually
transmitted disease; and
(4) concealment of drug addiction, alcoholism, or homosexuality.
No other misrepresentation or deceit shall constitute fraud as a ground for an action to annul a marriage.
Furthermore, under Article 47 (3), the ground of fraud may only be brought by the injured or innocent party.
Art. 45. A marriage may be annulled for any of the following causes, existing at the time of the marriage:
(1) That the party in whose behalf it is sought to have the marriage annulled was eighteen years of age or over but below twenty-one, and the marriage was solemnized without the consent of the parents, guardian or person having substitute parental authority over the party, in that order, unless after attaining the age of twenty-one, such party freely cohabited with the other and both lived together as husband and wife;
(2) That either party was of unsound mind, unless such party after coming to reason, freely cohabited with the other as husband and wife;
(3) That the consent of either party was obtained by fraud, unless such party afterwards, with full knowledge of the facts constituting the fraud, freely cohabited with the other as husband and wife;
(4) That the consent of either party was obtained by force, intimidation or undue influence, unless the same having disappeared or ceased, such party thereafter freely cohabited with the other as husband and wife;
(5) That either party was physically incapable of consummating the marriage with the other, and such incapacity continues and appears to be incurable; or
(6) That either party was afflicted with a sexually-transmissible disease found to be serious and appears to be incurable.
In case of legal separation of the parents, the custody of the minor children shall be awarded to
In case of legal separation of the parents, the custody of the minor children shall be awarded to the innocent spouse, unless otherwise directed by the court in the interest of the minor children, but when the husband and wife are living separately and apart from each other, without decree of the court, the court shall award the care, custody, and control of each child as will be for his best interest.
But when the husband and wife are living separately and apart from each other, without decree of the court, the court shall award the care, custody, and control of each child as will be for his best interest, permitting the child to choose which parent he prefers to live with if he is over seven (7) years of age unless the parent so chosen be unfit to take charge of the child by reason of moral depravity, habitual drunkenness or poverty.
Rules on alienation of conjugal property
1) The alienation or encumbrance of the conjugal property, without the wife’s consent, made before the effectivity of the Family Code, is not void but merely voidable. The applicable laws are Articles 166 and 173 of the Civil Code. The wife may file an action for annulment of contract within 10 years from the transaction; and
2) The alienation or encumbrance of the conjugal property, without the authority of the court or the written consent of the other spouse, made after the effectivity of the Family Code is void. The applicable law is Article 124 of the Family Code without prejudice to vested rights in the property acquired before August 3, 1988. Unless the transaction is accepted by the non-consenting spouse or is authorized by the court, an action for declaration of nullity of the contract may be filed before the continuing offer on the part of the consenting spouse and the third person becomes ineffective.
Is implied acceptance sufficient enough for donations proper nuptias to be valid?
Yes.
Article 127 thereof provides that the form of donations propter nuptias are regulated by the Statute of Frauds. Article 1403, paragraph 2, which contains the Statute of Frauds requires that the contracts mentioned thereunder need be in writing only to be enforceable.
However, as provided in Article 129, express acceptance “is not necessary for the validity of these donations.” Thus, implied acceptance is sufficient.
Each spouse’s liability in case conjugal property is not enough to answer for the liabilities
Article 94 of the Family Code governing the Absolute Community of Property regime, explicitly holds the spouses solidarily liable with each other if the conjugal properties are not enough to answer for the liabilities.
The last paragraph points to the “subsidiary but solidary liability of the separate properties” of the spouses for liabilities enumerated in the Article. This Article, similar to Article 94 of the Family Code governing the Absolute Community of Property regime, explicitly holds the spouses solidarily liable with each other if the conjugal properties are not enough to answer for the liabilities.
In this case, if the conjugal properties of the Reyes Spouses are not enough to answer for the loan, petitioner can recover the remaining unpaid balance from the separate properties of either respondent or his wife Lilia.
Property relations before the effectivity of the Family Code
Juan and Mercedes appear to have been married before the effectivity of the Family Code on August 3, 1988. There being no indication that they have adopted a different property regime, the presumption is that their property relations is governed by the regime of conjugal partnership of gains.
Does the grant of the judicial separation of the absolute community property automatically dissolve the absolute community regime?
Yes, as stated in the 4th paragraph of Article 99 of the Family Code.
Art. 99. The absolute community terminates:
(1) Upon the death of either spouse;
(2) When there is a decree of legal separation;
(3) When the marriage is annulled or declared void; or
(4) In case of judicial separation of property during the marriage under Articles 134 to 138.
Effect of declaration of absolute nullity of a marriage on the ground of psychological capacity
The declaration of absolute nullity of a marriage on the ground of psychological capacity will create a special co-ownership between the parties under Article 147 of the Family Code.
Since the petitioner and the respondent suffer no legal impediment and exclusively lived with each other under a void marriage, their property relation is one of co-ownership under Article 147 of the Family Code. The said provision finds application in this case even if the parties were married before the Family Code took effect by express provision of the Family Code on its retroactive effect for as long as it does not prejudice or impair vested or acquired rights in accordance with the Civil Code or other laws. Here, no vested rights will be impaired in the application of the said provision given that Article 147 of the Family Code is actually just a remake of Article 144 of the 1950 Civil Code.
RIGHTS AND OBLIGATIONS BETWEEN HUSBAND AND WIFE
The husband and wife are obliged to live together, observe mutual love, respect and fidelity, and render mutual help and support. Family Code, Article 68
The husband and wife shall fix the family domicile. In case of disagreement, the court shall decide.
The court may exempt one spouse from living with the other if the latter should live abroad or there are other valid and compelling reasons for the exemption. However, such exemption shall not apply if the same is not compatible with the solidarity of the family. Family Code, Article 69
The spouses are jointly responsible for the support of the family. The expenses for such support and other conjugal obligations shall be paid from the community property and, in the absence thereof, from the income or fruits of their separate properties. In case of insufficiency or absence of said income or fruits, such obligations shall be satisfied from their separate properties. Family
Code, Article 70
The management of the household shall be the right and duty of both spouses. The expenses for such management shall be paid in accordance with the provisions of Article 70. Family Code, Article 71
When one of the spouses neglects his or her duties to the conjugal union or commits acts which tend to bring danger, dishonor or injury to the other or to the family, the aggrieved party may apply to the court for relief. Family Code, Article 72
Either spouse may exercise any legitimate profession, occupation, business or activity without the consent of the other. The latter may object only on valid, serious, and moral grounds.
In case of disagreement, the court shall decide whether or not:
1) The objection is proper, and
2) Benefit has accrued to the family prior to the objection or thereafter. If the benefit accrued prior to the objection, the resulting obligation shall be enforced against the separate property of the spouse who has not obtained consent.
The foregoing provisions shall not prejudice the rights of creditors who acted in good faith. Family Code, Article 73
Rule on suit between family members
Art. 151. No suit between members of the same family shall prosper unless it should appear from the verified complaint or petition that earnest efforts toward a compromise have been made, but that the same have failed. If it is shown that no such efforts were in fact made, the same case must be dismissed.
This rules shall not apply to cases which may not be the subject of compromise under the Civil Code.
Art. 150. Family relations include those:
(1) Between husband and wife;
(2) Between parents and children;
(3) Among brothers and sisters, whether of the full or half-blood.
Petitioner argues that the property should be exempt from forced sale, attachment, and execution, based on Article 155 of the Family Code.
Article 155 of the Family Code explicitly provides that debts secured by mortgages are exempted from the rule against execution, forced sale, or attachment of family home.
Petitioner and his family have been neighbors with respondent since 1992, before the execution of the mortgage contract. Even though petitioner’s property has been constituted as a family home, it is not exempt from execution.
Art. 155. The family home shall be exempt from execution, forced sale or attachment except: . . . (3) For debts secured by mortgages on the premises before or after such constitution. Since petitioner’s property was voluntarily used by him as security for a loan he obtained from respondent, it may be subject to execution and attachment.
How is filiation proved?
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.
In the absence of the foregoing evidence, the legitimate filiation shall be
proved by:
(1) The open and continuous possession of the status of a legitimate child; or
(2) Any other means allowed by the Rules of Court and special laws.
Art. 173. The action to claim legitimacy may be brought by the child during his or her lifetime and shall be transmitted to the heirs should the child die during minority or in a state of insanity. In these cases, the heirs shall have a period of five years within which to institute the action.
The Rule on DNA Evidence permits the use of any biological sample, including bones, in DNA testing. This Court has sanctioned the exhumation of bodies for DNA testing. In Estate of Ong vs. Diaz, this Court affirmed the use of DNA testing in an instance when the putative father was dead.
To prove open and continuous possession of the status of an illegitimate child,
“To prove open and continuous possession of the status of an illegitimate child, there must be evidence of the manifestation of the permanent intention of the supposed father to consider the child as his, by continuous and clear manifestations of parental affection and care, which cannot be attributed to pure charity.”
Here, the single instance that Antonio allegedly hugged Randy and promised to support him cannot be considered as proof of continuous possession of the status of a child. To emphasize, “the father’s conduct towards his son must be spontaneous and uninterrupted for this ground to exist.” Here, except for that singular occasion in which they met, there are no other acts of Antonio treating Randy as his son. Neither can Antonio’s paternity be deduced from how his sister Lelita treated Randy.
Can baptismal certificates prove filiation?
Just like in a birth certificate, the lack of participation of the supposed father in the preparation of a baptismal certificate renders this document incompetent to prove paternity.
Anent Randy’s baptismal certificate, we cannot agree with the CA that the same is a good proof of Antonio’s paternity of Randy. Just like in a birth certificate, the lack of participation of the supposed father in the preparation of a baptismal certificate renders this document incompetent to prove paternity. And “while a baptismal certificate may be considered a public document, it can only serve as evidence of the administration of the sacrament on the date specified but not the veracity of the entries with respect to the child’s paternity. Thus, baptismal certificates are per se inadmissible in evidence as proof of filiation and they cannot be admitted indirectly as circumstantial evidence to prove the same.”
Rights of legitimate children
Legitimate children shall have the right:
1) To bear the surnames of the father and the mother, in conformity with the provisions of the Civil Code on Surnames;
2) To receive support from their parents, their ascendants, and in proper cases, their brothers and sisters, in conformity with the provisions of this Code on Support; and
3) To be entitled to the legitime and other successional rights granted to them by the Civil Code. Family Code, Article 174
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. The legitime of each illegitimate child shall consist of one-half of the legitime of a legitimate child. Family Code, Article 174
To emphasize, illegitimate children who were still minors at the time the Family Code took effect and whose putative parent died during their minority are thus given the right to seek recognition (under Article 285 of the Civil Code) for a period of up to four years from attaining majority age.
This vested right was not impaired or taken away by the passage of the Family Code. Indeed, our overriding consideration is to protect the vested rights of minors who could not have filed suit, on their own, during the lifetime of their putative parents.
Angela, who was not yet born when the Family Code took effect, has the right to prove that she was her father’s daughter under Article 285 of the Civil Code within four years from attaining the age of majority. Under Article 402 of the Civil Code, the age of majority is 21 years old. Angela attained majority on October 9, 1999.
She had until October 9, 2003 to assert her right to prove her filiation with Arturo. Thus, when she moved to be included in the distribution and partition of Miguel’s estate on July 17, 2003, she was not yet barred from claiming her filiation. However, there is no provision in the Civil Code that guides a child, who was born after their father’s death, in proving filiation with him.
Article 164 of the Family Code provides that “children conceived or born during the marriage of the parties are legitimate.”
How do you rebut this presumption?
The presumption is quasi-conclusive and may be refuted only by the evidence of physical impossibility of coitus between husband and wife within the first 120 days of the 300 days which immediately preceded the birth of the child.
To rebut the presumption, the separation between the spouses must be such as to make marital intimacy impossible. This may take place, for instance, when they reside in different countries or provinces and they were never together during the period of conception or the husband was in prison during the period of conception, unless it appears that sexual union took place through the violation of prison regulations.
In what instance may a child born out of wedlock be legitimated?
Article 177 of the Family Code provides that “only children conceived and born outside of wedlock of parents who, at the time of the conception of the former, were not disqualified by any impediment to marry each other may be legitimated.”
Article 178 states that “legitimation shall take place by a subsequent valid marriage between parents.” In the case at bar, the parties do not dispute the fact that BBB is not CCC’s biological father. Such being the case, it was improper to have CCC legitimated after the celebration of BBB and AAA’s marriage. Clearly then, the legal process of legitimation was trifled with. BBB voluntarily but falsely acknowledged CCC as his son.
Article 1431 of the New Civil Code pertinently provides: Art. 1431. Through estoppel an admission or representation is rendered conclusive upon the person making it, and cannot be denied or disproved as against the person relying thereon.
Rights of Legitimated Children
Legitimated children shall enjoy the same rights as legitimate children. Family Code, Article 179
Art. 166. Legitimacy of a child may be impugned only on the following grounds:
(1) That it was physically impossible for the husband to have sexual intercourse with his wife within the first 120 days of the 300 days which immediately preceded the birth of the child because of:
(a) the physical incapacity of the husband to have sexual intercourse with his wife;
(b) the fact that the husband and wife were living separately in such a way that sexual intercourse was not possible; or
(c) serious illness of the husband, which absolutely prevented sexual intercourse;
(2) That it is proved that for biological or other scientific reasons, the child could not have been that of the husband, except in the instance provided in the second paragraph of Article 164; or
(3) That in case of children conceived through artificial insemination, the written authorization or ratification of either parent was obtained through mistake, fraud, violence, intimidation, or undue influence.
Who may be adopted
The following may be adopted:
a) Any child who has been issued a Certificate Declaring a Child Legally Available for Adoption;
b) The legitimate child of one spouse by the other spouse;
c) An illegitimate child by a qualified adopter to improve status of legitimacy;
d) A Filipino of legal age if, prior to the adoption, said person has been consistently considered and treated by the adopters as their own child for a period of at least three (3) years;
e) A foster child;
f) A child whose adoption has been previously rescinded;
g) A child whose biological or adoptive parents have died: Provided, That no proceedings shall be initiated within six (6) months from the time of death of said parents; or
h) A relative of the adopter. Domestic Administrative Adoption and Alternative Child Care Act, Section 22
Whose consent is necessary to the Domestic Adoption
After being properly counseled and informed of the right to give or withhold approval of the adoption, the written consent of the following to the adoption are hereby required:
a) The adoptee, if ten (10) years of age or over;
b) The biological parents of the child, if known, or the legal guardian, or the proper government instrumentality which has legal custody of the child, except in the case of a Filipino of legal age if, prior to the adoption, said person has been consistently considered and treated as their own child by the adopters for at least three (3) years;
c) The legitimate and adopted children, ten (10) years of age or over, of the adopters, if any;
d) The illegitimate children, ten (10) years of age or over, of the adopter if living with said adopter or over whom the adopter exercises parental authority and the latter’s spouse, if any; and
e) The spouse, if any, of the person adopting or to be adopted. Provided, That children under ten (10) years of age shall be counseled and consulted, but shall not be required to execute within consent. Domestic Administrative Adoption and Alternative Child Care Act, Section 23
Effects of Adoption on legitimacy
The adoptee shall be considered the legitimate child of the adopter for all intents and purposes and as such in entitled to all the rights and obligations provided by law to legitimate children born to them without discrimination of any kind.
To this end, the adoptee is entitled to love, guidance, and support in keeping with the means of the family.
The legitimate filiation that is created between the adopter and adoptee shall be extended to the adopter’s parents, adopter’s legitimate siblings, and legitimate descendants.
The adopter is also given the right to choose the name by which the child is to be known, consistent with the best interest of the child.
Effects of Adoption on parental authority
Upon issuances of the Order of Adoption, adoption shall cease as alternative care and becomes parental care.
Adoptive parents shall now have full parental authority over the child. Except in cases where the biological parent is the spouse of the adopter, all legal ties between the biological parents and the adoptee shall be severed and the same shall then be vested on the adopters. In case spouses jointly adopt or one spouse adopts the legitimate child of the other, joint parental authority shall be exercised by the spouses.
Effects of Adoption on Succession
In testate and intestate succession, the adopters and the adoptee shall have reciprocal rights of succession without distinction from legitimate filiations. However, if the adoptees and their biological parents have left a will, the law on testamentary succession shall govern. Domestic Administrative Adoption and Alternative Child Care Act, Sections 41 to 43
Rectification of Simulated Birth Record
Notwithstanding any provision of law to the contrary, a person or persons who, prior to the effectivity of this Act, simulated the birth of a child, and those who cooperated in the execution of such simulation, shall not be criminally, civilly, or administratively liable for such act: Provided, That the simulation of birth was made for the best interest of the child and that the child has been consistently considered and treated by such person or persons as her, his, or their own daughter or son: Provided, further, That such person or persons has or have filed a petition for adoption with an application for the rectification of the simulated birth record within ten (10) years from the effectivity of this Act: Provided, finally, That all the benefits of this Act shall also apply to adult adoptees. Simulated Birth Rectification Act, Section 4
Administrative Adoption and Rectification
A person or persons who simulated the birth of a child under the conditions provided under Section 4 of this Act may avail of administrative proceedings for the adoption and rectification of the simulated birth record of such child: Provided, That the child has been living with the person for at least three (3) years before the effectivity of this Act: Provided, further, That a certificate declaring the child legally available for adoption (CDCLAA) is issued by the DSWD in favor of such child. Simulated Birth Rectification Act, Section 5
Required Consent in Administrative Adoption
After being properly counseled and informed of the right to give or withhold approval of the adoption, the written consent of the following shall be required:
a) The adoptee, if ten (10) years of age or over;
b) The legitimate and adopted daughters and sons, ten (10) years of age or over, of the adopter and adoptee, if any;
c) The illegitimate daughters and sons, ten (10) years of age or over, of the adopter if living with said adopter and the latter’s spouse, if any; and
d) The spouse, if any, of the adoptee. Simulated Birth Rectification Act, Section 8
Sec. 5(e) and (i) of RA 9262
The portions of Sections 5(e) and 5(i) of RA 9262 that deal with denial or deprivation of financial support punish different things. Section 5(e) punishes the deprivation of financial support for the purpose of controlling the woman or to make her and/or her child or children lose their agency.
Section 5(i), on the other hand, punishes the willful infliction of mental or emotional anguish, or public ridicule or humiliation upon the woman and/or her child or children by denying her and/or her child or children financial support that is legally due her and/or her child or children. Thus, while the portions of Sections 5(e) and 5(i) that deal with denial or deprivation of financial support may seem similar at first glance, they, in reality, deal with different matters and penalize distinct acts. Finally, the Court clarifies that in either case, whether the accused is prosecuted under Section 5(e) or Section 5(i), the mere failure to provide financial support is not enough. In other words, neither Section 5(e) nor 5(i) can be construed to mean that mere failure or inability to provide support is sufficient for a conviction. Those entitled to support and are not given any have the remedy of filing a civil case for support against the delinquent person, consistent with the provisions of the Civil Code and the Family Code. In order to be liable under the penal provisions of R.A. 9262, therefore, it is necessary to allege and prove the existence of the facts that qualify the act of denial or deprivation of financial support from one in which mere civil liability may arise to one where a person may be criminally liable.
Extent of support
Under Article 195 (4) of the Family Code, a parent is obliged to support his child, comprising everything indispensable for sustenance, dwelling clothing, medical attendance, education, and transportation, in keeping with the financial capacity of the family. The amount of support shall be in proportion to the necessity of the recipient and the means of the person obliged to give support.
The obligation to give support shall only be demandable from
The obligation to give support shall only be demandable from the time the person entitled to it needs it for maintenance, but it shall not be paid except from the date of judicial or extrajudicial demand. Support pendente lite may also be claimed, in conformity with the manner stipulated by the Rules of Court.
Is an illegitimate child born out of wedlock entitled to support?
Yes. An illegitimate child, “conceived and born outside a valid marriage,’’ as is the admitted case with petitioner’s daughter, is entitled to support. To claim it, however, a child should have first been acknowledged by the putative parent or must have otherwise previously established his or her filiation with the putative parent. When “filiation is beyond question, support shall then follow as a matter of obligation.”
How is a judgment for support never final?
A judgment for support is never final in the sense that not only can its amount be subject to increase or decrease but its demandability may also be suspended or re-enforced when appropriate circumstances exist.
Thus, the order of support may be demanded or modified depending on the circumstances, even if the judgment has become final and executory. After the final judgment nullifying the marriage, “the obligation of mutual support between the spouses ceases.”
Petitioner and respondent’s marriage having been declared void, they are no longer obliged to give spousal support to each other. Nonetheless, the rest of the reliefs granted under the Permanent Protection Order in favor of respondent shall remain in full force and effect. Unlike in an ordinary case for spousal support, the grant of support under a permanent protection order also serves to protect the offended party from harm and violence and help them recover and regain control over their life. This added layer differentiates it from ordinary legal support between spouses and other dependents provided under the Family Code, which is solely meant to provide subsistence.
Tender age presumption
Article 213 of the Family Code provides for the so-called tender age presumption, stating that “no child under seven (7) years of age shall be separated from the mother unless the court finds compelling reasons to order otherwise.”
Article 213 of the same Code provides for the so-called tender age presumption, stating that “no child under seven (7) years of age shall be separated from the mother unless the court finds compelling reasons to order otherwise.” The rationale behind the rule was explained by the Code Commission in this wise: The general rule is recommended in order to avoid many a tragedy where a mother has seen her baby torn away from her. No man can sound the deep sorrows of a mother who is deprived of her child of tender age. The exception allowed by the rule has to be for “compelling reasons” for the good of the child; those cases must indeed be rare, if the mother’s heart is not to be unduly hurt. According to jurisprudence, the following instances may constitute “compelling reasons” to wrest away custody from a mother over her child although under seven (7) years of age: neglect, abandonment, unemployment, immorality, habitual drunkenness, drug addiction, maltreatment of the child, insanity or affliction with a communicable disease.
Article 216. In default of parents or a judicially appointed guardian, the following person shall exercise substitute parental authority over the child in the order indicated:
Article 216. In default of parents or a judicially appointed guardian, the following person shall exercise substitute parental authority over the child in the order indicated:
(1) The surviving grandparent, as provided in Article 214;
(2) The oldest brother or sister, over twenty-one years of age, unless unfit or disqualified; and
(3) The child’s actual custodian, over twenty-one years of age, unless unfit or disqualified.
Whenever the appointment or a judicial guardian over the property of the child becomes necessary, the same order of preference shall be observed. The order of preference laid down by Article 216 is mandatory, unless special circumstances require otherwise.
In the case at bar, in default of Irish’s biological parents and her deceased adoptive father, the parties claiming custody are the mother of her adoptive father and her biological aunt who is also her actual custodian.
Choice of a child for custody
The choice of a child over seven (7) years of age (first paragraph of Article 213 of the Family Code) and over ten (10) years of age (Rule 99 of the Rules of Court) shall be considered in custody disputes only between married parents because they are, pursuant to Article 211 of the Family Code, accorded joint parental authority over the persons of their common children.
On the other hand, this choice is not available to an illegitimate child, much more one of tender age (second paragraph of Article 213 of the Family Code), because sole parental authority is given only to the mother, unless she is shown to be unfit or unsuitable (Article 176 of the Family Code).
Succession
Succession is a mode of acquisition by virtue of which the property, rights and obligations to the extent of the value of the inheritance, of a person are transmitted through his death to another or others either by his will or by operation of law. The inheritance includes all the property, rights and obligations of a person which are not extinguished by his death. These provisions emphasize that what is passed by a decedent to his heirs by succession are those which he owned at the time of his death. It follows then that his heirs cannot inherit from him what he does not own anymore.
When are rights to the succession transmitted?
Rights to the succession are transmitted from the moment of death of the decedent.
Article 774 of the Civil Code defines Succession as a mode of transferring ownership as follows:
Art. 774. Succession is a mode of acquisition by virtue of which the property, rights and obligations to the extent and value of the inheritance of a person are transmitted through his death to another or others by his will or by operation of law.
Are contractual rights and obligations transmissible to the successors?
Yes. A party’s contractual rights and obligations are transmissible to the successors.
The spouses Basas have already passed away, since Estefania died on June 24, 1999, 105 while her husband, Dominador, died on March 9, 2005. However, their death did not extinguish their contractual obligations in the instant case since as a rule, “a party’s contractual rights and obligations are transmissible to the successors.” The pertinent provisions of the Civil Code state:
Art. 774. Succession is a mode of acquisition by virtue of which the property, rights and obligations to the extent of the value of the inheritance, of a person are transmitted through his [or her] death to another or others either by his [or her] will or by operation of law. XXX
Art. 776. The inheritance includes all the property, rights and obligations of a person which are not extinguished by his [or her] death. XXX
Art. 1311. Contracts take effect only between the parties, their assigns and heirs except in case where the rights and obligations arising from the contract are not transmissible by their nature, or by stipulation or by provision of law. The heir is not liable beyond the value of the property received from the decedent.
In determining which rights are intransmissible (extinguished by a person’s death) or transmissible (not extinguished by his death), the following general rules have been laid down:
First: That rights which are purely personal, not in the inaccurate equivalent of this term in contractual obligations, but in its proper sense, are, by their nature and purpose, intransmissible, for they are extinguished by death; examples, those relating to civil personality, to family rights, and to the discharge of public office.
Second: That rights which are patrimonial or relating to property are, as a general rule, not extinguished by death and properly constitute part of the inheritance, except those expressly provided by law or by the will of the testator, such as usufruct and those known as personal servitudes.
Third: That rights of obligation are by nature transmissible and may constitute part of the inheritance, both with respect to the rights of the creditor and as regards the obligations of the debtor.
The third rule stated above has three exceptions, especially with respect to the obligations of the debtor. They are: (1) those which are personal, in the sense that the personal qualifications and circumstances of the debtor have been taken into account in the creation of the obligation, (2) those that are intransmissible by express agreement or by will of the testator, and (3) those that are intransmissible by express provision of law, such as life pensions given under contract.
Rules on obligations passed on to successor/s
The heirs are no longer personally liable for the debts of the deceased; such debts must be collected only from the property left upon his [or her] death, and if this should not be sufficient to cover all of them, the heirs cannot be made to pay the uncollectible balance.
This should not be understood to mean, however, that “obligations” are no longer a part of the inheritance. Only money debts are chargeable against the estate left by the deceased; these are the obligations which do not pass to the heirs, but constitute a charge against the hereditary property. There are other obligations, however, which do not constitute money debts; these are not extinguished by death, and must still be considered as forming part of the inheritance. Thus, if the deceased is a lessee for a definite period, paying a periodical rental, then his [ or her] heirs will inherit the obligation to pay the rentals as they fall due together with the rights arising from the lease contract.
In the opening paragraph of the will, it was stated that English was a language “understood and known” to the testatrix. But in its concluding paragraph, it was stated that the will was read to the testatrix “and translated into Filipino language”.
Is the will valid?
A will written in English, which was not known to the Igorot testator, is void and was disallowed.
That could only mean that the will was written in a language not known to the illiterate testatrix and, therefore, it is void because of the mandatory provision of article 804 of the Civil Code that every will must be executed in a language or dialect known to the testator. Thus, a will written in English, which was not known to the Igorot testator, is void and was disallowed.
According to Article 799, the three things that the testator must have the ability to know to be considered of sound mind are as follows:
(1) the nature of the estate to be disposed of,
(2) the proper objects of the testator’s bounty, and
(3) the character of the testamentary act
Does the state of being forgetful make a person mentally unsound to execute a will?
The state of being forgetful does not necessarily make a person mentally unsound so as to render him unfit to execute a Will.
We agree with the position of the CA that the state of being forgetful does not necessarily make a person mentally unsound so as to render him unfit to execute a Will.
Forgetfulness is not equivalent to being of unsound mind. Besides, Article 799 of the New Civil Code states:
Art. 799. 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.
Holographic will
A holographic will must be entirely written, dated, and signed by the hand of the testator himself—it is subject to no other form, and may be made in or out of the Philippines, and need not be witnessed. Article 810, NCC
Requisites of a will
- Subscribed by testator
- Subscribed by 3 or more credible witnesses
- Each page shall be signed, except the last, on the left margin
- Every page shall be numbered correlatively in letters placed on the upper part of each page
- Attestation shall state the number of pages
Art. 805
Last page of the will that requires signature
As the probate court correctly appreciated, the last page of the will does not contain any testamentary disposition; it is but a mere continuation of the Acknowledgment.
The respondents take a skewed stance in insisting that the testator Legaspi and the instrumental witnesses should have signed on the last page of the subject will.
When Article 805 of the Civil Code requires the testator to subscribe at the end of the will, it necessarily refers to the logical end thereof, which is where the last testamentary disposition ends. As the probate court correctly appreciated, the last page of the will does not contain any testamentary disposition; it is but a mere continuation of the Acknowledgment.
The purpose of requiring the number of pages to be stated in the attestation clause
The purpose of requiring the number of pages to be stated in the attestation clause is to make the falsification of a will more difficult.
As to whether the failure to state the number of pages of the will in the attestation clause renders such will defective, the CA, citing Uy Coque v. Naves Sioca, 43 Phil. 405 (1922), and In re: Will of Andrada, perceived such omission as a fatal flaw.
In Uy Coque, one of the defects in the will that led to its disallowance is the failure to declare the number of its pages in the attestation clause.
The Court elucidated that the purpose of requiring the number of pages to be stated in the attestation clause is to make the falsification of a will more difficult.
While Article 809 allows substantial compliance for defects in the form of the attestation clause, Richard likewise failed in this respect. The statement in the Acknowledgment portion of the subject last will and testament that it “consists of 7 pages including the page on which the ratification and acknowledgment are written” cannot be deemed substantial compliance. The will actually consists of 8 pages including its acknowledgment which discrepancy cannot be explained by mere examination of the will itself but through the presentation of evidence aliunde.
Extrinsic validity of an alien’s will
Articles 816 and 817 of the Civil Code both allow the application of Philippine Law.
Article 817 provides that a will by an alien executed in the Philippines shall be treated as if it were executed according to Philippine Laws, if it was validly executed and accordingly could have been probated under the laws of the alien’s country of nationality.
Further, Article 817 does not exclude the participation of Philippine courts in the probate of an alien’s will, especially when the will passes real property in the Philippines. It provides an option to the heirs or the executor: to use Philippine Law, or plead and prove foreign law. Thus, it does not remove jurisdiction from the Philippine court.
This option is clear from the clause “which might be proved and allowed by the law of his own country,” which implies that either the alien’s national law or Philippine Law applies in the probate proceedings. Additionally, the clause “shall have the same effect as if executed in accordance with the laws of the Philippines” creates a fiction that foreign law if proven will have the same effect as Philippine Law.
Clearly, as to the extrinsic validity of an alien’s will, Articles 816 and 817 of the Civil Code both allow the application of Philippine Law.
Will failure to strictly observe other formalities result in the disallowance of a holographic will?
Failure to strictly observe other formalities will not result in the disallowance of a holographic will that is unquestionably handwritten by the testator.
In the case of holographic wills, on the other hand, what assures authenticity is the requirement that they be totally autographic or handwritten by the testator himself, as provided under Article 810 of the New Civil Code. Failure to strictly observe other formalities will not result in the disallowance of a holographic will that is unquestionably handwritten by the testator.
A reading of Article 813 of the New Civil Code shows that its requirement affects the validity of the dispositions contained in the holographic will, but not its probate. If the testator fails to sign and date some of the dispositions, the result is that these dispositions cannot be effectuated. Such failure, however, does not render the whole testament void.
Likewise, a holographic will can still be admitted to probate, notwithstanding noncompliance with the provisions of Article 814. Thus, unless the unauthenticated alterations, cancellations or insertions were made on the date of the holographic will or on testator’s signature, their presence does not invalidate the will itself. The lack of authentication will only result in disallowance of such changes.
Which requirements are essential to the probate of a holographic will?
Only the requirements of Article 810 of the New Civil Code—and not those found in Articles 813 and 814—are essential to the probate of a holographic will.
It is also proper to note that the requirements of authentication of changes and signing and dating of dispositions appear in provisions (Articles 813 and 814) separate from that which provides for the necessary conditions for the validity of the holographic will (Article 810). The distinction can be traced to Articles 678 and 688 of the Spanish Civil Code, from which the present provisions covering holographic wills are taken. This separation and distinction adds support to the interpretation that only the requirements of Article 810 of the New Civil Code—and not those found in Article 813 and 814 of the same Code—are essential to the probate of a holographic will.
Article 810. A person may execute a holographic will which must be entirely written, dated, and signed by the hand of the testator himself. It is subject to no other form, and may be made in or out of the Philippines, and need not be witnessed.
Qualifications of a witness in attestation
Article 820. Any person of sound mind and of the age of eighteen years or more, and not blind, deaf or dumb, and able to read and write, may be a witness to the execution of a will mentioned in article 805 of this Code. (n)
Article 821. The following are disqualified from being witnesses to a will:
(1) Any person not domiciled in the Philippines;
(2) Those who have been convicted of falsification of a document, perjury or false testimony.
Article 830. No will shall be revoked except in the following cases:
(1) By implication of law; or
(2) By some will, codicil, or other writing executed as provided in case of wills; or
(3) By burning, tearing, cancelling, or obliterating the will with the intention of revoking it, by the testator himself, or by some other person in his presence, and by his express direction. If burned, torn, cancelled, or obliterated by some other person, without the express direction of the testator, the will may still be established, and the estate distributed in accordance therewith, if its contents, and due execution, and the fact of its unauthorized destruction, cancellation, or obliteration are established according to the Rules of Court.
To constitute an effective revocation of a will…
To constitute an effective revocation, the physical act of destruction of a will must be coupled with animus revocandi on the part of the testator.
It is clear that the physical act of destruction of a will, like burning in this case, does not per se constitute an effective revocation, unless the destruction is coupled with animus revocandi on the part of the testator.
It is not imperative that the physical destruction be done by the testator himself. It may be performed by another person but under the express direction and in the presence of the testator. Of course, it goes without saying that the document destroyed must be the will itself.
Doctrine of Presumed Revocation
The law does not require any evidence of the revocation or cancellation of the will to be preserved. It therefore becomes difficult at times to prove the cancellation or revocation of wills. The fact that such cancellation or revocation has taken place must either remain unproved or be inferred from evidence showing that after due search the original will cannot be found. Where a will which cannot be found is shown to have been in the possession of the testator, when last seen, the presumption is, in the absence of other competent evidence, that the same was cancelled or destroyed.
The same presumption arises where it is shown that the testator had ready access to the will and it cannot be found after his death. It will not be presumed that such will has been destroyed by any other person without the knowledge or authority of the testator.
Is revocation done outside the Philippines valid?
Article 829. A revocation done outside the Philippines, by a person who does not have his domicile in this country, is valid when it is done according to the law of the place where the will was made, or according to the law of the place in which the testator had his domicile at the time; and if the revocation takes place in this country, when it is in accordance with the provisions of this Code.
Extrinsic validity of will
Due execution of the will or its extrinsic validity pertains to whether the testator, being of sound mind, freely executed the will in accordance with the formalities prescribed by law.
Probate of wills executed by foreigners abroad
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.
The rules do not require proof that the foreign will has already been allowed and probated in the country of its execution.
Our rules require merely that the petition for the allowance of a will must show, so far as known to the petitioner: (a) the jurisdictional facts (b) the names, ages, and residences of the heirs, legatees, and devisees of the testator or decedent; (c) the probable value and character of the property of the estate; (d) the name of the person for whom letters are prayed; and (e) if the will has not been delivered to the court, the name of the person having custody of it.
Jurisdictional facts refer to the fact of death of the decedent, his residence at the time of his death in the province where the probate court is sitting, or if he is an inhabitant of a foreign country, the estate he left in such province. The rules do not require proof that the foreign will has already been allowed and probated in the country of its execution.
Fideicommissary substitution
Article 863. A fideicommissary substitution by virtue of which the fiduciary or first heir instituted is entrusted with the obligation to preserve and to transmit to a second heir the whole or part of the inheritance, shall be valid and shall take effect, provided such substitution does not go beyond one degree from the heir originally instituted, and provided further, that the fiduciary or first heir and the second heir are living at the time of the death of the testator.
Article 870. The dispositions of the testator declaring all or part of the estate inalienable for more than twenty years are void.
When substitution of heir occurs
Substitution occurs only when another heir is appointed in a will “so that he may enter into inheritance in default of the heir originally instituted.”
Legitime
Legitime is defined as that part of the testator’s property which he cannot dispose of because the law has reserved it for certain heirs who are, therefore, called compulsory heirs.
Preterition
Preterition consists in the omission of a compulsory heir from the will, either because he is not named or, although he is named as a father, son, etc., he is neither instituted as an heir nor assigned any part of the estate without expressly being disinherited — tacitly depriving the heir of his legitime.
Preterition requires that the omission is total, meaning the heir did not also receive any legacies, devises, or advances on his legitime. In other words, preterition is the complete and total omission of a compulsory heir from the testator’s inheritance without the heir’s express disinheritance.
Article 887. The following are compulsory heirs:
(1) Legitimate children and descendants, with respect to their legitimate parents and ascendants;
(2) In default of the foregoing, legitimate parents and ascendants, with respect to their legitimate children and descendants;
(3) The widow or widower;
(4) Acknowledged natural children, and natural children by legal fiction;
(5) Other illegitimate children referred to in article 287.
Compulsory heirs mentioned in Nos. 3, 4, and 5 are not excluded by those in Nos. 1 and 2; neither do they exclude one another.
In all cases of illegitimate children, their filiation must be duly proved.
The father or mother of illegitimate children of the three classes mentioned, shall inherit from them in the manner and to the extent established by this Code.
Effect of preterition of a compulsory heir
Under the Civil Code, the preterition of a compulsory heir in the direct line shall annul the institution of heirs, but the devises and legacies shall remain valid insofar as the legitimes are not impaired.
Consequently, if a will does not institute any devisees or legatees, the preterition of a compulsory heir in the direct line will result in total intestacy. In the present case, the decedent’s will evidently omitted Francisco Olondriz as an heir, legatee, or devisee. As the decedent’s illegitimate son, Francisco is a compulsory heir in the direct line.
Unless Morales could show otherwise, Francisco’s omission from the will leads to the conclusion of his preterition.
Is prior determination of heirship in a special proceeding required before one can file an ordinary civil action to enforce ownership rights by virtue of succession?
No. The Court laid down in Treyes vs. Larlar that a prior determination of heirship in a special proceeding is not a prerequisite before one can file an ordinary civil action to enforce ownership rights by virtue of succession.
Given the clear dictates of the Civil Code that the rights of the heirs to the inheritance vest immediately at the precise moment of the decedent’s death even without judicial declaration of heirship, and the various Court En Banc and Division decisions holding that no prior judicial declaration of heirship is necessary before an heir can file an ordinary civil action to enforce ownership rights acquired by virtue of succession through the nullification of deeds divesting property or properties forming part of the estate and reconveyance thereof to the estate or for the common benefit of the heirs of the decedent, the Court hereby resolves to clarify the prevailing doctrine.
Article 919. The following shall be sufficient causes for the disinheritance of children and descendants, legitimate as well as illegitimate:
(1) When a child or descendant has been found guilty of an attempt against the life of the testator, his or her spouse, descendants, or ascendants;
(2) When a child or descendant has accused the testator of a crime for which the law prescribes imprisonment for six years or more, if the accusation has been found groundless;
(3) When a child or descendant has been convicted of adultery or concubinage with the spouse of the testator;
(4) When a child or descendant by fraud, violence, intimidation, or undue influence causes the testator to make a will or to change one already made;
(5) A refusal without justifiable cause to support the parent or ascendant who disinherits such child or descendant;
(6) Maltreatment of the testator by word or deed, by the child or descendant;
(7) When a child or descendant leads a dishonorable or disgraceful life;
(8) Conviction of a crime which carries with it the penalty of civil interdiction.
Article 920. The following shall be sufficient causes for the disinheritance of parents or ascendants, whether legitimate or illegitimate:
(1) When the parents have abandoned their children or induced their daughters to live a corrupt or immoral life, or attempted against their virtue;
(2) When the parent or ascendant has been convicted of an attempt against the life of the testator, his or her spouse, descendants, or ascendants;
(3) When the parent or ascendant has accused the testator of a crime for which the law prescribes imprisonment for six years or more, if the accusation has been found to be false;
(4) When the parent or ascendant has been convicted of adultery or concubinage with the spouse of the testator;
(5) When the parent or ascendant by fraud, violence, intimidation, or undue influence causes the testator to make a will or to change one already made;
(6) The loss of parental authority for causes specified in this Code;
(7) The refusal to support the children or descendants without justifiable cause;
(8) An attempt by one of the parents against the life of the other, unless there has been a reconciliation between them.
Article 921. The following shall be sufficient causes for disinheriting a spouse:
(1) When the spouse has been convicted of an attempt against the life of the testator, his or her descendants, or ascendants;
(2) When the spouse has accused the testator of a crime for which the law prescribes imprisonment of six years or more, and the accusation has been found to be false;
(3) When the spouse by fraud, violence, intimidation, or undue influence cause the testator to make a will or to change one already made;
(4) When the spouse has given cause for legal separation;
(5) When the spouse has given grounds for the loss of parental authority;
(6) Unjustifiable refusal to support the children or the other spouse.
Effect of disinheritance on the share of the heir
Article 923. The children and descendants of the person disinherited shall take his or her place and shall preserve the rights of compulsory heirs with respect to the legitime; but the disinherited parent shall not have the usufruct or administration of the property which constitutes the legitime.
How will disinheritance be valid?
For disinheritance to be valid, Article 916 of the Civil Code requires that the same must be effected through a will wherein the legal cause therefor shall be specified; Maltreatment of a parent by a child presents a sufficient cause for the disinheritance of the latter.
The document, entitled Kasulatan ng Pag-Aalis ng Mana, unmistakably showed Segundo’s intention of excluding his eldest son, Alfredo, as an heir to his estate for the reasons that he cited therein. In effect, Alfredo was disinherited by Segundo.
With regard to the reasons for the disinheritance that were stated by Segundo in his document, the Court believes that the incidents, taken as a whole, can be considered a form of maltreatment of Segundo by his son, Alfredo, and that the matter presents a sufficient cause for the disinheritance of a child or descendant under Article 919 of the Civil Code.
ART. 957. The legacy or devise shall be without effect:
(1) If the testator transforms the thing bequeathed in such a manner that it does not retain either the form or the denomination it had;
(2) If the testator by any title or for any cause alienates the thing bequeathed or any part thereof, it being understood that in the latter case the legacy or devise shall be without effect only with respect to the part thus alienated. If after the alienation the thing should again belong to the testator, even if it be by reason of nullity of the contract, the legacy or devise shall not thereafter be valid, unless the reacquisition shall have been effected by virtue of the exercise of the right of repurchase;
(3) If the thing bequeathed is totally lost during the lifetime of the testator, or after his death without the heir’s fault. Nevertheless, the person obliged to pay the legacy or devise shall be liable for eviction if the thing bequeathed should not have been determinate as to its kind, in accordance with the provisions of Article 928.
There might be here an intention on the part of Anacleto to alienate through the SREI unit 632A subsequent to the execution of his will although it subsequently became inefficacious, or without obligatory force, by reason of the nonfulfillment of the positive suspensive condition of full payment of the purchase price by spouses Estipona on the stipulated date.
When a person dies intestate, his or her estate may generally be subject to judicial administration proceedings. There are, however, several exceptions.
One such exception is provided for in Section 1 of Rule 74 of the Rules of Court. This Section states: Sec. 1. Extrajudicial settlement by agreement between heirs.—If the decedent left no will and no debts and the heirs are all of age, or the minors are represented by their judicial or legal representatives duly authorized for the purpose, the parties may, without securing letters of administration, divide the estate among themselves as they see fit by means of a public instrument filed in the office of the register of deeds, and should they disagree, they may do so in an ordinary action of partition. If there is only one heir, he may adjudicate to himself the entire estate by means of an affidavit filed in the office of the register of deeds.
The parties to an extrajudicial settlement, whether by public instrument or by stipulation in a pending action for partition, or the sole heir who adjudicates the entire estate to himself by means of an affidavit shall file, simultaneously with and as a condition precedent to the filing of the public instrument, or stipulation in the action for partition, or of the affidavit in the office of the register of deeds, a bond with the said register of deeds, in an amount equivalent to the value of the personal property involved as certified to under oath by the parties concerned and conditioned upon the payment of any just claim that may be filed under Section 4 of this rule. It shall be presumed that the decedent left no debts if no creditor files a petition for letters of administration within two (2) years after the death of the decedent. The fact of the extrajudicial settlement or administration shall be published in a newspaper of general circulation in the manner provided in the next succeeding section; but no extrajudicial settlement shall be binding upon any person who has not participated therein or had no notice thereof.
According to this provision, when the deceased left no will and no debts and the heirs are all of age, the heirs may divide the estate among themselves without judicial administration. The heirs may do so extrajudicially through a public instrument filed in the office of the Register of Deeds.
In case of disagreement, they also have the option to file an action for partition.
In default of the heirs of the decedent,
In default of the heirs of the decedent, the State will inherit the decedent’s share and will thus be a co-petitioner entitled to possession and enjoyment of the property.
In the same vein, there is no merit in petitioner’s claim that he has the legal personality to file the present unlawful detainer suit because the ejectment of respondents would benefit not only him but also his alleged co-owners. However, petitioner forgets that he filed the instant case to acquire possession of the property and to recover damages. If granted, he alone will gain possession of the lot and benefit from the proceeds of the award of damages to the exclusion of the heirs of Graciana. Hence, petitioner cannot successfully capitalize on the alleged benefit to his co-owners. Incidentally, it should be pointed out that in default of the said heirs of Graciana, whom petitioner labeled as “fictitious heirs,” the State will inherit her share and will thus be petitioner’s co-owner entitled to possession and enjoyment of the property.
Right of representation
Article 971. The representative is called to the succession by the law and not by the person represented. The representative does not succeed the person represented but the one whom the person represented would have succeeded.
In the direct line, right of representation is proper only in the descending, never in the ascending, line. In the collateral line, the right of representation may only take place in favor of the children of brothers or sisters of the decedent when such children survive with their uncles or aunts.
The right of representation in the collateral line takes place only in favor of the children of brothers and sisters (nephews and nieces); It cannot be exercised by grandnephews and grandnieces.
We note, however, that the petitioners before us are already the nephews, nieces, grandnephews and grandnieces of Josefa Delgado. Under Article 972 of the new Civil Code, the right of representation in the collateral line takes place only in favor of the children of brothers and sisters (nephews and nieces).
Article 973. In order that representation may take place, it is necessary that the representative himself be capable of succeeding the decedent.
Article 976. A person may represent him whose inheritance he has renounced.
Article 977. Heirs who repudiate their share may not be represented.
Rule on proximity
The rule on proximity is a concept that favors the relatives nearest in degree to the decedent and excludes the more distant ones except when and to the extent that the right of representation can apply. Thus, Article 962 of the Civil Code provides:
“ART. 962. In every inheritance, the relative nearest in degree excludes the more distant ones, saving the right of representation when it properly takes place. “Relatives in the same degree shall inherit in equal shares, subject to the provisions of Article 1006 with respect to relatives of the full and half blood, and of article 987, paragraph 2, concerning division between the paternal and maternal lines.”
Does right of representation apply to collateral relatives within the fifth civil degree?
No. The right of representation does not apply to “other collateral relatives within the fifth civil degree” (to which group both petitioner and respondent belong) who are sixth in the order of preference following, firstly, the legitimate children and descendants, secondly, the legitimate parents and ascendants, thirdly, the illegitimate children and descendants, fourthly, the surviving spouse, and fifthly, the brothers and sisters/nephews and nieces, of the decedent. Among collateral relatives, except only in the case of nephews and nieces of the decedent concurring with their uncles or aunts, the rule of proximity, expressed in Article 962, aforequoted, of the Code, is an absolute rule. In determining the degree of relationship of the collateral relatives to the decedent, Article 966 of the Civil Code gives direction.
Iron curtain rule
As ruled by the Supreme Court, when a nonmarital child seeks to represent their deceased parent to succeed in their grandparent’s estate, Article 928 of the Civil Code applies. In turn, the language of Article 982 does not make any distinctions or qualifications as to the birth status of the “grandchildren and other descendants” granted the right of representation. To allow grandchildren and other descendants, regardless of their birth status, to inherit by right of representation will protect the legitime of the compulsory heir they represent; otherwise, the legitime will be impaired, contrary to protections granted to this legitime in other areas of our law on succession. Thus, provided Angge proves her filiation, she is not barred by the iron curtain rule from inheriting from her grandparent.
We adopt a construction of Article 992 that makes children, regardless of the circumstances of their births, qualified to inherit from their direct ascendants-such as their grandparent-by their right of representation.
This Court abandons the presumption xxx that nonmarital children are products of illicit relationships or that they are automatically placed in a hostile environment perpetrated by the marital family. We are not duty bound to uncritically parrot archaic prejudices and cruelties, to mirror and amplify oppressive and regressive ideas about the status of children and family life.
The best interest of the child should prevail. We adopt a construction of Article 992 that makes children, regardless of the circumstances of their births, qualified to inherit from their direct ascendants-such as their grandparent-by their right of representation. Both marital and nonmarital children, whether born from a marital or nonmarital child, are blood relatives of their parents and other ascendants. Nonmarital children are removed from their parents and ascendants in the same degree as marital children.
Nonmarital children of marital children are also removed from their parents and ascendants in the same degree as nonmarital children of nonmarital children.
To emphasize, this ruling will only apply when the nonmarital child has a right of representation to their parent’s share in her grandparent’s legitime. It is silent on collateral relatives where the nonmarital child may inherit by themself. We are not now ruling on the extent of the right of a nonmarital child to inherit in their own right. Those will be the subject of a proper case and, if so minded, may also be the subject of more enlightened and informed future legislation.
May an heir to an inheritance dispose of his/her hereditary rights to whomever he/she chooses?
In the case of Intestate Estate of Josefa Tangco, et al. v. De Borja, 46 SCRA 577 (1972), the Court has already ruled that an heir to an inheritance could dispose of his/her hereditary rights to whomever he/she chooses. This is because:
[A]s a hereditary share in a decedent’s estate is transmitted or vested immediately from the moment of the death of such causante or predecessor-in-interest, there is no legal bar to a successor (with requisite contracting capacity) disposing of her or his hereditary share immediately after such death, even if the actual extent of such share is not determined until the subsequent liquidation of the estate.
Further, still according to Intestate Estate of Josefa Tangco, this alienation by the heirs of their aliquot portion of the inheritance is recognized by no less than the Civil Code, viz.: [A]nd as already shown, that eventual share she owned from the time of Francisco’s death and the Court of Nueva Ecija could not bar her selling it. As owner of her undivided hereditary share, Tasiana could dispose of it in favor of whomsoever she chose. Such alienation is expressly recognized and provided for by Article 1088 of the present Civil Code:
Art. 1088. Should any of the heirs sell his hereditary rights to a stranger before the partition, any or all of the co-heirs may be subrogated to the rights of the purchaser by reimbursing him for the price of the sale, provided they do so within the period of one month from the time they were notified in writing of the sale of the vendor. If a sale of a hereditary right can be made to a stranger, then a fortiori sale thereof to a coheir could not be forbidden.
Adjudication by an heir of the decedent’s entire estate to himself
Adjudication by an heir of the decedent’s entire estate to himself by means of an affidavit is allowed only if he is the sole heir of the estate.
Since Josefa Delgado had heirs other than Guillermo Rustia, Guillermo could not have validly adjudicated Josefa’s estate all to himself. Rule 74, Section 1 of the Rules of Court is clear.
Adjudication by an heir of the decedent’s entire estate to himself by means of an affidavit is allowed only if he is the sole heir to the estate.
If a donation is irrevocable, does it necessarily exempt the donated properties from collation?
No. Fact that a donation is irrevocable does not necessarily exempt the donated properties from collation as required under Art. 1061, Civil Code; Given the precise language of the deed of donation the decedent-donor would have included an express prohibition to collate if that had been the donor’s intention.
We agree with the respondent court that there is nothing in the above provisions expressly prohibiting the collation of the donated properties.
As the said court correctly observed, the phrase “sa pamamagitan ng pagbibigay na di na mababawing muli” merely described the donation as “irrevocable” and should not be construed as an express prohibition against collation.
We surmise from the use of such terms as “legitime” and “free portion” in the deed of donation that it was prepared by a lawyer, and we may also presume he understood the legal consequences of the donation being made. It is reasonable to suppose, given the precise language of the document, that he would have included therein an express prohibition to collate if that had been the donor’s intention. Anything less than such express prohibition will not suffice under the clear language of Article 1062.
Intention to exempt donated properties from collation should be expressed plainly and unequivocally as an exception to the general rule in Art. 1062, Civil Code; Absent such a clear indication of that intention, the rule not the exception should be applied.
Effect of acceptance of inheritance
Under Article 1056 of the Civil Code, the acceptance of an inheritance, once made, is irrevocable and cannot be impugned, except when it was made through any of the causes that vitiate consent or when an unknown will appears.
In this case, the summary settlement and distribution of the estate—both of the husband and his deceased wife—was not only an adjudicated matter; it was actually accepted by the heirs and carried out. Some took actual possession, others had their shares transferred in their names and a few sold and disposed of their shares in favor of third persons. A new project of partition with respect to the same properties is no longer legally feasible.
Can a testator dispose his property in favor of a definite class or group of persons?
Article 845. Every disposition in favor of an unknown person shall be void, unless by some event or circumstance his identity becomes certain. However, a disposition in favor of a definite class or group of persons shall be valid.
Distribution of inheritance in case the testator includes his siblings, both full blood and half blood
Article 848. If the testator should institute his brothers and sisters, and he has some of full blood and others of half blood, the inheritance shall be distributed equally unless a different intention appears.
There are three (3) kinds of property of public dominion:
ART. 420. The following things are property of public dominion:
(1) Those intended for public use, such as roads, canals, rivers, torrents, ports and bridges constructed by the State, banks, shores, roadsteads, and others of similar character;
(2) Those which belong to the State, without being for public use, and are intended for some public service or for the development of the national wealth.
With respect to provinces, cities and municipalities or local government units (LGUs), property for public use “consist of the provincial roads, city streets, municipal streets, the squares, fountains, public waters, promenades, and public works for public service paid for by said provinces, cities, or municipalities.”
(3) those intended for the development of national wealth
The Civil Code classifies property of private ownership into three (3) categories
The Civil Code classifies property of private ownership into three categories:
(1) patrimonial property of the State under Articles 421 and 422;
(2) patrimonial property of LGUs under Article 424; and
(3) property belonging to private individuals under Article 425, hence:
ART. 421. All other property of the State, which is not of the character stated in the preceding article, is patrimonial property.
ART. 422. Property of public dominion, when no longer intended for public use or for public service, shall form part of the patrimonial property of the State.
ART. 424. Property for public use, in the provinces, cities, and municipalities, consist of the provincial roads, city streets, municipal streets, the squares, fountains, public waters, promenades, and public works for public service paid for by said provinces, cities, or municipalities. All other property possessed by any of them is patrimonial and shall be governed by this Code, without prejudice to the provisions of special laws.
ART. 425. Property of private ownership, besides the patrimonial property of the State, provinces, cities, and municipalities, consists of all property belonging to private persons, either individually or collectively. From the foregoing, property of private ownership or patrimonial property of the State may be subclassified into:
(1) “By nature or use” or those covered by Article 421, which are not property of public dominion or imbued with public purpose based on the State’s current or intended use; and
(2) “By conversion” or those covered by Article 422, which previously assumed the nature of property of public dominion by virtue of the State’s use, but which are no longer being used or intended for said purpose. Since those properties could only come from property of public dominion as defined under Article 420, “converted” patrimonial property of the State are separate from and not a subset of patrimonial property “by nature or use” under Article 421. With respect to lands, which are immovable property pursuant to Article 415(1) of the Civil Code, they can either be lands of public dominion or of private ownership following the general classification of property under Article 419.
Effect of voluntary declaration of a piece of property for taxation purposes
The voluntary declaration of a piece of property for taxation purposes manifests not only one’s sincere and honest desire to obtain title to the property and announces his adverse claim against the State and all other interested parties, but also the intention to contribute needed revenues to the Government.
While tax declarations are not per se conclusive evidence of ownership, they cannot simply be ignored especially where, as here, since the 1940s, tax declarations had already been registered in the name of petitioners’ predecessors-in-interest.
While it is true that tax receipts and tax declarations are not incontrovertible evidence of ownership, they constitute credible proof of a claim of title over the property.
Coupled with actual possession of the property, tax declarations become strong evidence of
ownership.
The voluntary declaration of a piece of property for taxation purposes manifests not only one’s sincere and honest desire to obtain title to the property and announces his adverse claim against the State and all other interested parties, but also the intention to contribute needed revenues to the Government.
Such an act strengthens one’s bona fide claim of acquisition of ownership. Hence, the constant filing by the Melendreses of tax declarations covering the subject property spanning several decades, taken together with the other pieces of evidence, shows that petitioners’ claim of title over the subject property is consistent, providing sufficient basis in proving their possession over the said property.
Does the registered owner automatically have right of possession no matter the conditions?
No. The registered owner of real property is entitled to its possession. However, the owner cannot simply wrest possession thereof from whoever is in actual occupation of the property.
Proper proceedings shall be resorted to.
Who has the right to whatever is built, planted, or sown on the land of another, and the improvements or repairs made thereon?
Whatever is built, planted, or sown on the land of another, and the improvements or repairs made thereon, belong to the owner of the land; It is the owner of the land who is allowed to exercise the option to acquire improvements because his right is older and because, by the principle of accession, he is entitled to the ownership of the accessory thing.
Where, however, the planter, builder, 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 what Manresa calls a state of “forced co-ownership,” the law has provided a just and equitable 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 to pay the proper rent.
It is the owner of the land who is allowed to exercise the option because his right is older and because, by the principle of accession, he is entitled to the ownership of the accessory thing.
The landowner has to make a choice between appropriating the building by paying the proper indemnity or obliging the builder to pay the price of the land. But even as the option lies with the landowner, the grant to him, nevertheless, is preclusive. He must choose one. He cannot, for instance, compel the owner of the building to remove the building from the land without first exercising either option. It is only if the owner chooses to sell his land, and the builder or planter fails to purchase it where its value is not more than the value of the improvements, that the owner may remove the improvements from the land. The owner is entitled to such remotion only when, after having chosen to sell his land, the other party fails to pay for the same.
Two options of the seller/owner of the land when the builder believes that he is the owner of the land and has applied improvements thereon
Article 448 of the Civil Code applies when the builder believes that he is the owner of the land or that by some title he has the right to build thereon, or that, at least, he has a claim of title thereto.
The seller (the owner of the land) has two options under Article 448:
(1) he may appropriate the improvements for himself after reimbursing the buyer (the builder in good faith) the necessary and useful expenses under Articles 546 and 548 of the Civil Code; or
(2) he may sell the land to the buyer, unless its value is considerably more than that of the improvements, in which case, the buyer shall pay reasonable rent.
Builder in good faith
The term “builder in good faith” as used in reference to Article 448 of the Civil Code, refers to one who, not being the owner of the land, builds on that land believing himself to be its owner and unaware of the land, builds on that land, believing himself to be its owner and unaware of the defect in his title or mode of acquisition. The essence of good faith lies in an honest belief in the validity of one’s right, ignorance of a superior claim, and absence of intention to overreach another.
In the instant case, the Spouses Aguilar cannot be considered as builders in good faith on account of their admission that the subject lot belonged to the Spouses Aquino when they constructed the building.
At the onset, petitioners were aware of a flaw in their title and a limit to their right to possess the property. By law, one is considered in good faith if he is not aware that there exists in his title or mode of acquisition any flaw which invalidates it.
Objective in an action for quieting of title
In an action for quieting of title, the objective is for the competent court to remove the cloud by determining the rights of the parties so that the ones entitled to the subject property may exercise said rights without fear, disturbance, or interference from those who have no right over the same.
Two requisites must be established in order that a complaint for quieting of title may prosper
First, the plaintiff must have a legal or equitable title or interest in the property subject of the complaint.
Second, the deed, claim, encumbrance, or proceeding allegedly casting doubt over one’s title must be proven to be in truth invalid, void or inoperative despite the prima facie appearance of validity.
Legal or equitable title or interest in the property subject of the complaint
On one hand, legal title means registered ownership, where the subject property is registered under the name of the complainant in an action to quiet title, which may be evidenced by presenting the certificate of title in the latter’s name.
On the other hand, equitable title denotes beneficial ownership, which is “ownership recognized by law and capable of being enforced in the courts at the suit of the beneficial owner.”
Rule on impleading co-owner in a suit to protect their rights over the co-owned property
Where the suit is brought by a co owner, without repudiating the co ownership, then the suit is presumed to be filed for the benefit of the other co-owners and may proceed without impleading the other coowners.
However, where the co-owner repudiates the co-ownership by claiming sole ownership of the property or where the suit is brought against a co-owner, his co-owners are indispensable parties and must be impleaded as party-defendants, as the suit affects the rights and interests of these other co-owners.
May a co-owner alienate an inchoate portion of the subject property which belongs to him or her?
Yes. Article 493 of the Civil Code provides for the rights of the co owners over a co-owned property, thus, each co-owner shall have the full ownership of his part and of the fruits and benefits pertaining thereto, and he may therefore alienate, assign or mortgage it and even substitute another person in its enjoyment, except when personal rights are involved. But the effect of the alienation or mortgage, with respect to the co-owners, shall be limited to the portion which may be allotted to him in the division upon the termination of the co-ownership.
Can the same court in the same proceeding, handle matters of annulment of titles in an action for partition?
Yes. This Court has previously allowed the annulment of titles in an action for partition.
The case of Sps. Villafria vs. Plazo provides, the fact that respondents’ complaint also prayed for the annulment of title and recovery of possession does not strip the trial court off of its jurisdiction to hear and decide the case. Asking for the annulment of certain transfers of property could very well be achieved in an action for partition, as can be seen in cases where courts determine the parties’ rights arising from complaints asking not only for the partition of estates but also for the annulment of titles and recovery of ownership and possession of property.
Each co-owner has the full ownership of his part or share in the co-ownership and may, therefore, alienate, assign or mortgage it except when
Each co-owner has the full ownership of his part or share in the co ownership and may, therefore, alienate, assign or mortgage it except when personal rights are involved.
Can the co-heirs or co-owners acquire by acquisitive prescription the share of the co-heirs or co-owners?
Only if there is a clear repudiation of the co-ownership.
Co-heirs or co-owners cannot acquire by acquisitive prescription the share of the co-heirs or co-owners absent a clear repudiation of the co-ownership.
Requisites before a co-owner’s possession may be deemed adverse to the other co-owners
Since possession of co-owners is like that of a trustee, in order that a co owner’s possession may be deemed adverse to the cestui que trust or other co-owners, the following requisites must concur:
(1) that he has performed unequivocal acts of repudiation amounting to an ouster of the cestui que trust or other co-owners,
(2) that such positive acts of repudiation have been made known to the cestui que trust or other co-owners, and
(3) that the evidence thereon must be clear and convincing
Concept of possession in forcible entry suits
Possession in forcible entry suits refers to nothing more than physical possession, not legal possession.
Ownership carries the right of possession, but the possession contemplated by the concept of ownership is not exactly the same as the possession in issue in a forcible entry case.
Possession in forcible entry suits refers only to possession de facto, or actual or material possession, and not possession flowing out of ownership; these are different legal concepts for which the law provides different remedies for recovery of possession. The word “possession” in forcible entry suits refers to nothing more than prior physical possession or possession de facto, not possession de jure or legal possession in the sense contemplated in civil law.
Essence of a forcible entry suit
In a forcible entry case, a party who can prove prior possession can recover such possession even against the owner himself.
Whatever may be the character of his possession, if he has in his favor prior possession in time, he has the security that entitles him to remain on the property until a person with a better right lawfully ejects him. He cannot be ejected by force, violence or terror - not even by its owners. For these reasons, an action for forcible entry is summary in nature aimed only at providing an expeditious means of protecting actual possession. Ejectment suits are intended to prevent breach of peace and criminal disorder and to compel the party out of possession to respect and resort to the law alone to obtain what he claims is his.
Thus, lest the purpose of these summary proceedings be defeated, any discussion or issue of ownership is avoided unless it is necessary to resolve the issue of de facto possession.
How is possession acquired?
Possession can be acquired not only by material occupation, but also by the fact that a thing is subject to the action of one’s will or by the proper acts and legal formalities established for acquiring such right.
Possession can be acquired by juridical acts. These are acts to which the law gives the force of acts of possession. Examples of these are donations, succession, execution and registration of public instruments, inscription of possessory information titles and the like. The reason for this exceptional rule is that possession in the eyes of the law does not mean that a man has to have his feet on every square meter of ground before it can be said that he is in possession.
It is sufficient that petitioner was able to subject the property to the action of his will.
Discuss the concept of proof in an unlawful detainer suit
An action for unlawful detainer is a summary action which may be filed for the purpose of recovering possession against one who illegally withholds the same after the expiration or termination of his or her right to hold possession under any contract, express or implied.
To sustain an action for unlawful detainer, the plaintiff bears the burden of alleging and proving, by preponderance of evidence, the following jurisdictional facts:
(i) initially, possession of property by the defendant was by contract with or by tolerance of the plaintiff;
(ii) eventually, such possession became illegal upon notice by plaintiff to defendant of the termination of the latter’s right of possession;
(iii) thereafter, the defendant remained in possession of the property and deprived the plaintiff of the enjoyment thereof; and
(iv) within one year from the last demand on defendant to vacate the property, the plaintiff instituted the complaint for ejectment.
Is unlawful detainer proper to compel a public utility to vacate a property?
As ordained in the leading case of National Transmission Corp. v. Bermuda Development Corp., 899 SCRA 598 (2019), for reasons of public policy and public necessity, as well as equitable estoppel, the remedy of unlawful detainer is unavailing to compel a public utility to vacate subject property.
“The proper recourse is for the ejectment court: (1) to dismiss the case without prejudice to the landowner filing the proper action for recovery of just compensation and consequential damages; or (2) to dismiss the case and direct the public utility corporation to institute the proper expropriation or condemnation proceedings and to pay the just compensation and consequential damages assessed therein; or (3) to continue with the case as if it were an expropriation case and determine the just compensation and consequential damages pursuant to Rule 67 (Expropriation) of the Rules of Court, if the ejectment court has jurisdiction over the value of the subject land.”
Thus, it is well-settled that a case filed by a landowner for recovery of possession or ejectment against a public utility corporation, endowed with the power of eminent domain, which has occupied the land belonging to the former in the interest of public service without prior acquisition of title thereto by negotiated purchase or expropriation proceedings, will not prosper. Any action to compel the public utility corporation to vacate such property is unavailing since the landowner is denied the remedies of ejectment and injunction for reasons of public policy and public necessity as well as equitable estoppel.
Main issue in ejectment proceedings
The only issue in ejectment proceedings is who between the parties is entitled to physical or material possession of the premises; that is, to possession de facto, not possession de jure. Issues as to the ownership are not involved in the action; evidence thereon is not admissible, except only for the purpose of determining the issue of possession.
Given the dismissal of the complaint for lack of cause of action, there is no need to discuss the parties’ respective claim of ownership. Besides, it is settled that even the registered owner of a real property cannot simply wrest possession from whoever is in its actual possession. This is especially true where the occupation of the property was not obtained through the means, or held under the circumstances contemplated by the rules on summary ejectment.
We reiterate that in giving recognition to ejectment suits, the purpose of the law is to protect the person who in fact has actual possession, and in case of a controverted proprietary right, the law requires the parties to preserve the status quo until one or the other sees fit to invoke the decision of a court of competent jurisdiction upon the question of ownership.
What must be alleged in an action for forcible entry?
In an action for forcible entry, it must be alleged that the complainant was deprived of the possession of any land or building by force, intimidation, threat, strategy, or stealth, and that the action was filed anytime within one (1) year from the time the unlawful deprivation of possession took place, except that when the entry is through stealth, the 1-year period is counted from the time the complainant learned of the dispossession.
Accion interdictal
Accion interdictal is a summary action that seeks the recovery of physical possession where the dispossession has not lasted for more than one (1) year, and is to be exclusively brought in the proper inferior court.
The issue involved is material possession or possession de facto.
The action is either forcible entry (detentacion) or unlawful detainer (deshhucio).
Forcible entry vs. Unlawful detainer
In forcible entry, the plaintiff is deprived of physical possession of real property by means of force, intimidation, strategy, threats or stealth, but in unlawful detainer, the defendant illegally withholds possession of real property after the expiration or termination of his right to hold possession under any contract, express or implied.
The two are distinguished from each other in that in forcible entry, the possession of the defendant is illegal from the beginning, and that the issue is which a party has prior de facto possession, while in unlawful detainer, the possession of the defendant is originally legal but becomes illegal because of the expiration or termination of the right to possess.
Both actions must be brought within one year from the date of actual entry on the land by the defendant in case of forcible entry, and within one year from the date of last demand in case of unlawful detainer.
Forcible entry
The elements of forcible entry are: (1) prior physical possession of the property; and (2) unlawful deprivation of it by the defendant through force, intimidation, strategy, threat or stealth.
Possession in forcible entry cases means nothing more than physical possession or possession de facto; not legal possession. Only prior physical possession, not title, is the issue. For forcible entry to prosper, an appreciable length of time of prior physical possession is not required. However short it is, for as long as prior physical possession is established, recovery of possession under Rule 70 of the Rules may be granted.
Accion publiciana
Accion publiciana is an ejectment suit where the cause of dispossession is not among the grounds for forcible entry and unlawful detainer, or when possession has been lost for more than one (1) year and the action can no longer be maintained under Rule 70 of the Rules of Court.
The objective of the plaintiff in accion publiciana is to recover possession only, not ownership.
Accion publiciana is the second possessory action. It is a plenary action to recover the right of possession, and the issue is which party has the better right of possession (possession de jure). It can be filed when the dispossession lasted for more than one year. It is also used to refer to an ejectment suit where the cause of dispossession is not among the grounds for forcible entry and unlawful detainer, or when possession has been lost for more than one year and the action can no longer be maintained under Rule 70 of the Rules of Court. The objective of the plaintiff in accion publiciana is to recover possession only, not ownership.
When the complaint fails to aver facts constitutive of forcible entry or unlawful detainer, as where it does not state how entry was effected or how and when dispossession started, the remedy should be
When the complaint fails to aver facts constitutive of forcible entry or unlawful detainer, as where it does not state how entry was effected or how and when dispossession started, the remedy should either be an accion publiciana or accion reivindicatoria.
This Court stresses that to give the court jurisdiction to effect the ejectment of an occupant or deforciant on the land, it is necessary that the complaint must sufficiently show such a statement of facts as to bring the party clearly within the class of cases for which the statutes provide a remedy, without resort to parol testimony, as these proceedings are summary in nature.
In short, the jurisdictional facts must appear on the face of the complaint. When the complaint fails to aver facts constitutive of forcible entry or unlawful detainer, as where it does not state how entry was effected or how and when dispossession started, the remedy should either be an accion publiciana or accion reivindicatoria.
Accion reivindicatoria
An accion reivindicatoria is an action to recover ownership over real property. Article 434 of the New Civil Code provides that to successfully maintain an action to recover the ownership of a real property, the person who claims a better right to it must prove two things:
first, the identity of the land claimed by describing the location, area, and boundaries thereof;
and second, his title thereto.
Hence, with regard to the first requisite, in an accion reivindicatoria, the person who claims that he/she has a better right to the property must fix the identity of the land he/she is claiming by describing the location, area and boundaries thereof. Anent the second requisite, i.e., the claimant’s title over the disputed area, the rule is that a party can claim a right of ownership only over the parcel of land that was the object of the deed.
Main issue in an accion reivindicatoria
The issue involved in and determined through accion reivindicatoria is the recovery of ownership of real property.
The last possessory action is accion reivindicatoria or accion de reivindicacion. It is an action whereby the plaintiff alleges ownership of the parcel of land and seeks recovery of its full possession. The issue involved in and determined through accion reivindicatoria is the recovery of ownership of real property. This action can be filed when the dispossession lasted for more than one year.
How are boundary disputes settled?
Settled is the rule that a boundary dispute can only be resolved in the context of an accion reivindicatoria, and not in an ejectment case.
In Manalang v. Bacani, 745 SCRA 27 (2015), the Court held that boundary dispute cannot be resolved in ejectment proceedings as it involves different issues. The boundary dispute is not about possession, but encroachment, that is, whether the property claimed by the defendant formed part of the plaintiff’s property. A boundary dispute cannot be settled summarily under Rule 70 of the Rules of Court, the proceedings under which are limited to unlawful detainer and forcible entry. In unlawful detainer, the defendant unlawfully withholds the possession of the premises upon the expiration or termination of his right to hold such possession under any contract, express or implied. The defendant’s possession was lawful at the beginning, becoming unlawful only because of the expiration or termination of his right of possession. In forcible entry, the possession of the defendant is illegal from the very beginning, and the issue centers on which between the plaintiff and the defendant had the prior possession de facto.
Right of way easement
A right of way easement is one such encumbrance which is imposed for the benefit of another immovable which is surrounded by other immovables pertaining to other persons and without adequate outlet to a public highway.
The requisites for the establishment of a right of way easement are:
- The immovable benefiting from the right of way (referred to by law as the dominant estate) is surrounded by other immovables and has no adequate outlet to a public highway;
- The owner, user, or holder of the dominant estate must pay proper indemnity to the owner of the immovable on which the easement is being imposed;
- The isolation of the dominant estate is not the result of its owner, user, or holder’s own acts; and
- The claimed right of way must be at the point least prejudicial to the immovable on which the easement is being imposed (referred to by law as the servient estate); and insofar as consistent with this rule, where the distance of the dominant estate to a public highway may be the shortest.
In a proceeding for the compulsory imposition of a right of way easement, the burden of proving compliance with the foregoing requisites lies with the owner, holder, or user of the dominant estate.
Remedy if the easement is intended to perpetually deprive the owner of his proprietary rights
If the easement is intended to perpetually or indefinitely deprive the owner of his proprietary rights through the imposition of conditions that affect the ordinary use, free enjoyment and disposal of the property or through restrictions and limitations that are inconsistent with the exercise of the attributes of ownership, or when the introduction of structures or objects which, by their nature, create or increase the probability of injury, death upon or destruction of life and property found on the land is necessary, then the owner should be compensated for the monetary equivalent of the land.
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.
Nuisances are of two kinds
Nuisances are of two kinds: nuisance per se and nuisance per accidens.
The first is recognized as a nuisance under any and all circumstances, because it constitutes a direct menace to public health or safety, and, for that reason, may be abated summarily under the undefined law of necessity.
The second is that which depends upon certain conditions and circumstances, and its existence being a question of fact, it cannot be abated without due hearing thereon in a tribunal authorized to decide whether such a thing does in law constitute a nuisance.
Article 699. The remedies against a public nuisance are:
(1) A prosecution under the Penal Code or any local ordinance: or
(2) A civil action; or
(3) Abatement, without judicial proceedings.
Article 701. If a civil action is brought by reason of the maintenance of a public nuisance, such action shall be commenced by the city or municipal mayor.
Article 705. The remedies against a private nuisance are:
(1) A civil action; or
(2) Abatement, without judicial proceedings.
Under Article 712 of the Civil Code, there are generally two (2) classifications of the modes of acquiring ownership
Under Article 712 of the Civil Code, there are generally two (2) classifications of the modes of acquiring ownership, namely, the original mode, that is, “through occupation, acquisitive prescription, law or intellectual creation,” and derivative mode “through succession mortis causa or tradition as a result of certain contracts, such as sale, barter, donation, assignment or mutuum.”
Can occupation vest title?
Unless occupation is coupled with hostility toward the true owner, occupation no matter how long will not vest title.
As pointed out by the RTC and the CA, petitioners cannot acquire the subject property by mere occupation.
In the absence of their adverse possession of the property, even if petitioners had declared it for taxation purposes, is not sufficient to establish ownership.
At the same time, their claim of ownership over the improvements thereon remained unsubstantiated and thus, without merit.
Donations, according to its purpose or cause, may be categorized as:
Donations, according to its purpose or cause, may be categorized as: (1) pure or simple; (2) remuneratory or compensatory; (3) conditional or modal; and (4) onerous.
A pure or simple donation is one where the underlying cause is plain gratuity. This is donation in its truest form. On the other hand, a remuneratory or compensatory donation is one made for the purpose of rewarding the donee for past services, which services do not amount to a demandable debt.
A conditional or modal donation is one where the donation is made in consideration of future services or where the donor imposes certain conditions, limitations or charges upon the donee, the value of which is inferior than that of the donation given.
Finally, an onerous donation is that which imposes upon the donee a reciprocal obligation or, to be more precise, this is the kind of donation made for a valuabie consideration, the cost of which is equal to or more than the thing donated.
Article 739. The following donations shall be void:
1) Those made between persons who were guilty of adultery or concubinage at the time of the donation;
(2) Those made between persons found guilty of the same criminal offense, in consideration thereof;
(3) Those made to a public officer or his wife, descendants and ascendants, by reason of his office.
In the case referred to in No. 1, the action for declaration of nullity may be brought by the spouse of the donor or donee; and the guilt of the donor and donee may be proved by preponderance of evidence in the same action.
Article 740. Incapacity to succeed by will shall be applicable to donations inter vivos.
Article 765. The donation may also be revoked at the instance of the donor, by reason of ingratitude in the following cases:
(1) If the donee should commit some offense against the person, the honor or the property of the donor, or of his wife or children under his parental authority;
(2) If the donee imputes to the donor any criminal offense, or any act involving moral turpitude, even though he should prove it, unless the crime or the act has been committed against the donee himself, his wife or children under his authority;
(3) If he unduly refuses him support when the donee is legally or morally bound to give support to the donor.
Can a deed of conditional donation be automatically revoked if the conditions are not complied with?
The deed of conditional donation expressly provided for the automatic revocation and/or reversion in case of breach of any of the conditions therein. If the donee fails to comply with or violate any of the conditions stated in the donation, the title over the subject property shall ipso facto revert to the donor, his heirs, successors or assigns and alI improvements, structures or buildings thereon shall be forfeited in favor of the donor.
Such provision was upheld in De Luna vs. Abrigo as it is in the nature of an agreement granting a party to rescind a contract in case of breach, without need of going to court; “upon the happening of the resolutory condition or non-compliance with the conditions of the contract, the donation is automatically revoked without need of a judicial declaration to that effect.” However, if the done challenges the propriety thereof, the Court can conclusively settle whether the resolution is proper or not. The judicial intervention is not for the purpose of obtaining a judicial declaration rescinding a contract already deemed rescinded by reason of the parties’ agreement but in order to determine whether or not the rescission was proper.
Onerous donation
In the case bar, the donation involved is an onerous one since the burden imposed upon the donee is to build a mental hospital on the donated property.
Thus, the provisions of the Civil Code on the rules on contracts shall govern, to wit: “Article 733. Donations with an onerous cause shall be governed by the rules on contracts, and remuneratory donations by the provisions of the present Title as regards that portion which exceeds the value of the burden imposed.”
Can one file a complaint for revocation or action of rescission in behalf of the donor even in the presence of a stipulation on the automatic revocation of donation?
Although the deed of conditional donation contained a stipulation on the automatic revocation of donation in case of failure of the donee to comply with any or all of the conditions, the estate’s complaint for revocation or action for rescission in behalf of the donor, Rodriguez, is a valid exercise of the latter’s right to determine the propriety of the revocation.
Article 1144 of the Civil Code provides that all actions upon a written contract shall be brought within ten (10) years from accrual of the right of action. Petitioner’s complaint for revocation of the donation therefore has not yet prescribed since the cause of action accrued only upon the alleged failure of the Republic to comply with any or all of the conditions of the donation.
Although the deed of conditional donation contained a stipulation on the automatic revocation of donation in case of failure of the donee to comply with any or all of the conditions, the estate’s complaint for revocation or action for rescission in behalf of the donor, Rodriguez, is a valid exercise of the latter’s right to determine the propriety of the revocation.
Can the donor unduly restrict the right of the donee to dispose the donated property perpetually?
The donor could not unduly restrict the right of the donee to dispose the donated property perpetually or for an unreasonable period of time.
The provision in the deed of conditional donation did not expressly state a period of restriction on the Republic’s right to dispose of the donated property. It simply stated that the Republic could not lease, let, convey, dispose or encumber the donated property without the prior and express knowledge of the donor as it was the latter’s intention to devote the use of the donated property exclusively for the mental hospital.
Applying by analogy the Roman Catholic Archbishop case, the donor could not unduly restrict the right of the donee to dispose the donated property perpetually or for an unreasonable period of time. The prohibition in the deed of donation that the Republic cannot lease, let, convey, dispose, or encumber the donated property without specifying the duration of the restriction should be declared as an illegal or impossible condition within the contemplation of Article 727 of the Civil Code as it is contrary to public policy. Although the parties did not agree on the period of validity of the restriction as in Roman Catholic Archbishop, the same may be viewed as perpetual or permanent which constitutes undue restriction for unreasonable period of time.
When will rescission not be granted?
Rescission will not be granted in the following: (1) where the breach is only slight or casual; (2) where there has been substantial compliance; and (3) where the court finds valid reason for giving a period of fulfillment of the obligation.
In general, rescission will not be permitted for a slight or casual breach of the contract, but only for such breaches that are substantial and fundamental as to defeat the object of the parties in making the agreement. The right to rescind or resolve by the injured party is not absolute as the third paragraph of Article 1191 authorizes the court to fix a period.
Validity of donation of immovable property
According to Article 749 of the Civil Code, in order for a donation of an immovable property to be considered valid, the donation must be made in a public document, specifying therein the property donated and the value of the charges which the donee must satisfy.
Instead of simply donating the property, Labnao opted to simply simulate a contract of sale. Unfortunately, even as a transfer of the subject lot to the respondents Heirs of Julita, the Deed of Absolute Sale cannot be considered a valid donation. In the instant case, as already explained, the Deed of Absolute Sale was not properly notarized, making it a private document. Hence, there was no donation made in a public document.
Acceptance of donation
Article 749 of the Civil Code additionally requires that the donee manifests his/her acceptance of the donation of the immovable property in either the same public instrument or in a separate instrument.
If the donee accepts the donation in a separate instrument, the donor should be notified thereof in an authentic form, and this step shall be noted in both instruments.
There are two kinds of prescription provided in the Civil Code
- Acquisitive
- Acquisition of a right by the lapse of time as expounded in paragraph I, Article 1106
- Also known as adverse possession and usucapion - Extinctive
- Rights and actions are lost by the lapse of time as defined in paragraph 2, Article 1106 and Article 1139
- Another name is litigation of action
Extinctive prescription
Extinctive prescription refers to the rule that bars even the registered owner from availing of remedies to vindicate their right over the subject lot.
It is a shield rather than a sword the mere fact that the party seeking recovery can no longer sue the party in possession does not mean automatically that the latter already has the right to possess or own. The present case demonstrates the legal principle that the law aids the vigilant, not those who slumber on their rights. Vigilantibus, sed non dormientibus jura subverniunt.
Laches
The principle of laches is a creation of equity which, as such, is applied not really to penalize neglect or sleeping upon one’s right, but rather to avoid recognizing a right when to do so would result in a clearly inequitable situation.
The time-honored rule anchored on public policy is that relief will be denied to a litigant whose claim or demand has become “stale”, or who has acquiesced for an unreasonable length of time, or who has not been vigilant or who has slept on his rights either by negligence, folly or inattention. In other words, public policy requires, for the peace of society, the discouragement of claims grown stale for non-assertion; thus laches is an impediment to the assertion or enforcement of a right which has become, under the circumstances, inequitable or unfair to permit.
There is no hard and fast rule in determining whether a party is guilty of laches. It is not merely a question of time, and its application depends on the circumstances of a particular case. Ultimately, however, the question of laches is addressed to the court’s sound discretion and, since it is an equitable doctrine, its application is controlled by equitable consideration.
Regalian Doctrine
In essence, the Regalian doctrine espouses that lands not appearing to be clearly under private ownership are generally presumed to form part of the public domain belonging to the State.
1987 CONST., art. XII, sec. 2
Section 2. All lands of the public domain, waters, minerals, coal, petroleum, and other mineral oils, all forces of potential energy, fisheries, forests or timber, wildlife, flora and fauna, and other natural resources are owned by the State. With the exception of agricultural lands, all other natural resources shall not be alienated. The exploration, development, and utilization of natural resources shall be under the full control and supervision of the State. The State may directly undertake such activities, or it may enter into co-production, joint venture, or production-sharing agreements with Filipino citizens, or corporations or associations at least 60 per centum of whose capital is owned by such citizens. Such agreements may be for a period not exceeding twenty-five years, renewable for not more than twenty-five years, and under such terms and conditions as may provided by law. In cases of water rights for irrigation, water supply, fisheries, or industrial uses other than the development of waterpower, beneficial use may be the measure and limit of the grant.
The State shall protect the nations marine wealth in its archipelagic waters, territorial sea, and exclusive economic zone, and reserve its use and enjoyment exclusively to Filipino citizens.
The Congress may, by law, allow small-scale utilization of natural resources by Filipino citizens, as well as cooperative fish farming, with priority to subsistence fishermen and fish workers in rivers, lakes, bays, and lagoons.
The President may enter into agreements with foreign-owned corporations involving either technical or financial assistance for large-scale exploration, development, and utilization of minerals, petroleum, and other mineral oils according to the general terms and conditions provided by law, based on real contributions to the economic growth and general welfare of the country. In such agreements, the State shall promote the development and use of local scientific and technical resources.
The President shall notify the Congress of every contract entered into in accordance with this provision, within thirty days from its execution.
Exception to the regalian doctrine
This general rule admits of a single exception: native title to land.
Claims of private ownership pursuant to native title are presumed to have been held even before the Spanish conquest. Thus, lands subject of native titles are deemed excluded from the mass of lands forming part of the public domain.
Nationality Restrictions on Land Ownership
Section 7. Save in cases of hereditary succession, no private lands shall be transferred or conveyed except to individuals, corporations, or associations qualified to acquire or hold lands of the public domain.
Section 8. Notwithstanding the provisions of Section 7 of this Article, a natural-born citizen of the Philippines who has lost his Philippine citizenship may be a transferee of private lands, subject to limitations provided by law.
Public domain categories
At present, Section 3, Article XII of the 1987 Constitution classifies lands of the public domain into five (5) categories – agricultural lands, forest lands, timber lands, mineral lands, and national parks.
The provision states, Section 3. Lands of the public domain are classified into agricultural, forest or timber, mineral lands and national parks.
Agricultural lands of the public domain may be further classified by law according to the uses to which they may be devoted. Alienable lands of the public domain shall be limited to agricultural lands. In turn, Section 3 mandates that only lands classified as agricultural may be declared alienable and susceptible of private ownership. It bears noting, however, that private ownership contemplates not only ownership by private ownership, but also ownership by the State, provinces, cities, and municipalities in their private capacity.
The Civil Code classifies property into two (2) categories:
The Civil Code classifies property into two (2) categories: (i) property of public dominion (that held by the State in its public capacity for public use, public service or the development of national wealth for the common and public welfare), or
(ii) patrimonial property (that held by the State in its private capacity to attain economic ends).
Being private in nature, patrimonial property is subject to alienation and disposition in the same way as properties owned by private individuals, and may thus be subject to prescription and be the object of ordinary contracts or agreements.
Examples of patrimonial property of the State include those acquired by the government in execution sales and tax sales, friar lands, mangrove lands and mangrove swamps.
Patrimonial property of the State may be further classified into two sub-categories:
Patrimonial property of the State may be further classified into two sub categories: (i) those which are not property of public dominion or imbued with public purpose based on the State’s current or intended use, and may thus be classified as patrimonial property “by nature” pursuant to Article 421; and
(ii) those which previously assumed the nature of property of public dominion by virtue of the State’s use, but which are no longer being used or intended for said purpose, and may thus be classified as “converted” patrimonial property pursuant to Article 422. Thus, the proper interpretation of Article 422 in relation to Article 420 and 421 is that “converted” patrimonial property can only come from property
of public dominion under Article 420.
Hence, “converted” patrimonial property should not be understood as a subset of patrimonial property “by nature” under Article 421.
Discuss the rule on inalienability of public land.
There is no doubt that forest lands, timber lands, mineral lands, and national parks which are lands of the public domain under the Constitution fall under property of public dominion under Article 420(2) of the Civil Code, as do agricultural lands. It is also clear that land classified as agricultural and subject to the State’s current or intended use remains property of public dominion.
However, these agricultural lands, once declared as alienable and disposable, become “converted” patrimonial property of the State. In effect, the classification of agricultural land as alienable and disposable serves as unequivocal proof of the withdrawal by the State of the said land from the public dominion, and its “conversion” to patrimonial property. The clear intention of such conversion is to open the land to private acquisition or ownership.
Such converted patrimonial property remains within the broader constitutional concept of public domain precisely as alienable and disposable land of the public domain.
Exception to the rule on inalienability of public land
A recognized exception to the rule on inalienability of public land is if the forest or mineral land has been statutorily reclassified and considered as ancestral land, openly and continuously occupied by a member of an indigenous cultural community. Ancestral lands are defined in Section 3 (b) of Republic Act No. 8371, or The Indigenous Peoples’ Rights Act of 1997:
b) Ancestral Lands – Subject to Section 56 hereof, refers to land occupied, possessed and utilized by individuals, families and clans who are members of the ICCs/Ips since time immemorial, by themselves or through their predecessors-in-interest, under claims of individual or traditional group ownership, continuously, to the present except when interrupted by war, force majeure or displacement by force, deceit, stealth, or as a consequence of government projects and other voluntary dealings entered into by government and private individuals/corporations, including, but not limited to, residential lots, rice terraces or paddies, private forests, swidden farms and tree lots.
A, a Filipino citizen, acquired land. At the time of registration, he was already a foreign citizen. Will the registration prosper?
A foreign national may apply for registration of title over a parcel of land which he acquired by purchase while still a citizen of the Philippines from a vendor who has complied with the requirements for registration under the law.
Even if private respondents were already Canadian citizens at the time they applied for registration of the properties in question, said properties as discussed above were already private lands; consequently, there could be no legal impediment for the registration thereof by respondents in view of what the Constitution ordains. The parcels of land sought to be registered no longer form part of the public domain. They are already private in character since private respondents’ predecessors-in-interest have been in open, continuous and exclusive possession and occupation thereof under claim of ownership prior to June 12, 1945 or since 1937. The law provides that a natural-born citizen of the Philippines who has lost his Philippine citizenship may be a transferee of a private land up to a maximum area of 1,000 sq. m., if urban, or one (1) hectare in case of rural land, to be used by him as his residence (BP 185). It is undisputed that private respondents, as vendees of a private land, were natural-born citizens of the Philippines. For the purpose of transfer and/or acquisition of a parcel of residential land, it is not significant whether private respondents are no longer Filipino citizens at the time they purchased or registered the parcels of land in question. What is important is that private respondents were formerly natural-born citizens of the Philippines, and as transferees of a private land, they could apply for registration in accordance with the mandate of Section 8, Article XII of the Constitution. Considering that private respondents were able to prove the requisite period and character of possession of their predecessors-in-interest over the subject lots, their application for registration of title must perforce be approved.
Unrecorded deed of sale of registered land
Unrecorded deed of sale of registered land is valid between the parties.
Interpreting Section 50, Land Registration Act, this Court has ruled that an unrecorded deed of sale between vendor and the vendee is binding between them because actual notice is equivalent to registration. It is also binding on the vendor’s privies. Reason therefor is that the purpose of registration is to give notice to third persons. And privies are not third persons. The vendor’s heirs are his privies. Against them, failure to register will not vitiate or annul the vendee’s right of ownership conferred by such unregistered deed of sale.
Torrens System
The Torrens system was adopted to “obviate possible conflicts of title by giving the public the right to rely upon the face of the Torrens certificate and to dispense, as a rule, with the necessity of inquiring further.” One need not inquire beyond the four corners of the certificate of title when dealing with registered property.
Section 44 of Presidential Decree No. 1529 known as the Property Registration Decree recognizes innocent purchasers in good faith for value and their right to rely on a clean title:
Section 44. Statutory liens affecting title. - Every registered owner receiving a certificate of title in pursuance of a decree of registration, and every subsequent purchaser of registered land taking a certificate of title for value and in good faith, shall hold the same free from all encumbrances except those noted in said certificate and any of the following encumbrances which may be subsisting, namely:
First. Liens, claims or rights arising or existing under the laws and Constitution of the Philippines which are
not by law required to appear of record in the Registry of Deeds in order to be valid against subsequent
purchasers or encumbrances of record.
Second. Unpaid real estate taxes levied and assessed within two years immediately preceding the
acquisition of any right over the land by an innocent purchaser for value, without prejudice to the right of
the government to collect taxes payable before that period from the delinquent taxpayer alone.
Third. Any public highway or private way established or recognized by law, or any government irrigation
canal or lateral thereof, if the certificate of title does not state that the boundaries of such highway or
irrigation canal or lateral thereof have been determined.
Fourth. Any disposition of the property or limitation on the use thereof by virtue of, or pursuant to,
Presidential Decree No. 27 or any other law or regulations on agrarian reform.
If a deed is registered, does it overcome all presumptions of invalidity?
The act of registration does not validate petitioner’s otherwise void contract.
Registration is a mere ministerial act by which a deed, contract, or instrument is sought to be inscribed in the records of the Office of the Register of Deeds and annotated at the back of the certificate of title covering the land subject of the deed, contract, or instrument. While it operates as a notice of the deed, contract, or instrument to others, it does not add to its validity nor converts an invalid instrument into a valid one as between the parties, nor amounts to a declaration by the state that the instrument is a valid and subsisting interest in the land. The registration of petitioner’s void deed is not an impediment to a declaration by the courts of its invalidity.
Does the Registration of Deeds have jurisdiction to determine whether a registered title was done in fraud?
Since registration of documents is a ministerial act and merely creates a constructive notice of its contents against all third persons, the Register of Deeds is not authorized to determine whether or not fraud was committed in the document sought to be registered.
Registration is a mere ministerial act by which a deed, contract, or instrument is sought to be inscribed in the records of the Office of the Register of Deeds and annotated at the back of the certificate of title covering the land subject of the deed, contract, or instrument. Being a ministerial act, it must be performed in any case. The public officer having this ministerial duty has no choice but to perform the specific action which is the particular duty imposed by law. The purpose of registration is to give notice to all persons. It operates as a notice of the deed, contract, or instrument to others, but neither adds to its validity nor converts an invalid instrument into a valid one between the parties. Since registration of documents is a ministerial act and merely creates a constructive notice of its contents against all third persons, the Register of Deeds is not authorized to determine whether or not fraud was committed in the document sought to be registered. In this case, the owner’s duplicate copy of title attached to the real estate mortgage was written in an official paper of the Land Registration Authority and contained all the markings of a genuine title. The Office of the Register of Deeds is not mandated to investigate further than necessary when documents presented before it appear authentic.
Is a certificate title subject to collateral attack?
Section 43 of Presidential Decree No. 1529, or the Property Registration Decree, states that a certificate of title shall not be subject to a collateral attack and cannot be altered, modified, or cancelled except in a direct proceeding in accordance with law.
A direct attack is an action whose main objective is to annul, set aside, or enjoin the enforcement of a judgment pursuant to which a registration decree is issued, if the judgment has not yet been implemented, or if already implemented, to seek the recovery of the property. On the other hand, a collateral attack transpires when, in an action to obtain a different relief, an attack is incidentally made against the judgment.
A collateral attack is prohibited because the integrity of land titles and their indefeasibility are guaranteed by the Torrens system of registration.
The Torrens system was adopted precisely to quiet titles to lands and to put a stop forever to any question of legality of the titles, except claims which were noted at the time of registration or which may arise subsequent thereto. By guaranteeing the integrity of land titles and their indefeasibility, the Torrens system gives the registered owners complete peace of mind.
Will tax declarations prove ownership over the property?
It is only when these tax declarations are coupled with proof of actual possession of the property that they may become the basis of a claim of ownership.
Indeed, there is nothing in this case which would substantiate the respondents’ claim that they have been in possession of the subject properties since June 12, 1945, or earlier. The earliest tax declaration that was presented in the name of Dalumpines was issued only in 1967. Although the respondents presented a tax declaration over the subject property issued to Pablo in 1948, they failed to establish the relationship of Pablo to Dalumpines.
In any case, the respondents’ claim of ownership of the subject properties based on the tax declarations they presented will not prosper. It is only when these tax declarations are coupled with proof of actual possession of the property that they may become the basis of a claim of ownership.
In this case, the respondents miserably failed to prove that they] and their predecessors-in-interest actually possessed the properties since June 12, 1945 or earlier.
A decree of registration may be reopened or reviewed by the proper Regional Trial Court upon concurrence of five essential requisites.
It is the teaching of the foregoing provisions that a decree of registration may be reopened or reviewed by the proper Regional Trial Court upon the concurrence of five essential requisites, to wit: (a) that the petitioner has a real and a dominical right; (b) that he has been deprived thereof; (c) through fraud (d) that the petition is filed within one year from the issuance of the decree; and (e) that the property has not as yet been transferred to an innocent purchaser for value.
No valid transfer certificate of title can issue from a void certificate of title, unless an innocent purchaser for value has intervened.
Established is the rule that the rights of an innocent purchaser for value must be respected and protected notwithstanding the fraud employed by the sellers in securing their title.
Purchaser in good faith
A purchaser in good faith is one who buys property of another, without notice that some other person has a right to, or interest in, such property and pays a full and fair price for the same, at the time of such purchase, or before he has notice of the claim or interest of some other persons in the property.
To prove good faith, a buyer of registered and titled land need only show that he relied on the face of the title to the property. He need not prove that he made further inquiry for he is not obliged to explore beyond the four corners of the title.
Such degree of proof of good faith, however, is sufficient only when the following conditions concur: first, the seller is the registered owner of the land; second, the latter is in possession thereof; and third, at the time of the sale, the buyer was not aware of any claim or interest of some other person in the property, or of any defect or restriction in the title of the seller or in his capacity to convey title to the property. Absent one or two of the foregoing conditions, then the law itself puts the buyer on notice and obliges the latter to exercise a higher degree of diligence by scrutinizing the certificate of title and examining all factual circumstances in order to determine the seller’s title and capacity to transfer any interest in the property. Under such circumstance, it is no longer sufficient for said buyer to merely show that he relied on the face of the title; he must now also show that he exercised reasonable precaution by inquiring beyond the title. Failure to exercise such degree of precaution makes him a buyer in bad faith.
To successfully invoke and be considered as a buyer in good faith, the presumption is that first and foremost, the “buyer in good faith” must have shown prudence and due diligence in the exercise of his/her rights.
X sells property to Y. The property is in possession of Z. Can Y invoke good faith?
The buyer must investigate the rights of the actual possessor in cases where the purchased land is in possession of a person other than the seller.
The “honesty of intention” which constitutes good faith implies a freedom from knowledge of circumstances which ought to put a person on inquiry. If the land purchased is in the possession of a person other than the vendor, the purchaser must be wary and must investigate the rights of the actual possessor. Without such inquiry, the purchaser cannot be said to be in good faith and cannot have any right over the property. Applied to the present case, what is not disputed is that despite La Vilma Realty being the registered owner, petitioners are in actual possession of Lot 12. Hence, following the discussion above, respondents cannot merely rely on the face of La Vilma Realty’s title but must now exercise a higher degree of diligence and investigate petitioners’ claim. On this score, we find that the CA erred in finding that respondents were buyers in good faith. To the Court’s mind, that Marcelino verified the title with the Register of Deeds; inspected the property and confirmed that some of the heirs of Isabelo, Sr. and Antonio were in possession of Lot 12; and was able to speak with Libertad from whom he discovered that the petitioners were also claiming ownership on the basis of Angela’s Affidavit, and even warned him not to buy the property, do not meet the higher degree of diligence required under the circumstances. Rather, what these circumstances establish is that as a result of such inspection, respondents were already aware of petitioners’ possession and adverse claim over Lot 12. This should have prompted them to investigate La Vilma Realty’s capacity to convey title to them and consequently lead them to ascertain the veracity of Visitacion’s Confirmation of Ownership; however, respondents have not shown that they undertook such steps before finally deciding to purchase Lot 12. As such, the Court cannot sustain the CA’s conclusion that respondents were innocent purchasers for value. Not being innocent purchasers for value, respondents cannot have a better right over Lot 12.
A prospective buyer must observe the following precautionary measures and diligence to ensure the legality of the title and the accuracy of the metes and bounds of the lots to be purchased:
- verify the origin, history, authenticity, and validity of the title with the Office of the Register of Deeds and the Land Registration Authority;
- engage the services of a competent and reliable geodetic engineer to verify the boundary, metes, and bounds of the lot subject of said title based on the technical description in the said title and the approved survey plan in the Land Management Bureau;
- conduct an actual ocular inspection of the lot;
- inquire from the owners and possessors of adjoining lots with respect to the true and legal ownership of the lot in question;
- put up signs that said lot is being purchased, leased, or encumbered; and
- undertake such other measures to make the general public aware that said lot will be subject to alienation, lease, or encumbrance by the parties.
Mirror doctrine
The mirror doctrine provides that every person dealing with registered land may safely rely on the correctness of the certificate of title issued therefor and is in no way obliged to go beyond the certificate to determine the condition of the property.
Every registered owner and every subsequent purchaser for value in good faith holds the title to the property free from all encumbrances except those noted in the certificate.
As such, a defective title, or one the procurement of which is tainted with fraud and misrepresentation — may be the source of a completely legal and valid title, provided that the buyer is an innocent third person who, in good faith, relied on the correctness of the certificate of title, or an innocent purchaser for value.
Exceptions to the mirror doctrine
(1) when the party has actual knowledge of facts and circumstances that would impel a reasonably cautious man to make further inquiry;
(2) when the buyer has knowledge of a defect or the lack of title in his vendor; or
(3) when the buyer/mortgagee is a bank or an institution of similar nature as they are enjoined to exert a higher degree of diligence, care, and prudence than individuals in handling real estate transactions
X sells property to bank Y. The property is in possession of Z. Can Y invoke good faith?
When the purchaser or the mortgagee is a bank, the rule on innocent purchasers or mortgagees for value is applied more strictly.
Being in the business of extending loans secured by real estate mortgage, banks are presumed to be familiar with the rules on land registration. Since the banking business is impressed with public interest, they are expected to be more cautious, to exercise a higher degree of diligence, care and prudence, than private individuals in their dealings, even those involving registered lands. Banks may not simply rely on the face of the certificate of title. Hence, they cannot assume that, simply because the title offered as security is on its face free of any encumbrances or lien, they are relieved of the responsibility of taking further steps to verify the title and inspect the properties to be mortgaged. As expected, the ascertainment of the status or condition of a property offered to it as security for a loan must be a standard and indispensable part of a bank’s operations.
Forged deed
A forged deed is a nullity and conveys no title.
As for the agreement that Pilar is an innocent purchaser for value, such principle would apply only if the title is not null and void.
All transactions subsequent to the alleged sale are likewise void. Even if parties have in their favor a certificate of title in their name, it has no beneficial effect on them and their title cannot be used to validate the forgery or cure the void sale.
This is in view of the legal truism that the spring cannot rise higher than its source. Because Pilar acquired no title over the subject property, it remained in the name of the original registered owner, Serapio, Francisco, and his siblings, as heirs of Serapio, thus became co-owners of Lot No. 5762. As such, they may exercise all attributes of ownership over the property, including selling it to Paxton.
X buys property from Y. After purchase, X learns of the property’s encumbrances. X continues to register the title. Can he still invoke good faith?
No. Buyers of registered land must be continuing purchasers for value and in good faith until the registration of the conveyance.
In the event of a buyer of registered land who has yet to register the conveyance is made aware of any claim or interest of some other person in the property, or of any defect or restriction in the title of the seller or in his or her capacity to convey title, the buyer shall no longer be considered to be in good faith even if he or she subsequently registers the conveyance. It is only upon registration of the conveyance in good faith will the purchaser acquire such rights and interest as they appear in the certificate of title, unaffected by any prior lien or encumbrance not noted therein. The buyer must purchase the property and register the deed of conveyance without notice that some other person has a right to, or interest in, such property and pay a full and fair price of the same, at the time of such purchase, or before he or she has notice of the claim or interest of some other persons in the property.
The (1) property must be bought for consideration, and (2) purchase should have no knowledge or notice of adverse claim or interest until registration. In the event of a buyer of registered land who has yet to register the conveyance be made aware of any claim or interest of some other person in the property, or of any defect or restriction in the title of the seller or in his or her capacity to convey title, the buyer shall no longer be considered to be in good faith even if he or she subsequently registers the conveyance.
When shall the buyer be considered to have duly registered the conveyance?
A purchaser is deemed the registered owner once he or she: (a) files a duly notarized valid deed of sale, (b) the sale is entered into the day book, (c) the buyer surrenders or presents the owner’s duplicate certificate of title covering the land sold, and (d) pays the registration fees.
Confirmation of imperfect titles
While ordinarily, under Section 14(1) of P.D. No. 1529, petitioner must prove possession under a bona fide claim of ownership since June 12, 1945 or earlier, R.A. No. 11573 has lowered the required length of possession to twenty (20) years immediately preceding the filing of the application.
Under Section 14 of P.D. No. 1529, as amended by Section 6 of R.A. No. 11573, the applicant for original registration of title to land must establish the following:
(1) that the subject land, which does not exceed 12 hectares, forms part of disposable and alienable lands of the public domain;
(2) that the applicants, by themselves or through their predecessors-in-interest, have been in open, continuous, exclusive, and notorious possession and occupation thereof; and
(3) that the possession is under a bona fide claim of ownership for at least twenty (20) years immediately preceding the filing of the application for confirmation of title
Proof that a land is now alienable
Petitioner needs only to present a duly signed certification by a duly designated Department of Environment and Natural Resources (DENR) geodetic engineer that the land is part of the alienable and disposable agricultural lands of the public domain, stating the applicable issuance and the Land Classification Project Map Number.
Another notable improvement ushered in by R.A. No. 11573 is Section 7 thereof on what constitutes sufficient proof to establish the alienable and disposable character of the land. It provides: “Section 7. Proof that the Land is Alienable and Disposable. For purposes of judicial confirmation of imperfect titles filed under Presidential Decree No. 1529, a duly signed certification by a duly designated DENR geodetic engineer that the land is part of alienable and disposable agricultural lands of the public domain is sufficient proof that the land is alienable. Said certification shall be imprinted in the approved survey plan submitted by the applicant in the land registration court. The imprinted certification in the plan shall contain a sworn statement by the geodetic engineer that the land is within the alienable and disposable lands of the public domain and shall state the applicable Forestry Administrative Order, DENR Administrative Order, Executive Order, Proclamations and the Land Classification Project Map Number covering the subject land.” The above provision does away with the requirements articulated in Republic of the Philippines vs. T.A.N. Properties, Inc. Thus, petitioner need only present a duly signed certification by a duly designated Department of Environment and Natural Resources (DENR) geodetic engineer that the land is part of the alienable and disposable agricultural lands of the public domain, stating the applicable issuance and the Land Classification Project Map Number.
As the rule now stands, petitioner need not show that the DENR Secretary had approved the land classification and present a copy of the land’s original classification.
“Voluntary Registration” and “Involuntary Registration,” Distinguished.
The notice of levy on attachment in favor of petitioner may be annotated on TCT No. PT-94912. Levin v. Bass, 91 Phil. 420 (1952), provided the distinction between voluntary registration and involuntary registration.
In voluntary registration, such as a sale, mortgage, lease and the like, if the owner’s duplicate certificate be not surrendered and presented or if no payment of registration fees be made within fifteen (15) days, entry in the day book of the deed of sale does not operate to convey and affect the land sold.
In involuntary registration, such as an attachment, levy upon execution, lis pendens and the like, entry thereof in the day book is a sufficient notice to all persons of such adverse claim.
To aid the bench and the bar, the Court lays down the following guidelines on the application of RA 11573:
- RA 11573 shall apply retroactively to all applications for judicial confirmation of title which remain pending as of September 1, 2021, or the date when RA 11573 took effect. These include all applications pending resolution at the first instance before all Regional Trial Courts, and applications pending appeal before the Court of Appeals.
- Applications for judicial confirmation of title filed on the basis of the old section Section 14(1) and 14(2) of PD 1529 and which remain pending before the Regional Trial Court of Court of Appeals as of September 1, 2021 shall be resolved following the period and manner of possession required under the new Section 14(1). Thus, beginning September 1, 2021 proof of “open, continuous, exclusive and notorious possession and occupation of alienable and disposable lands of the public domain not covered by existing certificates of title or patents under a bona fide claim of ownership for at least twenty (20) years immediately preceding the filing of the application for confirmation” shall be sufficient for purposes of judicial confirmation of title, and shall entitle the applicant to a decree of registration.
- In the interest of substantial justice, the Regional Trial Courts and Court of Appeals are hereby directed, upon proper motion or motu proprio, to permit the presentation of additional evidence on land classification status based on the parameters set forth in Section 7 of RA 11573.
a. Such additional evidence shall consist of a certification issued by the DENR geodetic engineer which (i) states that the land subject of the application for registration has been classified as alienable and disposable land of the public domain; (ii) bears reference to the applicable Forestry Administrative Order, DENR Administrative Order, Executive Order, or proclamation classifying the land as such; and (ii) indicates the number of the LC Map covering the land.
b. In the absence of a copy of the relevant issuance classifying the land as alienable and disposable, the certification must additionally state (i) the release date of the LC Map; and (ii) the Project Number. Further, the certification must confirm that the LC Map forms part of the records of NAMRIA and is precisely being used by the DENR as a land classification map.
c. The DENR geodetic engineer must be presented as witness for proper authentication of the certification in accordance with the Rules of Court.
Act of registration
Sections 51 and 52 of P.D. No. 1529 provide that the act of registration is the operative act to convey or affect the land insofar as third persons are concerned; Constructive notice is also created upon registration of every conveyance, mortgage, lease, lien, attachment, order, judgment, instrument or entry affecting registered land.
An owner of registered land may convey, mortgage, lease, charge or otherwise deal with the same in accordance with existing laws. He may use such forms of deeds, mortgages, leases or other voluntary instruments as are sufficient in law.
But no deed, mortgage, lease, or other voluntary instrument, except a will purporting to convey or affect registered land shall take effect as a conveyance or bind the land, but shall operate only as a contract between the parties and as evidence of authority to the Registry of Deeds to make registration. The act of registration shall be the operative act to convey or affect the land insofar as third persons are concerned, and in all cases under this Decree, the registration shall be made in the office of the Register of Deeds for the province or city where the land lies.
SEC. 52. Constructive notice upon registration.—Every conveyance, mortgage, lease, lien, attachment, order, judgment, instrument or entry affecting registered land shall, if registered, filed or entered in the office of the Register of Deeds for the province or city where the land to which it relates lies, be constructive notice to all persons from the time of such registering, filing or entering.
Under the aforesaid provisions, the act of registration is the operative act to convey or affect the land insofar as third persons are concerned.
Constructive notice is also created upon registration of every conveyance, mortgage, lease, lien, attachment, order, judgment, instrument or entry affecting registered land.
Rule of notice
Under the rule of notice, it is presumed that the purchaser has examined every instrument of record affecting the title, a presumption which is irrebuttable; A declaration from the court that the buyer is in bad faith is not necessary in order that the notice of levy on attachment may be annotated on a transfer certificate of title.
Respondent cannot be considered an innocent purchaser for value. Under the rule of notice, it is presumed that the purchaser has examined every instrument of record affecting the title. Such presumption is irrebuttable. He is charged with notice of every fact shown by the record and is presumed to know every fact shown by the record and to know every fact which an examination of the record would have disclosed. This presumption cannot be overcome by proof of innocence or good faith. Otherwise, the very purpose and object of the law requiring a record would be destroyed. Such presumption cannot be defeated by proof of want of knowledge of what the record contains any more than one may be permitted to show that he was ignorant of the provisions of the law.
The rule that all persons must take notice of the facts which the public record contains is a rule of law. The rule must be absolute; any variation would lead to endless confusion and useless litigation. For these reasons, a declaration from the court that respondent was in bad faith is not necessary in order that the notice of levy on attachment may be annotated on TCT No. PT-94912.
When is attachment duly perfected?
As long as the requisites required by law in order to affect attachment are complied with and the appropriate fees duly paid, attachment is duly perfected, and the attachment already binds the land.
The fact that the notice of levy on attachment was not annotated on the original title on file in the Registry of Deeds, which resulted in its non-annotation on TCT No. PT-94912, should not prejudice petitioner. As long as the requisites required by law in order to effect attachment are complied with and the appropriate fees duly paid, attachment is duly perfected. The attachment already binds the land. This is because what remains to be done lies not within the petitioner’s power to perform but is a duty incumbent solely on the Register of Deeds.
Good faith
Good faith is ordinarily used to describe that state of mind denoting “honesty of intention, and freedom from knowledge of circumstances which ought to put the holder upon inquiry; an honest intention to abstain from taking any unconscientious advantage of another, even though technicalities of law, together with absence of all information, notice, or benefit or belief of facts which render the transaction unconscientious.
Lis pendens
Lis pendens literally means a pending suit. The doctrine of lis pendens refers to the jurisdiction, power or control which a court acquires over property involved in a suit, pending the continuance of the action, and until final judgment.
The purposes of lis pendens are (1) to protect the rights of the party causing the registration of the lis pendens, and (2) to advise third persons who purchase or contract on the subject property that they do so at their peril and subject to the result of the pending litigation.
The filing of a notice of lis pendens has a two-fold effect.
First, it keeps the subject matter of the litigation within the power of the court until the entry of the final judgment to prevent the defeat of the final judgment by successive alienations.
Second, it binds a purchaser, bona fide or not, of the land subject of the litigation to the judgment or decree that the court will promulgate subsequently. However, the filing of a notice of lis pendens does not create a right or lien that previously did not exist. Without a notice of lis pendens, a third party who acquires the property after relying only on the certificate of title is a purchaser in good faith. Against such third party, the supposed rights of a litigant cannot prevail, because the former is not bound by the property owner’s undertakings not annotated in the transfer certificate of title.
Are LRTA properties subject to private sale?
LRTA’s properties are properties of public dominion that are for public use or public service hence, are not subject to levy, encumbrance or disposition through public or private sale.
Undoubtedly, the light rail transit performs a crucial role in the lives of the people in Metro Manila. And the fact that by necessary implication, it has to pass through several local government units, the protection accorded to properties of public dominion for public use must be extended to the LRTA and its properties. Taking some or a portion of the railroads, railways, carriageways and terminal stations will literally hamper the operation of the light rail transit. Trains run on the rail tracks which are fastened to a concrete foundation resting on a prepared subsurface. Like an airport, the light rail transit has a terminal commonly known as the LRT station. It is a hub where passengers converge to buy train tickets and access the train facilities. It is also where the trains regularly stop to load or unload passengers. These properties are essential for the passenger transport and continued operation of the light rail transit, without which this massive transportation system will be paralyzed. The fact that the LRTA may have entered into transactions with, short of alienating them, to private parties in relation to the establishment, operation, maintenance, and viability of a light rail transit in the country, does not detract from the characterization of the LRTA’s properties as properties of public dominion for public use or public service. What is important is the role, nexus, and relevance that these properties play in the public use or public service purposes of the LRTA.
X buys an unregistered land. Can X invoke good faith?
One who purchases an unregistered land does so at his peril.
As to whether or not petitioner was in good faith, the issue of good faith or bad faith of a buyer is relevant only where the subject of the sale is a registered land but not where the property is an unregistered land.
One who purchases an unregistered land does so at his peril. His claim of having bought the land in good faith, i.e., without notice that some other person has a right to, or interest in, the property, would not protect him if it turns out that the seller does not actually own the property. In the instant case, there is no dispute that at the time that petitioner entered into a contract of mortgage with Roberto and in subsequently buying the subject lot during the auction sale, the same was still an unregistered land. Thus, petitioner may not claim good faith and due diligence in dealing with Roberto. As a consequence, the CA did not commit error in nullifying the real estate mortgage contract between petitioner and Roberto and in declaring respondent as the owner of the disputed lot.
Assurance Fund
The Assurance Fund is a long-standing feature of our property registration system which is intended “to relieve innocent persons from the harshness of the doctrine that a certificate is conclusive evidence of an indefeasible title to land.”
The Assurance Fund is a long-standing feature of our property registration system which is intended “to relieve innocent persons from the harshness of the doctrine that a certificate is conclusive evidence of an indefeasible title to land.”
Originally, claims against the Assurance Fund were governed by Section 101 of Act No. 496, otherwise known as the “Land Registration Act.” The language of this provision was substantially carried over to PD 1529, Section 95 of which reads: Section 95. Action for compensation from funds.—A person who, without negligence on his part, sustains loss or damage, or is deprived of land or any estate or interest therein in consequence of the bringing of the land under the operation of the Torrens system or arising after original registration of land, through fraud or in consequence of any error, omission, mistake or misdescription in any certificate of title or in any entry or memorandum in the registration book, and who by the provisions of this Decree is barred or otherwise precluded under the provision of any law from bringing an action for the recovery of such land or the estate or interest therein, may bring an action in any court of competent jurisdiction for the recovery of damages to be paid out of the Assurance Fund.
When will the Assurance Fund be held liable?
Loss, damage, or deprivation of land or any estate or interest therein through fraudulent registration alone is not a valid ground to recover damages against the Assurance Fund;
Instead, the loss, damage or deprivation becomes compensable under the Assurance Fund when the property has been further registered in the name of an innocent purchaser for value (IPV).
Section 101 of PD 1529 explicitly provides that “the Assurance Fund shall not be liable for any loss, damage or deprivation caused or occasioned by a breach of trust, whether express, implied or constructive or by any mistake in the resurvey or subdivision of registered land resulting in the expansion of area in the certificate of title.” It is hornbook doctrine that “when a party uses fraud or concealment to obtain a certificate of title of property, a constructive trust is created in favor of the defrauded party.” However, as stated in Section 101 of PD 1529, the inability to recover from the defrauding party does not make the Assurance Fund liable therefor.
Instead, the loss, damage or deprivation becomes compensable under the Assurance Fund when the property has been further registered in the name of an innocent purchaser for value. This is because in this instance, the loss, damage or deprivation are not actually caused by any breach of trust but rather, by the operation of the Torrens system of registration which renders indefeasible the title of the innocent purchaser for value. To note, it has been held that a mortgagee in good faith (such as Rowena) stands as an innocent mortgagee for value with the rights of an innocent purchaser for value.
Condition sine qua non for a person who brings an action against the Assurance Fund
In the 1936 case of La Urbana v. Bernardo, 62 Phil. 790, the Supreme Court (SC) qualified that “it is a condition sine qua non that the person who brings an action for damages against the assurance fund be the registered owner, and, as to holders of transfer certificates of title, that they be innocent purchasers in good faith and for value.”
The Court herein holds that an action against the Assurance Fund on the ground of “fraudulent registration under the Torrens system after the land’s original registration” may be brought only after the claimant’s property is registered in the name of an innocent purchaser for value. This is because it is only after the registration of the innocent purchaser for value’s title (and not the usurper’s title which constitutes a breach of trust) can it be said that the claimant effectively “sustains loss or damage, or is deprived of land or any estate or interest therein in consequence of the bringing of the land under the operation of the Torrens system.” The registration of the innocent purchaser for value’s title is therefore a condition sine qua non in order to properly claim against the Assurance Fund.
Nature of an action for compensation against the Assurance Fund
An action for compensation against the Assurance Fund is a separate and distinct remedy, apart from review of decree of registration or reconveyance of title, which can be availed of when there is an unjust deprivation of property. This is evident from the various provisions of Chapter VII of PD 1529 which provide for specific parameters that govern the action.
Prescription for suits against the assurance fund
Chapter VII of PD No. 1529, Section 102, sets a six (6)-year prescriptive period “from the time the right to bring such action first occurred” within which one may proceed to file an action for compensation against the Assurance Fund.
Section 102. Limitation of Action.—Any action for compensation against the Assurance Fund by reason of any loss, damage or deprivation of land or any interest therein shall be instituted within a period of six years from the time the right to bring such action first occurred. Provided, That the right of action herein provided shall survive to the legal representative of the person sustaining loss or damage, unless barred in his lifetime; and Provided, further, That if at the time such right of action first accrued the person entitled to bring such action was a minor or insane or imprisoned, or otherwise under legal disability, such person or anyone claiming from, by or under him may bring the proper action at any time within two years after such disability has been removed, notwithstanding the expiration of the original period of six years first above provided.
Jurisprudence has yet to interpret the meaning of the phrase “from the time the right to bring such action first occurred’’; hence, the need to clarify the same.
Prescription on action based on fraud
The general rule is that “a right of action accrues only from the moment the right to commence the action comes into existence, and prescription begins to run from that time.” However, in cases involving fraud, the common acceptation is that the period of prescription runs from the discovery of the fraud.
Pursuant to Article 1391 of the same Code, the action for annulment of contracts where consent is vitiated by fraud shall be brought within four years from the time of discovery of the same.
Reconstitution of a title
The reconstitution of a title is simply the re-issuance of a lost duplicate certificate of title in its original form and condition.
It does not determine or resolve the ownership of the land covered by the lost or destroyed title. A reconstituted title, like the original certificate of title, by itself does not vest ownership of the land or estate covered thereby.
In determining the divisibility of an obligation, the following factors may be considered:
(1) the will or intention of the parties, which may be expressed or presumed;
(2) the objective or purpose of the stipulated prestation;
(3) the nature of the thing; and
(4) provisions of law affecting the prestation.
In positive obligations, when does the obligor or debtor incur in delay?
In positive obligations, like an obligation to give, the obligor or debtor incurs in delay from the time the obligee or creditor demands from him the fulfillment of the obligation.
Default or mora, which is a kind of voluntary breach of an obligation, signifies the idea of delay in the fulfillment of an obligation with respect to time.
In positive obligations, like an obligation to give, the obligor or debtor incurs in delay from the time the obligee or creditor demands from him the fulfillment of the obligation. Demand may be judicial — if the creditor files a complaint against the debtor for the fulfillment of the obligation — or extrajudicial — if the creditor demands from the debtor the fulfillment of the obligation either orally or in writing. Whether the demand is judicial or extrajudicial, if the obligor or debtor fails to fulfill or perform his obligations, like payment of a loan, as in this case, he is in mora solvendi, and, thus, liable for damages.
Under Article 1173 of the Civil Code, where it is not stipulated in the law or the contract, the diligence required to comply with one’s obligations is commonly referred to as
Under Article 1173 of the Civil Code, where it is not stipulated in the law or the contract, the diligence required to comply with one’s obligations is commonly referred to as paterfamilias; or, more specifically, as bonos paterfamilias or “a good father of a family.”
Negligence is the absence of reasonable care and caution that an ordinarily prudent person would have used in a given situation. To determine the prudence and diligence that must be required of all persons, we must use as basis the abstract average standard corresponding to a normal orderly person. Anyone who uses diligence below this standard is guilty of negligence.
Article 1191 of the Civil Code provides:
Art. 1191. The power to rescind obligations is implied in reciprocal ones, in case one of the obligors should not comply with what is incumbent upon him.
The injured party may choose between the fulfillment and the rescission of the obligation, with the payment of damages in either case. He may also seek rescission, even after he has chosen fulfillment, if the latter should become impossible. The court shall decree the rescission claimed, unless there be just cause authorizing the fixing of a period.
When can a contract be rescinded?
As a general rule, the power to rescind an obligation must be invoked judicially and cannot be exercised solely on a party’s own judgment that the other has committed a breach of the obligation. As an exception, an injured party need not resort to court action in order to rescind a contract when the contract itself provides that it may be revoked or cancelled upon violation of its terms and conditions.
The exception appears to hold in this case, as the Agreement clearly directed as follows: “That the parties to this Agreement likewise agree and stipulate that they will abide with the terms and conditions therein set forth and that in case of breach thereof then the Deed of Sale shall be rendered non-effective and nugatory.”
Potestative condition
A “potestative condition” is a condition the fulfillment of which depends exclusively upon the will of the debtor, in which case, the conditional obligation is void. Case law distinguishes between a potestative condition imposed on the birth of the obligation and a potestative condition imposed on the obligation’s fulfillment. In the latter scenario, only the condition is voided, leaving unaffected the obligation itself.
The tenth clause of the Second MOA, reads: “The FIRST PARTY hereby undertakes to exert best effort to fully pay its obligation.” The RTC ruled that the phrase “to exert best effort to fully pay its obligation” is a potestative condition, which is void under Article 1308 of the New Civil Code since the reimbursement of the plaintiffs’ investment was left to the will of OJDTC and Oscar.
OJDTC and Oscar maintained the same argument. We reject their contention. A “potestative condition” is a condition the fulfillment of which depends exclusively upon the will of the debtor, in which case, the conditional obligation is void. Case law distinguishes between a potestative condition imposed on the birth of the obligation and a potestative condition imposed on the obligation’s fulfillment. In the latter scenario, only the condition is voided, leaving unaffected the obligation itself.
Penalty clause
A penalty clause, expressly recognized by law, is an accessory undertaking to assume greater liability on the part of an obligor in case of breach of an obligation. It functions to strengthen the coercive force of the obligation and to provide, in effect for what could be the liquidated damages resulting from such a breach. The obligor would then be bound to pay the stipulated indemnity without the necessity of proof on the existence and on the measure of damages caused by the breach.
Although a court is not at liberty to ignore the freedom of the parties to agree on such terms and conditions as they see fit that contravene neither law nor morals, good customs, public order or public policy, a stipulated penalty, nevertheless, may be equitably reduced by the courts if it is iniquitous or unconscionable or if the principal obligation has been partly or irregularly complied with. In exercising this power to determine what is iniquitous and unconscionable, courts must consider the circumstances of each case since what may be iniquitous and unconscionable in one may be totally just and equitable in another.
Reciprocal obligations
Reciprocal obligations are those which arise from the same cause, and in which each party is a debtor and a creditor of the other, such that the obligation of one is dependent upon the obligation of the other. They are to be performed simultaneously such that the performance of one is conditioned upon the simultaneous fulfillment of the other.
This provision refers to rescission applicable to reciprocal obligations. It is invoked when there is noncompliance by one (1) of the contracting parties in case of reciprocal obligations.
When can rescission under Article 1191 be availed of?
Rescission under Article 1191 will be ordered when a party to a contract fails to comply with his or her obligation. Rescission “is a principal action that is immediately available to the party at the time that the reciprocal [obligation] was breached.”
When does Article 1197 apply?
Article 1197 applies “when the obligation does not fix a period but from its nature and circumstances it can be inferred that a period was intended.”
Article 1197 applies “when the obligation does not fix a period but from its nature and circumstances it can be inferred that a period was intended[.]” This provision allows the courts to fix the duration “because the fulfillment of the obligation itself cannot be demanded until after the court has fixed the period for compliance therewith and such period has arrived.”
When the obligor cannot comply with its obligation…
When the obligor cannot comply with its obligation, the obligee may exercise its right to rescind the obligation, and the Supreme Court (SC) will order the rescission in the absence of any just cause to fix the period.
To tolerate petitioner’s excuses would only cause more delay and burden to respondent. Petitioner failed to forward any just cause to convince this Court to set a period. It merely reasoned force majeure and mutual delays with Bases Conversion and Development Authority without offering any explanation for its alleged difficulty in building the units.
To belatedly fix the period for petitioner’s compliance would mean refusing immediate payment to respondent. Petitioner’s noncompliance with its obligation to deliver the two (2) units as payment to respondent can no longer be excused. The law and jurisprudence are clear. When the obligor cannot comply with its obligation, the obligee may exercise its right to rescind the obligation, and this Court will order the rescission in the absence of any just cause to fix the period. Here, lacking any reasonable explanation and just cause for the fixing of the period for petitioner’s noncompliance, the rescission of the obligation is justified.
Rescission under Article 1191
Rescission of the obligation under Article 1191 is a declaration that a contract is void at its inception. Its effect is to restore the parties to their original position, insofar as practicable.
Rescission has the effect of “unmaking a contract, or its undoing from the beginning, and not merely its termination.” Hence, rescission creates the obligation to return the object of the contract It can be carried out only when the one who demands rescission can return whatever he may be obliged to restore. To rescind is to declare a contract void at its inception and to put an end to it as though it never was. It is not merely to terminate it and release the parties from further obligations to each other, but to abrogate it from the beginning and restore the parties to their relative positions as if no contract has been made.
Mutual restitution is required in cases involving rescission under Article 1191. “Where a contract is rescinded, it is the duty of the court to require both parties to surrender that which they have respectively received and to place each other as far as practicable in his original situation[;] the rescission has the effect of abrogating the contract in all parts.
Mutual rescission
What mutual rescission entails is “the return of the benefits that each party may have received as a result of the contract.”
Although rescission repeals the contract from its inception, it does not disregard all the consequences that the contract has created. What mutual rescission entails is “the return of the benefits that each party may have received as a result of the contract.” Here, it is clear that only petitioner benefited from the contract. Respondent has already performed the painting works in 2003, and it was accepted by petitioner as satisfactory. Since this service cannot be undone and petitioner has already enjoyed the value of the painting services over the years, respondent is entitled to the payment of the painting services with interest in accordance with Articles 1191 and 2210 of the Civil Code. The interest shall be computed from the date of extrajudicial demand by respondent on August 3, 2007 in accordance with Article 1169 of the Civil Code and this Court’s ruling in Nacar v. Gallery Frames, 703 SCRA 439 (2013).
When can an obligation dependent upon a suspensive condition be demanded?
An obligation dependent upon a suspensive condition cannot be demanded until after the condition takes place because it is only after the fulfillment of the condition that the obligation arises.
Respondent-spouses’ obligation to pay the balance of the purchase price arises only when the court’s approval of the sale of the minor owners’ shares shall have been successfully secured, in accordance with Article 1181 of the New Civil Code. Judicial approval is a condition the operative act of which sets into motion the period of compliance by respondent spouses of their own obligation, i.e., to pay the balance of the purchase price. Accordingly, an obligation dependent upon a suspensive condition cannot be demanded until after the condition takes place because it is only after the fulfillment of the condition that the obligation arises. Petitioner cannot invoke the nonfulfillment of the condition in the contract to sell when she and her then co-owners themselves are guilty of preventing the fulfillment of such condition. When it has become evident that the condition would no longer be fulfilled, it was incumbent upon petitioner to inform respondent–spouses of such circumstance because the choice whether to waive the condition or continue with the agreement clearly belongs to the latter. Petitioner’s claim that respondent-spouses should have known that the condition would no longer be necessary because the latter knew that the minor owners had already reached the age of majority and that they should have been more proactive in following up the status of the contract to sell, deserves scant consideration. While petitioner may have been right in the aforementioned instances, the same will not negate her obligation to inform respondent-spouses of the nonfulfillment of the condition especially in view of the fact that it was her fault that the condition became irrelevant and unnecessary.
When is there solidary liability?
Under Article 1207 of the Civil Code, there is solidary liability when “the obligation expressly so states, or when the law or the nature of the obligation requires solidarity.”
Solidary liability under Philippine law is not to be inferred lightly but must be clearly expressed.
The Compromise Agreement provided: 25. Affiliates and Successors. This Agreement and the rights, obligations, and covenants contained herein shall inure to the benefit of and be binding upon The Plaintiffs and Settling Defendants and their respective subsidiaries, affiliates, controlled and related entities, successors, and assigns.
Clearly, the Compromise Agreement did not impose solidary liability on the parties’ subsidiaries, affiliates, controlled, and related entities, successors, and assigns but merely allowed them to benefit from its effects. Thus, respondent Judge Omelio gravely abused his discretion in holding that the petitioners’ subsidiaries and affiliates were solidarily liable under the Compromise Agreement.
Joint obligation
As defined in Article 1208, a joint obligation is one where there is a concurrence of several creditors, or of several debtors, or of several creditors and debtors, by virtue of which each of the creditors has a right to demand, and each of the debtors is bound to render compliance with his proportionate part of the prestation which constitutes the object of the obligation.
Each debtor answers only for a part of the whole liability and to each obligee belongs only a part of the correlative rights as it is only in solidary obligations that payment made to any one of the solidary creditors extinguishes the entire obligation. This means that Francisco, Ma. Consuelo and Consuelo are each entitled to equal shares in the P3,000,000 agreed upon in the Amended Compromise Agreement and that payment to Consuelo and Ma. Consuelo will not have the effect of discharging the obligation with respect to Francisco.
Article 1186
Article 1186 of the Civil Code is categorical that a “condition shall be deemed fulfilled when the obligor voluntarily prevents its fulfilment.”
Article 1198(4)
Article 1198(4) of the Civil Code, which states that the debtor loses the right to make use of the period when a condition is violated, making the obligation immediately demandable.
The due execution of the share purchase agreement is further bolstered by Article 1198(4) of the Civil Code, which states that the debtor loses the right to make use of the period when a condition is violated, making the obligation immediately demandable.
Article 1198. The debtor shall lose every right to make use of the period
(1) When after the obligation has been contracted, he becomes insolvent, unless he gives a guaranty or security for the debt;
(2) When he does not furnish to the creditor the guaranties or securities which he has promised;
(3) When by his own acts he has impaired said guaranties or securities after their establishment, and when through a fortuitous event they disappear, unless he immediately gives new ones equally satisfactory;
(4) When the debtor violates any undertaking, in consideration of which the creditor agreed to the period;
(5) When the debtor attempts to abscond.
Compensation
Compensation is a mode of extinguishing obligations of two persons who, in their own right, are creditors and debtors of each other.
Legal compensation
Legal compensation requires the concurrence of several conditions:
(1) each one of the obligors is bound principally and a principal creditor of the other;
(2) both debts consist in a sum of money, or if the things due are consumable, they are of the same kind, and also of the same quality if the latter has been stated;
(3) the two debts are due;
(4) the debts are liquidated and demandable; and
(5) over neither of them is there any retention or controversy, commenced by third persons and communicated in due time to the debtor.
A debt is considered LIQUIDATED when
A debt is considered LIQUIDATED when the amount and time of payment is fixed, and its exact amount is known. The exact amount of the debt may be expressed already in definite figures or determinable through a simple arithmetical operation. Compensation cannot extend to unliquidated, disputed claims arising from breach of contract.
A debt is DEMANDABLE when
A debt is DEMANDABLE when it is enforceable in court, there being no apparent defenses inherent in it. For instance, debts which are subject to suspensive conditions or those barred by prescription are not considered demandable.
Novation
Article 1293 of the Civil Code defines novation as “consists in substituting a new debtor in the place of the original one, which may be made even without the knowledge or against the will of the latter, but not without the consent of the creditor.”
Novation is a mode of extinguishing an obligation. The Civil Code provides that one of the ways to novate an obligation is by changing its object, cause, or principal conditions.
A necessary element of novation is the cancellation of the old obligation by the new one, which may be effected expressly or impliedly. It is never presumed and must be proven as a fact.
There is an express novation if the new obligation unequivocally declares that it extinguishes or substitutes the old obligation; on the other hand, there is an implied novation if the old and the new obligations are on every point incompatible with each other. The test of incompatibility is whether the two contracts can stand together, each one having an independent existence. “The incompatibility must take place in any of the essential elements of the obligation, such as its object, cause or principal conditions thereof; otherwise, the change would be merely modificatory in nature and insufficient to extinguish the original obligation.”
Under Article 1291 of the Civil Code, novation is done by:
(1) changing the object or principal conditions;
(2) substituting the person of the debtor; or
(3) subrogating a third person in the rights of the creditor.
On the second type of novation, by substituting the person of the debtor, law and jurisprudence recognize two forms:
(1) expromision and (2) delegacion
In expromision, the initiative for the change does not come from the debtor and may even be made without his knowledge, since it consists in a third person assuming the obligation. As such, it only requires the consent of the third person and the creditor.
In delegacion, the debtor offers and the creditor accepts a third person who consents to the substitution and assumes the obligation. Hence, the intervention and the consent of these three persons are necessary. But in either mode of substitution, the consent of the creditor is indispensable. After all, substitution of one debtor for another may delay or prevent the fulfillment of the obligation by reason of the financial inability or insolvency of the new debtor. It is only just, therefore, that the creditor expressly accepts the novation that extinguishes the obligation of the original debtor.
Can novation be presumed?
Novation is never presumed.
The mere fact that the creditor receives a guaranty or accepts payments from a third person who has agreed to assume the obligation, when there is no agreement that the first debtor shall be released from responsibility, does not constitute novation. This will, at best, result merely in the addition of debtors, with the creditor still being able to enforce the obligation against the original debtor.
Indeed, just because Bautista accepted Mascariñas’ promissory note does not necessarily mean that Bendecio’s obligation was already extinguished. In the absence of clear and unmistakable consent on the part of Bautista, her acceptance of Mascariñas’ note does equate to the release of Bendecio from her obligation.
Tender of payment
Tender of payment “is the manifestation by the debtor of a desire to comply with or pay an obligation. If refused without just cause, the tender of payment will discharge the debtor of the obligation to pay but only after a valid consignation of the sum due shall have been made with the proper court.”
“Consignation is the deposit of the [proper amount with a judicial authority] in accordance with rules prescribed by law, after the tender of payment has been refused or because of circumstances which render direct payment to the creditor impossible or inadvisable.”
Tender of payment, without more, produces no effect. [T]o have the effect of payment and the consequent extinguishment of the obligation to pay, the law requires the companion acts of tender of payment and consignation.
Effect of tender of payment on interest
As to the effect of tender of payment on interest, noted civilist Arturo M. Tolentino explained as follows:
When a tender of payment is made in such a form that the creditor could have immediately realized payment if he had accepted the tender, followed by a prompt attempt of the debtor to deposit the means of payment in court by way of consignation, the accrual of interest on the obligation will be suspended from the date of such tender. But when the tender of payment is not accompanied by the means of payment, and the debtor did not take anv immediate step to make a consignation, then interest is not suspended from the time of such tender.
Dacion en pago
Dacion en pago, according to Manresa, is the transmission of the ownership of a thing by the debtor to the creditor as an accepted equivalent of the performance of obligation.
In dacion en pago, as a special mode of payment, the debtor offers another thing to the creditor who accepts it as equivalent of payment of an outstanding debt. The undertaking really partakes in one sense of the nature of sale, that is, the creditor is really buying the thing or property of the debtor, payment for which is to be charged against the debtor’s debt.
As such, the essential elements of a contract of sale, namely, consent, object certain, and cause or consideration must be present. In its modern concept, what actually takes place in dacion en pago is an objective novation of the obligation where the thing offered as an accepted equivalent of the performance of an obligation is considered as the object of the contract of sale, while the debt is considered as the purchase price.
Dation in payment extinguishes the obligation to the extent of the value of the thing delivered, either as agreed upon by the parties or as may be proved, unless the parties by agreement — express or implied, or by their silence — consider the thing as equivalent to the obligation, in which case the obligation is totally extinguished.
Is consignation sufficient without a prior tender of payment?
Under Article 1256 of the Civil Code, consignation alone is sufficient even without a prior tender of payment:
a) when the creditor is absent or unknown or does not appear at the place of payment;
b) when he is incapacitated to receive the payment at the time it is due;
c) when, without just cause, he refuses to give a receipt;
d) when two or more persons claim the same right to collect; and
e) when the title of the obligation has been lost.
Requirements for a Valid Consignation
For consignation to be valid, the debtor must comply with the following requirements under the law:
1) there was a debt due;
2) valid prior tender of payment, unless the consignation was made because of some legal cause provided in Article 1256;
3) previous notice of the consignation has been given to the persons interested in the performance of the obligation;
4) the amount or thing due was placed at the disposal of the court; and
5) after the consignation had been made, the persons interested were notified thereof.
“Failure in any of these requirements is enough ground to render a consignation ineffective.”
Does consignation have a retroactive effect?
Although it is true that consignment has a retroactive effect, such payment is deemed to have been made only at the time of the deposit of the thing in court or when it was placed at the disposal of the judicial authority.
Note that PNB’s deposit of the subject monthly rentals in a non-drawing savings account is not the consignation contemplated by law, precisely because it does not place the same at the disposal of the court. Consignation is necessarily judicial; it is not allowed in venues other than the courts. Consequently, PNB’s obligation to pay rent for the period of January 16, 2005 up to March 23, 2006 remained subsisting, as the deposit of the rentals cannot be considered to have the effect of payment. It is important to point out that PNB’s obligation to pay the subject monthly rentals had already fallen due and demandable before PNB consigned the rental proceeds with the MeTC on May 31, 2006.
Although it is true that consignment has a retroactive effect, such payment is deemed to have been made only at the time of the deposit of the thing in court or when it was placed at the disposal of the judicial authority. Based on these premises, PNB’s payment of the monthly rentals can only be considered to have been made not earlier than May 31, 2006.
Whoever pays for another may demand from the debtor what he has paid. XPN?
except that if he paid without the knowledge or against the will of the debtor, he can recover only insofar as the payment has been beneficial to the debtor.
Contract
Article 1305 of New Civil Code (NCC) provides that a contract is “a meeting of minds between two persons whereby one binds himself, with respect to the other, to give something or to render some service.”
Essential requisites of contract
The essential requisites are:
(1) consent of the contracting parties;
(2) object certain which is the subject matter of the contract; and
(3) cause of the obligation which is established
Article 1332 of the Civil Code provides for an instance where a presumption of fraud or mistake might arise in the matter of giving consent to a contract
Article 1332 of the Civil Code provides for an instance where a presumption of fraud or mistake might arise in the matter of giving consent to a contract.
It states: “Article 1332. When one of the parties is unable to read, or if the contract is in a language not understood by him, and mistake or fraud is alleged, the person enforcing the contract must show that the terms thereof have been fully explained to the former.”
A contract has three distinct stages
A contract has three distinct stages: preparation, perfection, and consummation.
Preparation or negotiation begins when the prospective contracting parties manifest their interest in the contract and ends at the moment of their agreement.
Perfection or birth of the contract occurs when they agree upon the essential elements thereof.
Consummation, the last stage, occurs when the parties “fulfill or perform the terms agreed upon in the contract, culminating in the extinguishment thereof.”
Under Article 1323 of the Civil Code, an offer becomes ineffective when
Under Article 1323 of the Civil Code, an offer becomes ineffective upon the death, civil interdiction, insanity, or insolvency of either party before acceptance is conveyed.
How is consent manifested in corporations?
In corporations, consent is manifested through a board resolution since powers are exercised through its board of directors; As a general rule, in the absence of authority from the board of directors, no person, not even its officers, can validly bind a corporation.
The mandate of Section 23 of the Corporation Code is clear that unless otherwise provided in the Code, “the corporate powers of all corporations shall be exercised, all business conducted and all property of such corporations controlled and held by the board of directors or trustees. . .”
As a general rule, in the absence of authority from the board of directors, no person, not even its officers, can validly bind a corporation. This is so because a corporation is a juridical person, separate and distinct from its stockholders and members, having powers, attributes and properties expressly authorized by law or incident to its existence.
Consent
Consent is manifested by the meeting of the offer and the acceptance upon the thing and the cause which are to constitute the contract.
The offer must be certain, and the acceptance, whether express or implied, must be absolute. 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.
Simulation of a contract
Art. 1345. Simulation of a contract may be absolute or relative. The former takes place when the parties do not intend to be bound at all; the latter, when the parties conceal their true agreement.
Art. 1346. An absolutely simulated or fictitious contract is void. A relative simulation, when it does not prejudice a third person and is not intended for any purpose contrary to law, morals, good customs, public order or public policy binds the parties to their real agreement.
The main characteristic of an absolute simulation is that the apparent contract is not really desired or intended to produce a legal effect or alter the parties’ juridical situation. However, a reading of Faustino’s testimony clearly shows that he fully intended to be bound by the Deed of Sale.
Indeed, Faustino conceded that there was such a Deed of Sale, but only that he and his wife were induced by his mother to draw up the document and sign it. According to Faustino, his mother even asked him to assure his brother that the house in question will eventually be the latter’s property. These circumstances support the true nature of the document. Faustino’s excuses are therefore flimsy and specious.
Object of a contract
Object certain refers to the subject matter of the contract. It is the thing to be delivered or the service to be performed.
Cause of a contract
Cause is the essential reason which moves the parties to enter into the contract. It is the immediate, direct and proximate reason which justifies the creation of an obligation through the will of the contracting parties.
Relativity of contracts
The basic principle of relativity of contracts is that contracts can only bind the parties who entered into it, and cannot favor or prejudice a third person, even if he is aware of such contract and has acted with knowledge thereof.
Are escalation clauses void?
There is no mutuality of contracts when the determination or imposition of interest rates is at the sole discretion of a party to the contract. Further, escalation clauses in contracts are void when they allow the creditor to unilaterally adjust the interest rates without the consent of the debtor.
Mutuality of contracts
The principle of mutuality of contracts is found in Article 1308 of the New Civil Code, which states that contracts must bind both contracting parties, and its validity or compliance cannot be left to the will of one of them.
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.
As such, 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.
Likewise, any stipulation regarding the validity or compliance of the contract that is potestative or is left solely to the will of one of the parties is invalid. This holds true not only as to the original terms of the contract but also to its modifications.
Consequently, any change in a contract must be made with the consent of the contracting parties, and must be mutually agreed upon. Otherwise, it has no binding effect.
Perfection of real contracts
Real contracts, such as deposit, pledge and commodatum, are not perfected until the delivery of the object of the obligation
Reformation of an instrument
Reformation of an instrument is a remedy in equity where a valid existing contract is allowed by law to be revised to express the true intentions of the contracting parties.
The rationale is that it would be unjust to enforce a written instrument which does not truly reflect the real agreement of the parties. In reforming an instrument, no new contract is created for the parties, rather, the reformed instrument establishes the real agreement between the parties as intended, but for some reason, was not embodied in the original instrument.
ARTICLE 1359. When, there having been a meeting of the minds of the parties to a contract, their true intention is not expressed in the instrument purporting to embody the agreement, by reason of mistake, fraud, inequitable conduct or accident, one of the parties may ask for the reformation of the instrument to the end that such true intention may be expressed.
In order that an action for reformation of instrument may prosper, the following requisites must concur:
(1) there must have been a meeting of the minds of the parties to the contract;
(2) the instrument does not express the true intention of the parties; and
(3) the failure of the instrument to express the true intention of the parties is due to mistake, fraud, inequitable conduct or accident.
Under the Civil Code, there are four (4) defective contracts, namely
Under the Civil Code, there are four (4) defective contracts, namely: (1) rescissible contracts; (2) voidable contracts; (3) unenforceable contracts; and (4) void or inexistent contracts.
However, it has been opined that, strictly speaking, only the voidable and unenforceable contracts are defective contracts and are the only ones susceptible of ratification unlike the rescissible ones which suffer from no defect and the void or inexistent contracts which do not exist and are absolute nullity. Thus, the four may be more appropriately categorized as species or forms of the inefficacy of contracts.
Rescission
Rescission has been defined as a remedy to make ineffective a contract validly entered into and which is obligatory under normal conditions by reason of external causes resulting in a pecuniary prejudice to one of the contracting parties or their creditors.
Rescission, which is a specie or form of the inefficacy of contracts and operates by law and not through the will of the parties, requires the following:
(1) a contract initially valid, and
(2) a lesion or pecuniary prejudice to someone
Under Article 1381 of the Civil Code, the following contracts are rescissible:
(1) those which are entered into by guardians whenever the wards whom they represent suffer lesion by more than one-fourth of the value of the things which are the object thereof;
(2) those agreed upon in representation of absentees, if the latter suffer the lesion stated in the preceding number;
(3) those undertaken in fraud of creditors when the latter cannot, in any manner, collect the claims due them;
(4) those which refer to things under litigation if they have been entered into by the defendant without the knowledge and approval of the litigants or of competent judicial authority; and
(5) all other contracts specially declared by law to be subject to rescission.
Under Article 1390 of the Civil Code, contracts where consent is vitiated by fraud is
Under Article 1390 of the Civil Code, contracts where consent is vitiated by fraud is voidable.
Article 1390 of the Civil Code stipulates that a contract is voidable or annullable even if there is no damage to the contracting parties where “consent is vitiated by mistake, violence, intimidation, undue influence or fraud.”
For there to be a valid contract, all the three (3) elements of consent, subject matter, and price must be present. Consent wrongfully obtained is defective. The party to a contract whose consent was vitiated is entitled to have the contract rescinded.
Accordingly, Article 1390 of the Civil Code stipulates that a contract is voidable or annullable even if there is no damage to the contracting parties where “consent is vitiated by mistake, violence, intimidation, undue influence or fraud.”
Unenforceable contracts are susceptible to
Unenforceable contracts are susceptible to ratification.
Such ratification cleanses the contract from all its defects from the moment it was constituted.
Under Article 1409 of the Civil Code, the following contracts are inexistent and void from the beginning:
(1) those whose cause, object or purpose is contrary to law, morals, good customs, public order or public policy;
(2) those which are absolutely simulated or fictitious;
(3) those whose cause or object did not exist at the time of the transaction;
(4) those whose object is outside the commerce of men;
(5) those which contemplate an impossible service;
(6) those where the intention of the parties relative to the principal object of the contract cannot be ascertained; and
(7) those expressly prohibited or declared void by law. These contracts cannot be ratified and the right to set up the defense of illegality cannot be waived.
Further, the action or defense for the declaration of the inexistence of a contract does not prescribe. Void contracts cannot be ratified and the right to set up the defense of illegality cannot be waived.
Rescission vs. Nullity
Rescission and nullity can be distinguished in the following manner:
(a) by reason of the basis — rescission is based on prejudice, while nullity is based on a vice or defect of one of the essential elements of a contract;
(2) by reason of purpose — rescission is a reparation of damages, while nullity is a sanction;
(3) by reason of effects — rescission affects private interest while nullity affects public interest;
(4) by reason of nature of action — rescission is subsidiary while nullity is a principal action;
(5) by reason of the party who can bring action — rescission can be brought by a third person while nullity can only be brought by a party; and
(6) by reason of susceptibility to ratification — rescissible contracts need not be ratified while void contracts cannot be ratified.
They can likewise be distinguished as follows:
(1) as to defect: In rescissible contracts, there is damage or injury either to one of the contracting parties or to third persons; while in void or inexistent contracts, one or some of the essential requisites of a valid contract are lacking in fact or in law;
(2) As to effect: The first are considered valid and enforceable until they are rescinded by a competent court; while the latter do not, as a general rule, produce any legal effect;
(3) As to prescriptibility of action or defense: In the first, the action for rescission may prescribe; while in the latter, the action for declaration of nullity or inexistence or the defense of nullity or inexistence does not prescribe;
(4) As to susceptibility of ratification: The first are not susceptible of ratification, but are susceptible of convalidation; while the latter are not susceptible of ratification;
(5) As to who may assail contracts: The first may be assailed not only by a contracting party but even by a third person who is prejudiced or damaged by the contract; while the latter may be assailed not only by a contracting party but even by a third party whose interest is directly affected;
(6) As to how contracts may be assailed: the first may be assailed directly, and not collaterally; while the latter may be assailed directly or collaterally
Can a third person question the validity of a contract?
The defense of illegality of contracts is not available to third persons whose interests are not directly affected.
Effect of absence of one of the elements of contract
For a deed of sale or any contract to be valid, Article 1318 of the Civil Code provides that three (3) requisites must concur, namely:
(1) the consent of the contracting parties;
(2) the object; and
(3) the consideration.
All these elements must be present to constitute a valid contract. The absence of one (1) renders the contract void.
The contract of sale is perfected at the moment there is a meeting of minds upon the thing which is the object of the contract and upon the price. A contract of sale is consensual, as such it is perfected by mere consent. For consent to be valid, the following requisites must concur:
(a) it should be intelligent, or with an exact notion of the matter to which it refers;
(b) it should be free; and
(c) it should be spontaneous.
Intelligence in consent is vitiated by error; freedom by violence, intimidation or undue influence; and spontaneity by fraud.
Can void contracts be ratified?
No. Jurisprudence teaches that “the declaration of nullity of a contract which is void ab initio operated to restore things to the state and condition in which they were found before the execution thereof.”
As such, the trial court and the CA ordered the return of the certificates of title to the name of the Spouses Gaddi. Moreover, to prevent unjust enrichment, the Gaddis should return the amount of P400,000.00 with legal interest to Arakor, although the total amount should be deducted from the estate of Fernando, Sr. as there is an assumption that he received the consideration as the remaining living owner of the properties at the time. There was no sufficient proof offered to show that Efren also received part of the money, amidst the Gaddis’ allegation that he procured a loan from Atty. Legaspi. In other words, “the restitution of what each party has given is a consequence of a void and inexistent contract.”
Estoppel
As applied to jurisdictional challenges, estoppel by laches is the failure to timely raise a court’s lack of jurisdiction, ultimately resulting in a binding judgment, not because said judgment is valid as an adjudication, but because public policy looks with disfavor on the belated invocation of jurisdictional issues.
For estoppel to exist, it is indispensable that there be a declaration, act or omission by the party who is sought to be bound.
Estoppel by laches has been broadly defined as “failure or neglect for an unreasonable and unexplained length of time, to do that which, by exercising due diligence, could or should have been done earlier.”
Notwithstanding the unequivocal dictum in Sibonghanoy, it must be emphasized that the general rule remains to be that jurisdiction is not to be left to the will or stipulation of the parties; it cannot be lost by estoppel. Such emphasis is called for because, as the Court pointed out in Calimlim, et al. v. Hon. Ramirez, etc., et al., 118 SCRA 399 (1982), a jurisprudential trend was starting to emerge where estoppel was applied to bar jurisdictional challenges even in situations not contemplated by Sibonghanoy.
Can the government be estopped?
Fundamental is the rule that the State cannot be estopped by the omission, mistake or error of its officials or agents.
No one can give what one does not have.
The Civil Code provides that in a contract of sale, the seller binds himself to transfer the ownership of the thing sold, and thus consequently, he must have the right to convey ownership of the thing at the time of its delivery.
Settled is the rule that “no one can give what one does not have; nemo dat quad non habet.
For the sale of immovable property, [Article 1592] governs its rescission.
This provision contemplates
(1) a contract of sale of an immovable property and
(2) a stipulation in the contract that failure to pay the price at the time agreed upon will cause the rescission of the contract.
The vendee or the buyer can still pay even after the time agreed upon, if the agreement between the parties has these requisites. This right of the vendee to pay ceases when the vendor or the seller demands the rescission of the contract judicially or extrajudicially.
In case of an extrajudicial demand to rescind the contract, it should be notarized.
Hence, this provision does not apply if it is not a contract of sale of an immovable property and merely a contract to sell an immovable property.
Contract to sell
A contract to sell is “where the ownership or title is retained by the seller and is not to pass until the full payment of the price, such payment being a positive suspensive condition and failure of which is not a breach, casual or serious, but simply an event that prevented the obligation of the vendor to convey title from acquiring binding force.”
A contract to sell is textually defined as a ‘bilateral contract whereby the prospective seller, while expressly reserving the ownership of the subject property despite delivery thereof to the prospective buyer, binds himself to sell the said property exclusively to the prospective buyer upon fulfillment of the condition agreed upon.’
The obligation of the prospective seller, which is in the nature of an obligation to do, is to sell the property to the prospective buyer upon the happening of the positive suspensive condition, that is, the full payment of the purchase price.”
Contract to sell vs. Contract of sale
In a contract to sell, the payment of the purchase price is a positive suspensive condition; whereas, in a contract of sale, non-payment of the price is a negative resolutory condition.
In a contract to sell, title remains with the vendor and does not pass on to the vendee until the purchase price is paid in full. Thus, in a contract to sell, the payment of the purchase price is a positive suspensive condition.
Failure to pay the price agreed upon is not a mere breach, casual or serious, but a situation that prevents the obligation of the vendor to convey title from acquiring an obligatory force. This is entirely different from the situation in a contract of sale, where non-payment of the price is a negative resolutory condition. The effects in law are not
identical.
In a contract of sale, the vendor has lost ownership of the thing sold and cannot recover it, unless the contract of sale is rescinded and set aside. In a contract to sell, however, the vendor remains the owner for as long as the vendee has not complied fully with the condition of paying the purchase price.
Why can there be no rescission in a contract to sell?
In a contract to sell, there can be no rescission or resolution of an obligation that is still nonexistent due to the non-happening of the suspensive condition.
The breach contemplated in Article 1191 of the Civil Code is the obligor’s failure to comply with an obligation already extant, not a failure of a condition to render binding that obligation. Article 1592, on the other hand, speaks of nonpayment of the purchase price as a resolutory condition.
It permits the buyer to pay, even after the expiration of the period, as long as no demand for rescission of the contract has been made upon him either judicially or by notarial act. However, Article 1592 does not apply to a contract to sell where the seller reserves the ownership until full payment of the price. This only lends credence to the rule that rescission in its technical sense is not proper in a contract to sell. Such that failure to pay the price agreed upon is not a mere breach, casual or serious, rather, nonpayment is a condition that prevents the obligation from acquiring an obligatory force.
This is entirely different from the situation in a contract of sale, where nonpayment of the price is a negative resolutory condition. The effects in law are not identical.
In a contract of sale, the vendor has lost ownership of the thing sold and cannot recover it, unless the contract of sale is rescinded and set aside. In a contract to sell, however, the vendor remains the owner for as long as the vendee has not complied fully with the condition of paying the purchase price. Strictly speaking, in a contract to sell, there can be no rescission or resolution of an obligation that is still nonexistent due to the non-happening of the suspensive condition.
“Contract of Sale” and “Contract to Sell,” Distinguished.
In a contract of sale, title to the property passes to the buyer upon delivery of the thing sold. In contrast, in a contract to sell, ownership does not pass to the prospective buyer until full payment of the purchase price. The title of the property remains with the prospective seller.
In a contract of sale, the nonpayment of the purchase price is a resolutory condition that entitles the seller to rescind the sale. In a contract to sell, the payment of the purchase price is a positive suspensive condition that gives rise to the prospective seller’s obligation to convey title. However, nonpayment is not a breach of contract but “an event that prevents the obligation of the vendor to convey title from becoming effective.” The contract would be deemed terminated or cancelled, and the parties stand “as if the conditional obligation had never existed.”
“Option Contract,” Defined
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 former’s 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.
An option contract is a contract separate from and preparatory to a contract of sale which, if perfected, does not result in the perfection or consummation of the sale—only when the option is exercised may a sale be perfected.
An option contract is a preparatory contract in which one party grants to the other, for a fixed period and under specified conditions, the power to decide, whether or not to enter into a principal contract, 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. It is a separate agreement distinct from the contract which the parties may enter into upon the consummation of the option. An option contract is therefore a contract separate from and preparatory to a contract of sale which, if perfected, does not result in the perfection or consummation of the sale. Only when the option is exercised may a sale be perfected.
Option contract vs. Right of first refusal
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 former’s 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. 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.
Upon the other hand, a right of first refusal is a contractual grant, not of the sale of a property, but of the first priority to buy the property in the event the owner sells the same. As distinguished from an option contract, in a right of first refusal, while the object might be made determinate, the exercise of the right of first refusal would be dependent not only on the owner’s eventual intention to enter into a binding juridical relation with another but also on terms, including the price, that are yet to be firmed up.
Consideration
Consideration is defined as “the why of the contracts, the essential reason which moves the contracting parties to enter into the contract”; By the very nature of an option contract, the same is an erroneous contract for which the consideration must be something of value although its kind may vary.
Is money required consideration in an option contract?
No. Consideration’s definition illustrates that the consideration contemplated to support an option contract need not be monetary. Actual cash need not be exchanged for the option. However, by the very nature of an option contract, as defined in Article 1479, the same is an onerous contract for which the consideration must be something of value, although its kind may vary.
A deed of sale executed in favor of a third party who cannot be deemed a purchaser in good faith, and which is in violation of a right of first refusal granted to the lessee is
A deed of sale executed in favor of a third party who cannot be deemed a purchaser in good faith, and which is in violation of a right of first refusal granted to the lessee is not voidable under the Statute of Frauds but rescissible under Articles 1380 to 1381 (3) of the New Civil Code.
Subsequently in 1994, in the case of Ang Yu Asuncion v. Court of Appeals, the Court en banc departed from the doctrine laid down in Guzman, Bocaling & Co. v. Bonnevie and refused to rescind a contract of sale which violated the right of first refusal. The Court held that the so-called “right of first refusal” cannot be deemed a perfected contract of sale under Article 1458 of the New Civil Code and, as such, a breach thereof decreed under a final judgment does not entitle the aggrieved party to a writ of execution of the judgment but to an action for damages in a proper forum for the purpose.
In the 1996 case of Equatorial Realty Development, Inc. v. Mayfair Theater, Inc. the Court en banc reverted back to the doctrine in Guzman, Bocaling & Co. v. Bonnevie stating that rescission is a relief allowed for the protection of one of the contracting parties and even third persons from all injury and damage the contract may cause or to protect some incompatible and preferred right by the contract.
Earnest money
Under Article 1482 of the Civil Code, whenever earnest money is given in a contract of sale, it shall be considered as “proof of the perfection of the contract.” However, this is a disputable presumption, which prevails in the absence of contrary evidence. The delivery of earnest money is not conclusive proof that a contract of sale exists. The existence of a contract of sale depends upon the concurrence of the following elements: (1) consent or meeting of the minds; (2) a determinate subject matter; and (3) price certain in money or its equivalent.
In a contract to sell, earnest money is generally intended to compensate the seller for the opportunity cost of not looking for any other buyers.
As contemplated under Art. 1482 of the Civil Code, “there must first be a perfected contract of sale before we can speak of earnest money.”
In a potential sale transaction, the prior payment of earnest money even before the property owner can agree to sell his property is irregular, and cannot be used to bind the owner to the obligations of a seller under an otherwise perfected contract of sale; to cite a well-worn cliché, the carriage cannot be placed before the horse.
In order to have full compliance with the contractual right granting petitioner the first option to purchase,
The sale of the properties for the price for which they were finally sold to a third person should have been first offered to the former.
Further, there should be identity of terms and conditions to be offered to the buyer holding a right of first refusal if such right is not to be rendered illusory.
Lastly, the basis of the right of first refusal must be the current offer to sell of the seller or offer to purchase of any prospective buyer.
Thus, the prevailing doctrine is that a right of first refusal means identity of terms and conditions to be offered to the lessee and all other prospective buyers and a contract of sale entered into in violation of a right of first refusal of another person, while valid, is rescissible.
Is a person of advanced years considered incompetent to enter into a contract of sale?
The general rule is that a person is not incompetent to contract merely because of advanced years or by reason of physical infirmities, but when such age or infirmities have impaired the mental faculties so as to prevent the person from properly, intelligently, and firmly protecting her property rights then she is undeniably incapacitated.
How is ownership passed?
Under the Civil Code, ownership does not pass by mere stipulation but only by delivery; The delivery under any of the forms provided by Articles 1497 to 1505 of the Civil Code signifies that the transmission of ownership from vendor to vendee has taken place;
Article 1497 contemplates what is known as real or actual delivery, while Article 1498, on the one hand, refers to symbolic delivery by the execution of a public instrument; The presumptive delivery by the execution of a public instrument can be negated by the failure of the vendee to take actual possession of the land sold.
Manresa explains, “the delivery of the thing . . . signifies that title has passed from the seller to the buyer.”
According to Tolentino, the purpose of delivery is not only for the enjoyment of the thing but also a mode of acquiring dominion and determines the transmission of ownership, the birth of the real right.
The delivery under any of the forms provided by Articles 1497 to 1505 of the Civil Code signifies that the transmission of ownership from vendor to vendee has taken place.
Delivery
“Delivery” as used in the Law on Sales refers to the concurrent transfer of two things: (1) possession and (2) ownership; If the vendee is placed in actual possession of the property, but by agreement of the parties ownership of the same is retained by the vendor until the vendee has fully paid the price, the mere transfer of the possession of the property subject of the sale is not the “delivery” contemplated in the Law on Sales or as used in Article 1543 of the
Civil Code.
In order for Article 1544 of the Civil Code on double sale to apply, the following circumstances must concur:
(a) the two (or more) sales transactions in the issue must pertain to exactly the same subject matter, and must be valid sales transactions;
(b) the two (or more) buyers at odds over the rightful ownership of the subject matter must each represent conflicting interests; and
(c) the two (or more) buyers at odds over the rightful ownership of the subject matter must each have bought from the very same seller.”
Thus, the rule on double sales “applies when the same thing is sold to multiple buyers by one seller but not to sales of the same thing by multiple sellers.”
Here, the Spouses Basas sold the subject property to Zenaida in 1996, and sold the same as well to Munda on August 25, 1997. However, the foregoing requisites of a double sale are absent because the sale of the subject property by the Basas to Munda was not a valid sale transaction since by that time, the spouses Basas were no longer the owners of the property, and thus, they had no right to transfer the same.
Ownership of an immovable property which is the subject of a double sale shall be transferred:
Ownership of an immovable property which is the subject of a double sale shall be transferred:
(1) to the person acquiring it who in good faith first recorded it in the Registry of Property;
(2) in default thereof, to the person who in good faith was first in possession; and
(3) in default thereof, to the person who presents the oldest title, provided there is good faith.
The requirement of the law then is two-fold: acquisition in good faith and registration in good faith. Good faith must concur with the registration. If it would be shown that a buyer was in bad faith, the alleged registration they have made amounted to no registration at all.
The principle of primus tempore, potior jure (first in time, stronger in right) gains greater significance in case of a double sale of immovable property. When the thing sold twice is an immovable, the one who acquires it and first records it in the Registry of Property, both made in good faith, shall be deemed the owner. Verily, the act of registration must be coupled with good faith — that is, the registrant must have no knowledge of the defect or lack of title of his vendor or must not have been aware of facts which should have put him upon such inquiry and investigation as might be necessary to acquaint him with the defects in the title of his vendor.
Article 1544. If the same thing should have been sold to different vendees, the ownership shall be transferred to the person who may have first taken possession thereof in good faith, if it should be movable property.
Should it be immovable property, the ownership shall belong to the person acquiring it who in good faith first recorded it in the Registry of Property.
Should there be no inscription, the ownership shall pertain to the person who in good faith was first in the possession; and, in the absence thereof, to the person who presents the oldest title, provided there is good faith.
Occeña v. Esponilla, 431 SCRA 116 (2004) laid down the following rules in the application of Art. 1544:
(1) knowledge by the first buyer of the second sale cannot defeat the first buyer’s rights except when the second buyer first register in good faith the second sale; and
(2) knowledge gained by the second buyer of the first sale defeats his rights even if he is first to register, since such knowledge taints his registration with bad faith
Effects of Loss of Thing Sold
If at the time the contract of sale is perfected, the thing which is the object of the contract has been entirely lost, the contract shall be without any effect.
But if the thing should have been lost in part only, the vendee may choose between withdrawing from the contract and demanding the remaining part, paying its price in proportion to the total sum agreed upon. Civil Code, Article 1493
Where the parties purport a sale of specific goods, and the goods without the knowledge of the seller have perished in part or have wholly or in a material part so deteriorated in quality as to be substantially changed in character, the buyer may at his option treat the sale:
(1) As avoided; or
(2) As valid in all of the existing goods or in so much thereof as have not deteriorated, and as binding the buyer to pay the agreed price for the goods in which the ownership will pass, if the sale was divisible. Civil Code, Article 1493
Article 1484. In a contract of sale of personal property the price of which is payable in installments, the vendor may exercise any of the following remedies:
(1) Exact fulfillment of the obligation, should the vendee fail to pay;
(2) Cancel the sale, should the vendee’s failure to pay cover two or more installments;
(3) Foreclose the chattel mortgage on the thing sold, if one has been constituted, should the vendee’s failure to pay cover two or more installments. In this case, he shall have no further action against the purchaser to recover any unpaid balance of the price. Any agreement to the contrary shall be void.
Article 1484 of the Civil Code, interpreted; Remedies of a seller where the buyer fails to pay personal property in installments is alternative, not cumulative, that the exercise of one would bar the exercise of the others.
Article 1484 (Recto Law), Purpose of the Recto law
What Congress seeks to protect are only the buyers on installment who more often than not have been victimized by sellers who, before the enactment of this law, succeeded in unjustly enriching themselves at the expense of the buyers because aside from recovering the goods sold, upon default of the buyer in the payment of two installments, still retained for themselves all amounts already paid, in addition, furthermore, to other damages, such as attorney’s fees, and costs.
Surely, Congress could not have intended to impair and much less do away with the right of the seller to make commercial use of his credit against the buyer, provided said buyer is not burdened beyond what this law allows.
Purpose of the Realty Installment Buyer Protection Act, otherwise known as Republic Act (RA) No. 6552 or the Maceda Law
The Realty Installment Buyer Protection Act, otherwise known as RA 6552 or the Maceda Law, protects “buyers of real estate on installment payments against onerous and oppressive conditions.”
Whether the property is residential, commercial or industrial, Maceda Law does not make any distinction insofar as the availability of the remedy of cancellation by the seller in case of nonpayment of installments is concerned. The only distinction lies on the added protection given by the law to residential buyers, which is not enjoyed by commercial and industrial lot buyers.
Indeed, the Maceda Law addressed the predicament of thousands upon thousands of residential property buyers who, in the words of this Court, are hounded to suffer the loss of their life earnings only because of an oversight or difficulty in paying one or two installments. This is not the case for industrial or commercial lot buyers, who, the law perceives to have deep pockets.
One of the legal features of RA 6552 is Section 4 thereof, which provides for the remedies of a defaulting buyer that has paid less than two years of installment amortizations for a purchase of real property:
Section 4. In case where less than two years of installments were paid, the seller shall give the buyer a grace period of not less than sixty days from the date the installment became due. If the buyer fails to pay the installments due at the expiration of the grace period, the seller may cancel the contract after thirty days from receipt by the buyer of the notice of cancellation or the demand for rescission of the contract by a notarial act.
Section 4 of RA 6552 requires four (4) conditions before the seller may actually cancel the contract thereunder:
first, the defaulting buyer has paid less than two (2) years of installments;
second, the seller must give such defaulting buyer a sixty (60)-day grace period, reckoned from the date the installment became due;
third, if the buyer fails to pay the installments due at the expiration of the said grace period, the seller must give the buyer a notice of cancellation and/or a demand for rescission by notarial act; and
fourth, the seller may actually cancel the contract only after the lapse of thirty (30) days from the buyer’s receipt of the said notice of cancellation and/or demand for rescission by notarial act.
Scope of application of RA 6552
It is clear that the buyer’s protection under R.A. No. 6552 only applies to contracts of sale of real estate on installment payments, including residential condominium apartments, but excluding industrial lots, commercial buildings and sales to tenants.
A purchase by a company involved in the real estate business, just like the petitioners in this case, of a six-hectare lot can hardly be considered as residential. This is the same interpretation conveyed in the case of Spouses Garcia v. Court of Appeals, 619 SCRA 280 (2010), when this Court held that the subject lands, comprising five parcels and aggregating 69,028 square meters, do not comprise residential real estate within the contemplation of the Maceda Law. More so in this case where it was shown that petitioner Corporation is already engaged in the selling of the portions of the said lots to individual buyers.
But this is not to say that sellers in a contract to sell of industrial and commercial lots are precluded to cancel the contract when buyers defaulted in one installment. The old case of Luzon Brokerage Co., Inc. v. Maritime Building Co., Inc., 46 SCRA 381 (1972), made it clear that R.A. No. 6552 or the Maceda Law expressly recognizes the vendor’s right of cancellation of sale on installments of industrial and commercial properties with full retention of previous payments.
Sections 3 and 4 of the Maceda Law spell out the rights of defaulting buyers on installment payments, depending on the extent of payments made.
Section 3 governs situations in which a buyer “has paid at least two (2) years of installments”:
Section 3. In all transactions or contracts involving the sale or financing of real estate on installment payments, including residential condominium apartments but excluding industrial lots, commercial buildings and sales to tenants under Republic Act Numbered 380044, as amended by Republic Act Numbered 630089, where the buyer has paid at least two (2) years of installments, the buyer is entitled to the following rights in case he defaults in the payment of succeeding installments:
(a) To pay, without additional interest, the unpaid installments due within the total grace period earned by him, which is hereby fixed at the rate of one (1) month grace period for every one (1) year of installment payments made: Provided, That this right shall be exercised by the buyer only once in every five (5) years of the life of the contract and its extensions, if any.
(b) If the contract is cancelled, the seller shall refund to the buyer the cash surrender value of the payments on the property equivalent to fifty percent (50%) of the total payments made and, after five (5) years of installments, an additional five percent (5%) every year but not to exceed ninety percent (90%) of the total payments made: Provided, That the actual cancellation of the contract shall take 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 cash surrender value to the buyer. Down payments, deposits or options on the contract shall be included in the computation of the total number of installment payments made.
Section 4 governs situations “where less than two years of installments were paid”:
Section 4. In case where less than two (2) years of installments were paid, the seller shall give the buyer a grace period of not less than sixty (60) days from the date the installment became due. If the buyer fails to pay the installments due at the expiration of the grace period, the seller may cancel the contract after 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.
When Section 3 speaks of paying ‘‘at least two (2) years of installments,” it refers to the
When Section 3 speaks of paying “at least two years of installments,” it refers to the equivalent of the totality of payments diligently or consistently made throughout a period of two (2) years.
Accordingly, where installments are to be paid on a monthly basis, paying “at least two years of installments” pertains to the aggregate value of 24 monthly installments.
The basis for computation of the term refers to the installments that correspond to the number of months of payments, and not to the number of months that the contract is in effect as well as any grace period that has been given. Both the law and the contracts thus prevent any buyer who has not been diligent in paying his monthly installments from unduly claiming the rights provided in Section 3 of R.A. 6552. The phrase “at least two years of installments” refers to value and time. It does not only refer to the period when the buyer has been making payments, with total disregard for the value that the buyer has actually conveyed. It refers to the proportionate value of the installments made, as well as payments having been made for at least two (2) years.
For cancellations under Section 4 to be valid, three (3) requisites must concur
First, the buyer must have been given a 60-day grace period but failed to utilize it.
Second, the seller must have sent a notice of cancellation or demand for rescission by notarial act.
And third, the cancellation shall take effect only after 30 days of the buyer’s receipt of the notice of cancellation.
Is RA 6552 applicable to mortgage?
It bears emphasizing that Republic Act No. 6552 aimed to protect buyers of real estate on installment payments, not borrowers or mortgagors who obtained a housing loan to pay the costs of their purchase of real estate and used the real estate as security for their loan.
The “financing of real estate in installment payments” referred to in Section 3, supra, should be construed only as a mode of payment vis-à-vis the seller of the real estate, and excluded the concept of bank financing that was a type of loan.
Accordingly, Sections 3, 4 and 5, supra, must be read as to grant certain rights only to defaulting buyers of real estate on installment, which rights are properly demandable only against the seller of real estate.
Rights of an unpaid seller
The unpaid seller’s remedy in a sale of real property is either an action to collect the balance or to rescind the contract within the time allowed by law, and where rescission is no longer an option considering that the buyers have been in possession of the properties for a considerable period of time, substantial justice dictates that the seller be entitled to receive the unpaid balance of the purchase price, plus legal interest thereon.
An unpaid seller, who is deemed as such “[w]hen the whole of the price has not been paid or tendered” as provided in Article 1525(1), has the right to rescind the sale under Article 1526.
With respect to the sale of immovable properties, the remedies of the vendor are provided in the following Civil Code provisions:
ART. 1591. Should the vendor have reasonable grounds to fear the loss of immovable property sold and its price, he may immediately sue for the rescission of the sale. Should such ground not exist, the provisions of Article 1191 shall be observed.
ART. 1592. In the sale of immovable property, even though it may have been stipulated that upon failure to pay the price at the time agreed upon the rescission of the contract shall of right take place, the vendee may pay, even after the expiration of the period, as long as no demand for rescission of the contract has been made upon him either judicially or by a notarial act. After the demand, the court may not grant him a new term. x x x x
ART. 2242. With reference to specific immovable property and real rights of the debtor, the following claims, mortgages and liens shall be preferred, and shall constitute an encumbrance on the immovable or real right: x x x x (2) For the unpaid price of real property sold, upon the immovable sold[.]
Remedy of unpaid seller in a contract to sell
In this case, the contract to sell does not by itself give respondent the right to possess the property. Unlike in a contract of sale, here in a contract to sell, there is yet no actual sale nor any transfer of title, until and unless, full payment is made. The payment of the purchase price is a positive suspensive condition, the failure of which is not a breach, casual or serious, but a situation that prevents the obligation of the vendor to convey title from acquiring an obligatory force. Respondent must have fully paid the price to acquire title over the property and the right to retain possession thereof. In cases of non-payment, the unpaid seller can avail of the remedy of ejectment since he retains ownership of the property.
Remedy of an unpaid seller in a contract of sale
In a contract of sale, the remedy of an unpaid seller is either specific performance or rescission.
Under Article 1191 of the Civil Code, the right to rescind an obligation is predicated on the violation of the reciprocity between parties, brought about by a breach of faith by one of them. Rescission, however, is allowed only where the breach is substantial and fundamental to the fulfillment of the obligation.
A deed of sale is considered absolute in nature when
A deed of sale is considered absolute in nature when there is neither a stipulation in the deed that title to the property sold is reserved to the seller until the full payment of the price; nor a stipulation giving the vendor the right to unilaterally resolve the contract the moment the buyer fails to pay within a fixed period.
The Civil Code prohibits purely potestative, suspensive, conditional obligations that depend on the whims of the debtor, because such obligations are usually not meant to be fulfilled.
The Code prohibits purely potestative, suspensive, conditional obligations that depend on the whims of the debtor, because such obligations are usually not meant to be fulfilled. Indeed, to allow the fulfillment of conditions to depend exclusively on the debtor’s will would be to sanction illusory obligations.
Nonpayment
Under settled doctrine, nonpayment is a resolutory condition that extinguishes the transaction existing for a time and discharges the obligations created thereunder. The remedy of the unpaid seller is to sue for collection or, in case of a substantial breach, to rescind the contract.
These alternative remedies of specific performance and rescission are provided under Article 1191 of the Civil Code as follows:
“Art. 1191.—The power to rescind obligations is implied in reciprocal ones, in case one of the obligors should not comply with what is incumbent upon him. “The injured party may choose between fulfillment and the rescission of the obligation, with the payment of damages in either case. He may also seek rescission even after he has chosen fulfillment, if the latter should become impossible.
“The Court shall decree the rescission claimed, unless there be just cause authorizing the fixing of a period. “xxx xxx xxx.” The rescission of a sale of immovables, on the other hand, is governed by Article 1592 of the Civil Code.
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.
Article 1606. 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.
Article 1601. Conventional redemption shall take place when the vendor reserves the right to repurchase the thing sold, with the obligation to comply with the provisions of article 1616 and other stipulations which may have been agreed upon.
The Supreme Court (SC) frowned upon agreements indicating indefinite stipulations for the exercise of the right to repurchase and restricted the redemption period to
This Court 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,” this Court had not hesitated in imposing the ten (10)-year period, the expiration of which effectively bars redemption of the subject properties.
Similarly, there have been numerous occasions wherein we 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.
Right of repurchase must appear in the same instrument of sale, not in a separate instrument
We find and so hold that there is no pacto de retro sale in this case, within the contemplation of the Civil Code which provides: “Art. 1601. Conventional redemption shall take place when the vendor reserves the right to repurchase the thing sold, with the obligation to comply with the provisions of Article 1616 and other stipulations which may have been agreed upon.” In Villarica, et al. vs. The Court of Appeals, et al., We had the occasion to interpret this provision of law, to wit: “The right of repurchase is not a right granted the vendor by the vendee in a subsequent instrument, but is a right reserved by the vendor in the same instrument of sale as one of the stipulations of the contract. Once the instrument of absolute sale is executed, the vendor can no longer reserve the right to repurchase, and any right thereafter granted the vendor by the vendee in a separate instrument cannot be a right of repurchase but some other right like the option to buy in the instant case.”
We have similarly held in a prior case that an agreement to repurchase becomes a promise to sell when made after an absolute sale because where the sale is made without such an agreement, the purchaser acquires the thing sold absolutely.
Can legal redemption apply in a partition of co-ownership?
The purpose of partition is to separate, divide and assign a thing held in common among those to whom it belongs. By their own admission, petitioners already segregated and took possession of their respective shares in the lot. Their respective shares were therefore physically determined, clearly identifiable and no longer ideal. Thus, the co-ownership had been legally dissolved. With that, petitioners’ right to redeem any part of the property from any of their former co-owners was already extinguished. As legal redemption is intended to minimize coownership, once a property is subdivided and distributed among the co-owners, the community ceases to exist and there is no more reason to sustain any right of legal redemption.
ARTICLE 1622
Whenever a piece of urban land which is so small and so situated that a major portion thereof cannot be used for any practical purpose within a reasonable time, having been bought merely for speculation, is about to be re-sold, the owner of any adjoining land has a right of pre emption at a reasonable price.
If the re-sale has been perfected, the owner of the adjoining land shall have a right of redemption, also at a reasonable price.
When two or more owners of adjoining lands wish to exercise the right of pre-emption or redemption, the owner whose intended use of the land in question appears best justified shall be preferred.
There are 4 elements necessary for the application of Article 1622, to wit:
There are 4 elements necessary for the application of Article 1622, to wit:
(1) that the piece of land is urban land;
(2) that the land is so small that a major portion thereof cannot be used for any practical purpose within a reasonable time;
(3) that it was bought merely for speculation; and
(4) that the land is about to be resold, or that its resale has been perfected.
Before a party may avail of the right of pre-emption or redemption under this provision, it is necessary that all these elements be alleged in the complaint and proved at the trial.
In a sale with right to repurchase (pacto de retro), the title and ownership of the property sold are immediately vested in the vendee, subject to the vendor’s exercise of his or her right of redemption within the stipulated period. In fine, the failure of the vendor a retro to repurchase the property vests upon the vendee a retro, by operation of law, absolute title and ownership over the property sold.
The law does not look kindly on transactions that are claimed to be a sale with the right of repurchase.
Art. 1603 of the Code provides that, in case of doubt, a contract purporting to be a sale with right to repurchase should be considered an equitable mortgage. The policy of the law is to discourage pacto de retro sales and thereby prevent the circumvention of the prohibition against usury and pactum commissorium. This Court has taken judicial notice of the fact that pacto de retro sales have been frequently used to conceal contracts of loan secured by a mortgage. The provisions of the Civil Code, which consider certain types of sales as equitable mortgages, are intended for the protection of those who are the unlettered and who are penurious vis-à-vis their creditors. XXX Collectively, when a party to a pacto de retro sale complains, the provisions of the Civil Code on pacto de retro sales require the courts to closely scrutinize the transaction, and if certain facets of the sale correspond with the factors mentioned in Article 1602, to consider it an equitable mortgage.
The law’s intention is to protect those who are vulnerable due to circumstances such as poverty, penury, and lack of education from being taken advantage of by creditors. Their vulnerabilities invariably find themselves in no position whatsoever to bargain fairly with their lenders.
Equitable mortgage
An equitable mortgage masquerading as a sale with pacto de retro is a contract which, though lacking the formality, form, or words, or other requisites demanded by the statute, reveals the intention of the parties to burden a piece or pieces of real property only to secure the payment of a debt. It has two (2) requisites:
(1) the parties enter into what appears to be a contract of sale; but (2) their intention is to secure an existing debt by way of a mortgage.
A contract where the vendor/mortgagor remains in physical possession as lessee or otherwise has been held to be an equitable mortgage. In determining the nature of a contract, the Court is not bound by the title or name given to it by the parties, but by their intention, as shown not necessarily by the terminology used in the contract but by their conduct, words, actions and deeds prior to, during and immediately after executing the agreement.
A contract of sale, whether an absolute sale or with a right of repurchase, is presumed by law to be an equitable mortgage under any of the following circumstances:
Art. 1602. The contract shall be presumed to be an equitable mortgage, in any of the following cases:
- When the price of a sale with right to repurchase is unusually inadequate;
- When the vendor remains in possession as lessee or otherwise;
- When upon or after the expiration of the right to repurchase another instrument extending the period of redemption or granting a new period is executed;
- When the purchaser retains for himself a part of the purchase price; 5. When the vendor binds himself to pay the taxes on the thing sold;
- In any other case where it may be fairly inferred that the real intention of the parties is that the transaction shall secure the payment of a debt or the performance of any other obligation. In any of the foregoing cases, any money, fruits, or other benefit to be received by the vendee as rent or otherwise shall be considered as interest which shall be subject to the usury laws. For the presumption of an equitable mortgage to arise under any of the circumstances enumerated in Article 1602, however, two requisites must concur: (a) that the parties entered into a contract denominated as a contract of sale; and (b) that their intention was to secure an existing debt by way of mortgage.
Any of the circumstances laid out in Article 1602 of the Civil Code, not the concurrence nor an overwhelming number of the enumerated circumstances, is sufficient to support the conclusion that a contract of sale is in fact an equitable mortgage. The existence of any one of the conditions enumerated under Article 1602 of the Civil Code, not a concurrence of all or of a majority thereof, suffices to give rise to the presumption that the contract is an equitable mortgage.
There is gross inadequacy in price if
In Aguilar v. Ribato and Gonzales Vila, 40 Phil. 570 (1919), this Court ruled that there is gross inadequacy in price if a reasonable man will not agree to dispose of his property.
Courts are not guardians of persons who are not legally incompetent
Hehe
Contract of lease
A contract of lease is a special form of contract in civil law. The Civil Code outlines a number of provisions that guide the parties and limit the stipulations that may be agreed upon in the lease contract. It specifies the rights and obligations of the lessor and the lessee, as well as the rules on the payment and ejectment.
Under the Civil Code provisions on lease, when the lease has a definite period, it ceases on the day fixed without need for a demand from the lessor. The lessee, then, shall return the thing leased, as they received it, to the lessor. However, if at the end of the contract, the lessor allows the lessee to enjoy the lease for 15 days, there arises an implied lease and the terms of the original contract are revived. It is presumed by law that the lessor is amenable to its renewal.
When there is an implied lease, the lease will continue based on the period of payment. For instance, if the lease is paid monthly, the implied lease would only be renewed every month. The implied lease is a lease with a definite period, and it is “terminable at the end of each month upon demand to vacate by the lessor.” On the other hand, if the lessor refuses to renew the lease, it is necessary for him or her to furnish the lessee with a formal notice to vacate the premises. If the lessee continues to possess the premises against the lessor’s will, the lessee would be holding the property illegally and a judicial action may be filed. Moreover, the lessee “shall be subject to the responsibilities of a possessor in bad faith.”
Under Article 1673, “[t]he lessor may judicially eject the lessee” in the following instances:
(1) if the period agreed upon has expired;
(2) if the lessee fails to pay the price stipulated;
(3) if the lessee violates any of the conditions of the contract; and
(4) if the thing leased suffered deterioration due to use or service not stipulated. However, judicial action is not always required to eject the lessee.
Article 1678
Article 1678. If the lessee makes, in good faith, useful improvements which are suitable to the use for which the lease is intended, without altering the form or substance of the property leased, the lessor upon the termination of the lease shall pay the lessee one-half of the value of the improvements at that time. Should the lessor refuse to reimburse said amount, the lessee may remove the improvements, even though the principal thing may suffer damage thereby. He shall not, however, cause any more impairment upon the property leased than is necessary.
With regard to ornamental expenses, the lessee shall not be entitled to any reimbursement, but he may remove the ornamental objects, provided no damage is caused to the principal thing, and the lessor does not choose to retain them by paying their value at the time the lease is extinguished.
Article 1657. The lessee is obliged:
(1) To pay the price of the lease according to the terms stipulated;
(2) To use the thing leased as a diligent father of a family, devoting it to the use stipulated; and in the absence of stipulation, to that which may be inferred from the nature of the thing leased, according to the custom of the place;
(3) To pay expenses for the deed of lease.
Article 1673. The lessor may judicially eject the lessee for any of the following causes:
1) When the period agreed upon, or that which is fixed for the duration of leases under articles 1682 and 1687, has expired;
(2) Lack of payment of the price stipulated;
(3) Violation of any of the conditions agreed upon in the contract;
(4) When the lessee devotes the thing leased to any use or service not stipulated which causes the deterioration thereof; or if he does not observe the requirement in No. 2 of article 1657, as regards the use thereof.
Implied lease
Under Article 1670 of the Civil Code, “[i]f at the end of the contract the lessee should continue enjoying the thing leased for fifteen days with the acquiescence of the lessor, and unless a notice to the contrary by either party has previously been given, it is understood that there is an implied new lease, not for the period of the original contract, but for the time established in Articles 1682 and 1687. The other terms of the original contract shall be revived.”
Article 1658 of the Civil Code allows a lessee to postpone the payment of rent if the lessor fails to either
Article 1658 of the Civil Code allows a lessee to postpone the payment of rent if the lessor fails to either (1) “make the necessary repairs” on the property or (2) “maintain the lessee in peaceful and adequate enjoyment of the property leased.”
Contract of lease
A contract of lease is a “consensual, bilateral, onerous and commutative contract by which the owner temporarily grants the use of his property to another who undertakes to pay rent therefor.”
Assuming that respondents were entitled to invoke their right under Article 1658 of the Civil Code, this does exonerate them from their obligation under Article 1657 of the Civil Code “to pay the price of the lease according to the terms stipulated.”
In this case, the disconnection of electrical service over the leased premises on May 14, 2004 was not just an act of physical disturbance but one that is meant to remove respondents from the leased premises and disturb their legal possession as lessees. Ordinarily, this would have entitled respondents to invoke the right accorded by Article 1658 of the Civil Code. However, this rule will not apply in the present case because the lease had already expired when petitioner requested for the temporary disconnection of electrical service. Petitioner demanded respondents to vacate the premises by May 30, 2004. Instead of surrendering the premises to petitioner, respondents unlawfully withheld possession of the property. Respondents continued to stay in the premises until they moved to their new residence on September 26, 2004. At that point, petitioner was no longer obligated to maintain respondents in the “peaceful and adequate enjoyment of the lease for the entire duration of the contract.” Therefore, respondents cannot use the disconnection of electrical service as justification to suspend the payment of rent. Assuming that respondents were entitled to invoke their right under Article 1658 of the Civil Code, this does exonerate them from their obligation under Article 1657 of the civil Code “to pay the price of the lease according to the terms stipulated.” Lessees who exercise their right under Article 1658 of the Civil Code are not freed from the obligations imposed by law or contract. Moreover, respondents’ obligation to pay rent was not extinguished when they transferred to their new residence. Respondents are liable for a reasonable amount of rent for the use and continued occupation of the property upon the expiration of the lease. To hold otherwise would unjustly enrich respondents at petitioner’s expense.
The contention of LPI that RCAM is
party to the sublease agreement is belied by the records.
As gleaned from the agreement, RCAM was merely a witness to the deed. It bears stressing that in a sublease agreement, there are two distinct leases involved:
The principal lease and the sublease. In a contract of sublease, the lessor is not a party. Except in those cases provided by the New Civil Code, the lessor is a stranger to the relationship between the lessee and sublessee. The latter has no right or authority to pay the sublease rentals to the lessor the said rentals being due and payable to the lessee. However, the lessor may demand the payment by the sublessee of the rentals due from the lessee if the latter fails to pay the same.
There are two (2) juridical relationships which co-exist here and are intimately related to each other but nonetheless distinct one from the other. In a sublease arrangement, the personality of the lessee qua lessee does not disappear; his rights and obligations vis-a-vis the lessor are not passed on to nor acquired by the sublessee.
Can a lessee sublease a property?
Under the Civil Code, the rule is that the lessee can sublease the leased property, unless there is an express prohibition against subletting in the contract itself.
Is payment by sublessee to the lessor, payment to the lessee / sublessor?
No. We believe that payment by respondent sublessee Yao to lessor Bichara was not payment to petitioner lessee/sublessor. Bichara was, in the main, and except only in the specific instances identified in the Civil Code, a stranger to the relationship between lessee/sublessor Bias and respondent sublessee Yao. The lessee/sublessor is not an agent of the lessor; nor is the lessor an agent of the lessee/sublessor. Respondent Yao was not entitled to ignore the rights of petitioner Bias; he had no right or authority to pay the sublease rentals to lessor Bichara, said rentals being due and payable to lessee/sublessor Bias, even though petitioner was being credited by lessor Bichara with the amount of the rentals being paid by respondent Yao.
Can the lessee assign the lease without the consent of the lessor?
In an assignment of a lease, there is a novation by the substitution of the person of one of the parties—the lessee; The objective of the law in prohibiting the assignment of the lease without the lessor’s consent is to protect the owner or lessor of the leased property.
Art. 1649. The lessee cannot assign the lease without the consent of the lessor, unless there is a stipulation to the contrary.
(n) In an assignment of a lease, there is a novation by the substitution of the person of one of the parties—the lessee. The personality of the lessee, who dissociates from the lease, disappears.
Thereafter, a new juridical relation arises between the two persons who remain—the lessor and the assignee who is converted into the new lessee.
A novation may either be
Broadly, a novation may either be extinctive or modificatory.
It is extinctive when an old obligation is terminated by the creation of a new obligation that takes the place of the former; it is merely modificatory when the old obligation subsists to the extent it remains compatible with the amendatory agreement.
An extinctive novation results either by changing the object or principal conditions (objective or real), or by substituting the person of the debtor or subrogating a third person in the rights of the creditor (subjective or personal). Under this mode, novation would have dual functions—one to extinguish an existing obligation, the other to substitute a new one in its place. This requires a conflux of four essential requisites: (1) a previous valid obligation; (2) an agreement of all parties concerned to a new contract; (3) the extinguishment of the old obligation; and (4) the birth of a valid new obligation.
Contract of Agency
By the contract of agency, a person binds himself to render some service or to do something in representation or on behalf of another, with the consent or authority of the latter.
Agency may be express, or implied from the acts of the principal, from his silence or lack of action, or his failure to repudiate the agency, knowing that another person is acting on his behalf without authority. Acceptance by the agent may also be express, or implied from his acts which carry out the agency, or from his silence or inaction according to the circumstances. A contract of agency may be inferred from all the dealings between petitioner and respondent-spouses.
For a contract of agency to exist, the following requisites must concur, namely
(1) there must be consent coming from persons or entities having the juridical capacity and capacity to act to enter into such contract;
(2) there must exist an object in the form of services to be undertaken by the agent in favor of the principal; and
(3) there must be a cause or consideration for the agency
Relationship between principal and agent
The relationship existing between principal and agent is a fiduciary one, demanding conditions of trust and confidence.
It is the duty of the agent to act in good faith for the advancement of the interests of the principal.
In this case, BPI had the obligation to carry out the agency by informing the beneficiary, who appeared before BPI to withdraw funds of the insured who was BPI’s depositor, not only of the existence of the insurance contract but also the accompanying terms and conditions of the insurance policy in order for the beneficiary to be able to properly and timely claim the benefit.
The contract entered into in the name of another by one who has no authority or legal representation, or who has acted beyond his powers, is
Unenforceable, unless it is ratified, expressly or impliedly, by the person on whose behalf it has been executed, before it is revoked by the other contracting party.
Do promoter’s contracts or pre-incorporation contracts hold the signatories personally liable?
No. Under corporate law, contracts entered, prior corporate existence, by its representatives “have binding effects depending on the prevailing circumstances.” Among which is “where a contract is entered into with the parties knowing fully well that a corporation does not yet legally exist,” particularly a corporation yet to be registered or still in the process of registration. These contracts are entered into in the name of the intended corporation by the “promoters” or organizers of the corporation to establish the corporate business enterprise.
Contracts of this nature are known as promoter’s contracts or pre-incorporation contracts which are governed by the Law on Agency. Applying the pertinent provisions of agency in the Civil Code of the Philippines, Article 1897 of the law explicitly provides that “an agent who acts as such is not personally liable to the party with whom he contracts, unless he expressly binds himself or exceeds the limits of his authority without giving such party sufficient notice of his powers.”
Effect of sale of land by an agent
When the sale of a piece of land or any interest thereon is through an agent, the authority of the latter shall be in writing; otherwise, the sale shall be void.
The significance of requiring the authority of an agent to be put into writing was amplified in Dizon vs. Court of Appeals, 396 SCRA 151 (2003): When the sale of a piece of land or any interest thereon is through an agent, the authority of the latter shall be in writing; otherwise, the sale shall be void. Thus the authority of an agent to execute a contract for the sale of real estate must be conferred in writing and must give him specific authority, either to conduct the general business of the principal or to execute a binding contract containing terms and conditions which are in the contract he did execute. A special power of attorney is necessary to enter into any contract by which the ownership of an immovable is transmitted or acquired either gratuitously or for a valuable consideration. The express mandate required by law to enable an appointee of an agency (couched) in general terms to sell must be one that expressly mentions a sale or that includes a sale as a necessary ingredient of the act mentioned. For the principal to confer the right upon an agent to sell real estate, a power of attorney must so express the powers of the agent in clear and unmistakable language. When there is any reasonable doubt that the language so used conveys such power, no such construction shall be given the document.
Article 1878 of the Civil Code requires a Special Power of Attorney (SPA) in cases where real rights over immovable property are created or conveyed.
Does the principle on laches apply to void contracts?
No. Laches will not set in against a void transaction where the agent did not have a special power of attorney (SPA) to dispose of the lots co-owned by the other registered owners.
The rule is that a void contract produces no effect either against or in favor of anyone and cannot be ratified. Similarly, laches will not set in against a void transaction, as in this case, where the agent did not have a special power of attorney to dispose of the lots co-owned by the other registered owners.
In fact, Article 1410 of the Civil Code specifically provides that an action to declare the inexistence of a void contract does not prescribe. The transaction entered into by Atanacio and CAA, however, was not entirely void because the lack of consent by the other co-owners in the sale was with respect to their shares only.
Article 493 of the New Civil Code expressly provides: Art. 493. Each co-owner shall have the full ownership of his part and the fruits and benefits pertaining thereto, and he may therefore alienate, assign or mortgage it, and even substitute another person in its enjoyment, except when personal rights are involved. But the effect of the alienation or the mortgage, with respect to the co-owners, shall be limited to the portion which may be allotted to him in the division upon the termination of the co-ownership.
Can agency be implied in guaranty or surety?
No. In general, an agency may be express or implied. However, an agent must possess a special power of attorney if he intends to borrow money in his principal’s behalf, to bind him as a guarantor or surety, or to create or convey real rights over immovable property, including real estate mortgages. While the special power of attorney may be either oral or written, the authority given must be express. In other words, there must be “a clear mandate from the principal specifically authorizing the performance of the act,” not merely overt acts from which an agency may be inferred. Consequently, the agent’s “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.”
For the principle of apparent authority to apply, the petitioner was burdened to prove the following:
For the principle of apparent authority to apply, the petitioner was burdened to prove the following:
(a) the acts of the respondent justifying belief in the agency by the petitioner;
(b) knowledge thereof by the respondent which is sought to be held; and
(c) reliance thereon by the petitioner consistent with ordinary care and prudence.
Assuming that Roberto exceeded the limits of his authority under the SPA and such unauthorized acts were not ratified by Gemma and Trinidad, et al., the latter are still bound by the mortgages entered by Roberto under the doctrine of apparent authority.
As explained in Woodchild Holdings, Inc. v. Roxas Electric and Construction Co., Inc., 436 SCRA 235 (2004): It bears stressing that apparent authority is based on estoppel and can arise from two instances: first, the principal may knowingly permit the agent to so hold himself out as having such authority, and in this way, the principal becomes estopped to claim that the agent does not have such authority; second, the principal may so clothe the agent with the indicia of authority as to lead a reasonably prudent person to believe that he actually has such authority. There can be no apparent authority of an agent without acts or conduct on the part of the principal and such acts or conduct of the principal must have been known and relied upon in good faith and as a result of the exercise of reasonable prudence by a third person as claimant and such must have produced a change of position to its detriment. The apparent power of an agent is to be determined by the acts of the principal and not by the acts of the agent.
Doctrine of apparent authority
Under the doctrine of apparent authority, acts and contracts of the agent, as are within the apparent scope of the authority conferred on him, although no actual authority to do such acts or to make such contracts has been conferred, bind the principal.
As mentioned above, the records of the case show no evidence that EGI authorized Santos to file a Complaint and enter into a Compromise Agreement on its behalf. Neither was there any showing that EGI’s By-Laws authorize its President to do such acts. EGI’s grant of authority to Santos, however, falls under the doctrine of apparent authority. Under this doctrine, acts and contracts of the agent, as are within the apparent scope of the authority conferred on him, although no actual authority to do such acts or to make such contracts has been conferred, bind the principal. Furthermore, the principal’s liability is limited only to third persons who have been led reasonably to believe by the conduct of the principal that such actual authority exists, although none was actually given. Apparent authority is determined only by the acts of the principal and not by the acts of the agent.
View that the Civil Code provides that “[i]f the agent contracts in the name of the principal, exceeding the scope of his [or her] authority, and the principal does not ratify the contract, it shall be void if the party with whom the agent contracted is aware of the limits of the powers granted by the principal[.]”
Even the Civil Code provides that “[i]f the agent contracts in the name of the principal, exceeding the scope of his [or her] authority, and the principal does not ratify the contract, it shall be void if the party with whom the agent contracted is aware of the limits of the powers granted by the principal[.]” There is no showing that a Commission on Elections resolution explicitly authorizing respondent to enter the Memorandum of Agreement was attached to the Agreement as to assure the parties of respondent’s authority to sign on behalf of the Commission on Elections. There is also no showing that the Commission on Elections has resolved to approve or ratify the Memorandum of Agreement respondent signed.
The doctrine of apparent authority provides that a corporation will be estopped from denying the agent’s authority if it knowingly permits one of its officers or any other agent to act within the scope of an apparent authority, and it holds him out to the public as possessing the power to do those acts. The existence of apparent authority may be ascertained through
(1) the general manner in which the corporation holds out an officer or agent as having the power to act or, in other words, the apparent authority to act in general, with which it clothes him; or
(2) the acquiescence in his acts of a particular nature, with actual or constructive knowledge thereof, whether within or beyond the scope of his ordinary powers.
In what circumstances will an agent be held personally liable for his actions?
Under the law of agency, an agent is not personally liable for the obligations of the principal unless he performs acts outside the scope of his authority or he expressly binds himself to be personally liable.
Otherwise, the principal is solely liable. Here, there was no showing that SRMO bound itself personally for Gerardo’s obligations. SRMO also acted within the bounds of the authority issued by Gerardo, as the transferee pendente lite of the widow’s interest, to receive the payment.
Sales agents
Sales agents, by the very nature of their functions, are both employees and agents of their employers.
Our application of the law on agency to the claims of an employee in the context of a labor proceeding is grounded in the particular facts of this case, specifically, in the nature of Atienza’s employment as a sales agent. It is clear from the record that TKC sales agents, Atienza included, conduct sales activities, promote TKC’s products to prospective clients, communicate prospective and closed sales to the head office, and assist LGUs with the processing of government procurement documents in connection with such sales. TKC sales agents discharge these functions in representation of, and with the consent of, TKC.
Undoubtedly, there exists a principal-agent relationship between TKC and its sales agents. Sales agents, by the very nature of their functions, are both employees and agents of their employers. Atienza fits this definition of a traveling salesman; as such, the law on agency governs his right to commissions, in the absence of contractual stipulations on record. It must be remembered that the principles of civil law remain applicable to the employer-employee relationship, although such contract be primarily regulated by the Labor Code and its allied laws and regulations, in view of the vital role that labor plays in society, as recognized in our Constitution.
As a general rule, an agent is entitled to a commission only upon the successful conclusion of a sale.
However, in certain cases where the factual circumstances are contested, as in the case at bar, the determination of an agent’s right to commissions depends on a number of considerations, such as:
1) the extent of completion of the undertaking, which may be full, partial, or nonexistent;
2) the value of the agent’s efforts to the principal;
3) the termination of the agency before full completion of the undertaking; and
4) the nature and circumstances of such termination
Does an agent have the power to appoint a substitute?
The law creates a presumption that an agent has the power to appoint a substitute. The consequence of the presumption is that, upon valid appointment of a substitute by the agent, there ipso jure arises an agency relationship between the principal and the substitute, i.e., the substitute becomes the agent of the principal. As a result, the principal is bound by the acts of the substitute as if these acts had been performed by the principal’s appointed agent.
Concomitantly, the substitute assumes an agent’s obligations to act within the scope of authority, to act in accordance with the principal’s instructions, and to carry out the agency, among others. In order to make the presumption inoperative and relieve himself from its effects, it is incumbent upon the principal to prohibit the agent from appointing a substitute.
Effects of the principal’s death to the agency
The general rule is that the death of the principal or, by analogy, the agent extinguishes the contract of agency, unless any of the circumstances provided for under Article 1930 or Article 1931 obtains; in which case, notwithstanding the death of either principal or agent, the contract of agency continues to exist.
Article 1930. The agency shall remain in full force and effect even after the death of the principal, if it has been constituted in the common interest of the latter and of the agent, or in the interest of a third person who has accepted the stipulation in his favor. (n)
Article 1931. Anything done by the agent, without knowledge of the death of the principal or of any other cause which extinguishes the agency, is valid and shall be fully effective with respect to third persons who may have contracted with him in good faith. (1738)
Article 1932. If the agent dies, his heirs must notify the principal thereof, and in the meantime adopt such measures as the circumstances may demand in the interest of the latter. (1739)
How is agency extinguished by revocation?
Article 1924. The agency is revoked if the principal directly manages the business entrusted to the agent, dealing directly with third persons.
Revocation as a form of extinguishing an agency under Article 1924 of the Civil Code only applies in cases of incompatibility, such as when the principal disregards or bypassess the agent in order to deal with a third person in a way that excludes the agent. In the case at bar, the mortgaged vehicle was carnapped on November 5, 2003 and the Spouses Briones immediately informed petitioner about the loss. The Spouses Briones continued paying the monthly installment for the next three (3) months following the vehicle’s loss to show their good faith.
The Spouses Briones’ claim for loss cannot be seen as an implied revocation of the agency or their way of excluding petitioner. They did not disregard or bypass petitioner when they made an insurance claim; rather, they had no choice but to personally do it because of their agent’s negligence. This is not the implied termination or revocation of an agency provided for under Article 1924 of the Civil Code.
While a contract of agency is generally revocable at will as it is primarily based on trust and confidence, Article 1927 of the Civil Code provides the instances when an agency becomes irrevocable.
While a contract of agency is generally revocable at will as it is primarily based on trust and confidence, Article 1927 of the Civil Code provides the instances when an agency becomes irrevocable:
Article 1927. An agency cannot be revoked if a bilateral contract depends upon it, or if it is the means of fulfilling an obligation already contracted, or if a partner is appointed manager of a partnership in the contract of partnership and his removal from the management is unjustifiable. A bilateral contract that depends upon the agency is considered an agency coupled with an interest, making it an exception to the general rule of revocability at will. Lim v. Saban, 447 SCRA 232 (2004), emphasizes that when an agency is established for both the principal and the agent, an agency coupled with an interest is created and the principal cannot revoke the agency at will.
Compromise
The Civil Code defines a compromise as “a contract whereby the parties, by making reciprocal concessions, avoid a litigation or put an end to one already commenced.” A compromise agreement that is approved by final order of the court has the effect of res judicata between the parties, and is deemed a judgment that is subject to execution in accordance with the Rules of Court. “Judges[,] therefore[,] have the ministerial and mandatory duty to implement and enforce it.
Does the court have the power to modify or repeal a compromise?
In implementing a compromise agreement, the “courts cannot modify, impose terms different from the terms of [the] compromise agreement, or set aside the compromises and reciprocal concessions made in good faith by the parties without gravely abusing their discretion.”
To have the force of law between the parties, a compromise agreement must comply with the requisites and principles of contracts. Thus, it must have the following elements:
To have the force of law between the parties, a compromise agreement must comply with the requisites and principles of contracts. Thus, it must have the following elements:
(1) the consent of the parties to the compromise;
(2) an object certain that is the subject matter of the compromise; and
(3) the cause of the obligation that is established.
While compromise agreements are generally favored and encouraged by the courts, it must be proved that they were voluntarily, freely, and intelligently entered into by the parties, who had full knowledge of the judgment. Hence, a compromise agreement, once approved, has the effect of res judicata between the parties and should not be disturbed except for vices of consent, forgery, fraud, misrepresentation, and coercion.
Can compromise be rescinded?
The Supreme Court (SC) has acknowledged the option to rescind a compromise agreement due to noncompliance with its terms. The stipulations of the Compromise Agreement, particularly paragraphs (5) and (6) thereof, clearly show the right of respondent to rescind the same and to immediately secure a writ of possession over the subject property. This course of action/option on the part of respondent finds support under Article 2041 of the Civil Code, which recognizes the right of an aggrieved party to either (1) enforce the compromise by a writ of execution or (2) regard it as rescinded and insist upon his original demand, upon the other party’s failure or refusal to abide by the compromise. Indeed, the Court has acknowledged the option to rescind a compromise agreement due to noncompliance with its terms, as explained in Chavez v. Court of Appeals, 453 SCRA 843 (2005): However, in Heirs of Zari, et al. v. Santos, we clarified that the broad precept enunciated in Art. 2037 is qualified by Art. 2041 of the same Code, which provides: If one of the parties fails or refuses to abide by the compromise, the other party may either enforce the compromise or regard it as rescinded and insist upon his original demand. We explained, viz.: [B]efore the onset of the new Civil Code, there was no right to rescind compromise agreements. Where a party violated the terms of a compromise agreement, the only recourse open to the other party was to enforce the terms thereof. When the new Civil Code came into being, its Article 2041 x x x created for the first time the right of rescission. That provision gives to the aggrieved party the right to “either enforce the compromise or regard it as rescinded and insist upon his original demand.” Article 2041 should obviously be deemed to qualify the broad precept enunciated in Article 2037 that “[a] compromise has upon the parties the effect and authority of res judicata.”
In exercising the second option under Art. 2041, the aggrieved party may, if he chooses, bring the suit contemplated or involved in his original demand, as if there had never been any compromise agreement, without bringing an action for rescission. This is because he may regard the compromise as already rescinded by the breach thereof of the other party.
Is a compromise immediately final and executory?
Yes. The law recognizes a compromise agreement as a contract through which the parties, by making reciprocal concessions, avoid litigation or put an end to one already commenced. Once judicially approved, it becomes immediately final and executory. A judgment on compromise agreement is a judgment on the merits and operates as res judicata. However, its effects must be understood within the confines of the laws on contracts and the rules pertaining to res judicata in judicial decisions. A compromise agreement is essentially a contract.
As in the case of ordinary contracts, it is binding only upon the parties. It cannot affect the rights of persons who did not sign it. A compromise agreement, even if judicially approved, is unenforceable against a nonparty.
Can a compromise still be entered into after final judgment?
Yes. There is no justification to disallow a compromise agreement, solely because it was entered into after final judgment. The validity of the agreement is determined by compliance with the requisites and principles of contracts, not by when it was entered into.
A compromise may be entered into at any stage of the case — pending trial, on appeal and even after finality of judgment. Hence, petitioners may enter into a compromise with the respondent-spouses, even after the CA Decision was rendered. However, the validity of the agreement is determined by compliance with the requisites and the principles of contracts, not by when it was entered into. Unfortunately for petitioners, the compromise that they effected is wanting of one of the essential requisites of a valid and binding compromise — consent of all the parties in the case.
Quasi-contract
Article 2142. Certain lawful, voluntary and unilateral acts give rise to the juridical relation of quasi-contract to the end that no one shall be unjustly enriched or benefited at the expense of another.
Unjust enrichment
There is unjust enrichment ‘when a person unjustly retains a benefit to the loss of another, or when a person retains money or property of another against the fundamental principles of justice, equity and good conscience.’
The principle of unjust enrichment requires two conditions: (1) that a person is benefited without a valid basis or justification, and (2) that such benefit is derived at the expense of another. The main objective of the principle against unjust enrichment is to prevent one from enriching himself at the expense of another without just cause or consideration.
In the absence of specific terms and conditions governing the car plan arrangement between the petitioner and Mekeni, a quasi-contractual relation was created between them. Consequently, Mekeni may not enrich itself by charging petitioner for the use of its vehicle which is otherwise absolutely necessary to the full and effective promotion of its business.
Under Article 22 of the Civil Code, “[e]very person who through an act of performance by another, or any other means, acquires or comes into possession of something at the expense of the latter without just or legal ground, shall return the same to him.” Article 2142 of the same Code likewise clarifies that there are certain lawful, voluntary and unilateral acts which give rise to the juridical relation of quasi-contract, to the end that no one shall be unjustly enriched or benefited at the expense of another. In the absence of specific terms and conditions governing the car plan arrangement between the petitioner and Mekeni, a quasi-contractual relation was created between them. Consequently, Mekeni may not enrich itself by charging petitioner for the use of its vehicle which is otherwise absolutely necessary to the full and effective promotion of its business. It may not, under the claim that petitioner’s payments constitute rents for the use of the company vehicle, refuse to refund what petitioner had paid, for the reasons that the car plan did not carry such a condition; the subject vehicle is an old car that is substantially, if not fully, depreciated; the car plan arrangement benefited Mekeni for the most part; and any personal benefit obtained by petitioner from using the vehicle was merely incidental.
Implied contracts
The term “implied contracts,” as used in our remedial law, originated from the common law where obligations derived from quasi-contracts and from law are both considered as implied contracts. Thus, the term quasi-contract is included in the concept “implied contracts” as used in the Rules of Court.
In Maclan v. Garcia, 97 Phil. 119 (1955), Gabriel Maclan filed a civil case to recover from Ruben Garcia the necessary expenses he spent as possessor of a piece of land. Garcia acquired the land as an heir of its previous owner. He set up the defense that this claim should have been filed in the special proceedings to settle the estate of his predecessor. Maclan, on the other hand, contended that his claim arises from law and not from contract, express or implied. Thus, it need not be filed in the settlement of the estate of Garcia’s predecessor, as mandated by Section 5, Rule 87 of the Rules of Court (now Section 5, Rule 86). The Court held under these facts that a claim for necessary expenses spent as previous possessor of the land is a kind of quasi-contract.
Citing Leung Ben v. O’Brien, 38 Phil. 182 (1918), it explained that the term “implied contracts,” as used in our remedial law, originated from the common law where obligations derived from quasi-contracts and from law are both considered as implied contracts. Thus, the term quasi-contract is included in the concept “implied contracts” as used in the Rules of Court. Accordingly, liabilities of the deceased arising from quasi-contracts should be filed as claims in the settlement of his estate, as provided in Section 5, Rule 86 of the Rules of Court.
Solutio Indebiti
Article 2154. If something is received when there is no right to demand it, and it was unduly delivered through mistake, the obligation to return it arises.
Solutio indebiti, as defined in Article 2154 of the Civil Code, has two indispensable requisites:
First, that something has been unduly delivered through mistake; and second, that something was received when there was no right to demand it.
In order to establish the application of solutio indebiti in a given situation, two (2) conditions must concur:
(1) a payment is made when there exists no binding relation between the payor who has no duty to pay, and the person who received the payment, and
(2) the payment is made through mistake, and not through liberality or some other cause.
When quasi-contracts not applicable
Respondent Espinas bases his claim on the allegation that his work benefited not only the union members but also those not members of the union. In effect he claims that the latter should be made to pay on the principle of quasi contract. Quasi-contracts are defined in Art. 2142 of the Civil Code, thus:
“Certain lawful, voluntary and unilateral acts give rise to the juridical relation of quasi-contract to the end that no one shall be unjustly enriched or benefited at the expense of another.” However, the principle of quasi-contract cannot be applied in this case. For as pointed out in National Brewery and Allied Industries Labor Union of the Philippines vs. San Miguel Brewery, Inc., L-18170, August 31, 1983, 8 SCRA 806, where the same principle was invoked; But the benefits that accrue to nonmembers by reason of a collective bargaining agreement can hardly be termed ‘unjust enrichment’ because, as already pointed out, the same are extended to them precisely to avoid discrimination among employees.
Negotiorum Gestio
Whoever voluntarily takes charge of the agency or management of the business or property of another, without any power from the latter, is obliged to continue the same until the termination of the affair and its incidents, or to require the person concerned to substitute him, if the owner is in a position to do so. This juridical relation does not arise in either of these instances:
(1) When the property or business is not neglected or abandoned;
(2) If in fact the manager has been tacitly authorized by the owner.
In the first case, the provisions of articles 1317, 1403, No. 1, and 1404 regarding unauthorized contracts shall govern.
In the second case, the rules on agency in Title X of this Book shall be applicable.
Officious manager’s burden of responsibility
The officious manager shall perform his duties with all the diligence of a good father of a family, and pay the damages which through his fault or negligence may be suffered by the owner of the property or business under management.
The courts may, however, increase or moderate the indemnity according to the circumstances of each case. Civil Code, Article 2145
Effects of delegation from the officious manager
If the officious manager delegates to another person all or some of his duties, he shall be liable for the acts of the delegate, without prejudice to the direct obligation of the latter toward the owner of the business.
The responsibility of two or more officious managers shall be solidary, unless the management was assumed to save the thing or business from imminent danger. Civil Code, Article 2146
The officious manager shall be liable for any fortuitous event:
The officious manager shall be liable for any fortuitous event:
(1) If he undertakes risky operations which the owner was not accustomed to embark upon;
(2) If he has preferred his own interest to that of the owner;
(3) If he fails to return the property or business after demand by the owner;
(4) If he assumed the management in bad faith. Civil Code, Article 2147
Except when the management was assumed to save the property or business from imminent danger, the officious manager shall be liable for fortuitous events:
(1) If he is manifestly unfit to carry on the management;
(2) If by his intervention he prevented a more competent person from taking up the management. Civil Code, Article 2148
Effect of the ratification of the management by the owner of the business
The ratification of the management by the owner of the business produces the effects of an express agency, even if the business may not have been successful. Civil Code, Article 2149
Even though the owner did not derive any benefit and there has been no imminent and manifest danger to the property or business, the owner is liable as under the first paragraph of the preceding article, provided:
Even though the owner did not derive any benefit and there has been no imminent and manifest danger to the property or business, the owner is liable as under the first paragraph of the preceding article, provided:
(1) The officious manager has acted in good faith, and
(2) The property or business is intact, ready to be returned to the owner. Civil Code, Article 2151
The officious manager is personally liable for contracts which he has entered into with third persons, even though he acted in the name of the owner, and there shall be no right of action between the owner and third persons. These provisions shall not apply:
The officious manager is personally liable for contracts which he has entered into with third persons, even though he acted in the name of the owner, and there shall be no right of action between the owner and third persons. These provisions shall not apply:
(1) If the owner has expressly or tacitly ratified the management, or
(2) When the contract refers to things pertaining to the owner of the business. Civil Code, Article 2152
The management is extinguished:
The management is extinguished:
(1) When the owner repudiates it or puts an end thereto;
(2) When the officious manager withdraws from the management, subject to the provisions of Article 2144;
(3) By the death, civil interdiction, insanity or insolvency of the owner or the officious manager. Civil Code, Article 2153
Prescription for solutio indebiti
Solutio indebiti is a quasi-contract, and the instant case being in the nature of solutio indebiti, the claim for refund must be commenced within six (6) years from date of payment pursuant to Article 1145(2) of the New Civil Code.
Other quasi-contracts
(1) When, without the knowledge of the person obliged to give support, it is given by a stranger, the latter shall have a right to claim the same from the former, unless it appears that he gave it out of piety and without intention of being repaid. Civil Code, Article 2164
(2) When funeral expenses are borne by a third person, without the knowledge of those relatives who were obliged to give support to the deceased, said relatives shall reimburse the third person, should the latter claim reimbursement. Civil Code, Article 2165
(3) When the person obliged to support an orphan, or an insane or other indigent person unjustly refuses to give support to the latter, any third person may furnish support to the needy individual, with right of reimbursement from the person obliged to give support. The provisions of this article apply when the father or mother of a child under eighteen years of age unjustly refuses to support him. Civil Code, Article 2166
(4) When through an accident or other cause a person is injured or becomes seriously ill, and he is treated or helped while he is not in a condition to give consent to a contract, he shall be liable to pay for the services of the physician or other person aiding him, unless the service has been rendered out of pure generosity. Civil Code, Article 2167
(5) When during a fire, flood, storm, or other calamity, property is saved from destruction by another person without the knowledge of the owner, the latter is bound to pay the former just compensation. Civil Code, Article 2168
(6) When the government, upon the failure of any person to comply with health or safety regulations concerning property, undertakes to do the necessary work, even over his objection, he shall be liable to pay the expenses. Civil Code, Article 2169
(7) When by accident or other fortuitous event, movables separately pertaining to two or more persons are commingled or confused, the rules on co-ownership shall be applicable. Civil Code, Article 2170
(8) The rights and obligations of the finder of lost personal property shall be governed by articles 719 and 720. Civil Code, Article 2171
(9) The right of every possessor in good faith to reimbursement for necessary and useful expenses is governed by article 546. Civil Code, Article 2172
(10) When a third person, without the knowledge of the debtor, pays the debt, the rights of the former are governed by articles 1236 and 1237. Civil Code, Article 2173
(11) When in a small community a majority of the inhabitants of age decide upon a measure for protection against lawlessness, fire, flood, storm or other calamity, any one who objects to the plan and refuses to contribute to the expenses but is benefited by the project as executed shall be liable to pay his share of said expenses. Civil Code, Article 2174
(12) Any person who is constrained to pay the taxes of another shall be entitled to reimbursement from the latter. Civil Code, Article 2175
Basis for claim of damages
As a general rule, any act or omission coming under the purview of Article 2176 gives rise to a cause of action under quasi-delict. This, in turn, gives the basis for a claim of damages. Notably, quasi-delict is one among several sources of obligation. Article 1157 of the Civil Code states:
Article 1157. Obligations arise from: (1) Law; (2) Contracts; (3) Quasi-contracts; (4) Acts or omissions punished by law; and (5) Quasi-delicts.
Elements of quasi-delict
The elements of a quasidelict are: (1) an act or omission; (2) the presence of fault or negligence in the performance or nonperformance of the act; (3) injury; (4) a causal connection between the negligent act and the injury; and (5) no preexisting contractual relation.
Available remedies in negligence cases
In negligence cases, the aggrieved party may file an independent civil action for damages based on quasi-delict separately from a criminal action for imprudence.
This civil action may proceed simultaneously with the criminal action and requires only preponderance of evidence. Nevertheless, the aggrieved party may recover damages only once based on the same act or omission.
Effect of acquittal on civil liability based on quasi-delict
The accused’s acquittal, “even if based on a finding that [they are] not guilty, does not carry with it the extinction of the civil liability based on quasi[-]delict.”
This is based on the theory that a single act or omission causing injury to another creates two kinds of liability: (1) civil liability ex delicto; and (2) civil liability quasi delicto.
The aggrieved party may choose to enforce either liability against the erring party, subject only to the prohibition against double recovery of damages under Article 2177 of the Civil Code.
An act or omission causing damage to another may give rise to two separate civil liabilities on the part of the offender.
An act or omission causing damage to another may give rise to two separate civil liabilities on the part of the offender, i.e.,
(1) civil liability ex delicto, under Article 100 of the Revised Penal Code; and
(2) independent civil liabilities, such as those (a) not arising from an act or omission complained of as a felony, e.g., culpa contractual or obligations arising from law under Article 31 of the Civil Code, intentional torts under Articles 32 and 34, and culpa aquiliana under Article 2176 of the Civil Code; or (b) where the injured party is granted a right to file an action independent and distinct from the criminal action under Article 33 of the Civil Code. Either of these liabilities may be enforced against the offender subject to the caveat under Article 2177 of the Civil Code that the offended party cannot recover damages twice for the same act or omission or under both causes.
In resolving the question of whether any civil liability on the part of petitioner survives his acquittal beyond reasonable doubt, the Court anchors its analysis on two primary sequential premises that must guide the facts of the instant case:
In resolving the question of whether any civil liability on the part of petitioner survives his acquittal beyond reasonable doubt, the Court anchors its analysis on two primary sequential premises that must guide the facts of the instant case:
(1) the civil liability arising from a violation of B.P. 22 is ex delicto in character, and necessarily rises out of a finding of a crime having been committed, and
(2) if no crime is found to have been committed, as in this case, civil liability ex delicto is not obtained, and any surviving civil liability to be proven by mere preponderance of evidence must be grounded on another source of the civil obligation to pay, i.e., an underlying source of obligation by virtue of which petitioner, though acquitted of the criminal charge, remains civilly liable therefor.
Quasi-Delicts” and “Breach of Contract,” Distinguished
In quasi-delict, negligence is direct, substantive and independent, while in breach of contract, negligence is merely incidental to the performance of the contractual obligation; there is a pre-existing contract or obligation.
In quasi-delict, the defense of “good father of a family” is a complete and proper defense insofar as parents, guardians and employers are concerned, while in breach of contract, such is not a complete and proper defense in the selection and supervision of employees. In quasi-delict, there is no presumption of negligence and it is incumbent upon the injured party to prove the negligence of the defendant, otherwise, the former’s complaint will be dismissed, while in breach of contract, negligence is presumed so long as it can be proved that there was breach of the contract and the burden is on the defendant to prove that there was no negligence in the carrying out of the terms of the contract; the rule of respondeat superior is followed.
Negligence may either result in
Negligence may either result in culpa aquiliana or culpa contractual.
Culpa aquiliana is “the wrongful or negligent act or omission which creates a vinculum juris and gives rise to an obligation between two persons not formally bound by any other obligation,” and is governed by Article 2176 of the Civil Code:
Article 2176. Whoever by act or omission causes damage to another, there being fault or negligence, is obliged to pay for the damage done. Such fault or negligence, if there is no preexisting contractual relation between the parties, is called a quasidelict and is governed by the provisions of this Chapter.
Negligence in culpa contractual, on the other hand, is “the fault or negligence incident in the performance of an obligation which already existed, and which increases the liability from such already existing obligation.” This is governed by Articles 1170 to 1174 of the Civil Code:
Article 1170. Those who in the performance of their obligations are guilty of fraud, negligence, or delay, and those who in any manner contravene the tenor thereof, are liable for damages.
Article 1171. Responsibility arising from fraud is demandable in all obligations. Any waiver of an action for future fraud is void.
Article 1172. Responsibility arising from negligence in the performance of every kind of obligation is also demandable, but such liability may be regulated by the courts, according to the circumstances.
Article 1173. The fault or negligence of the obligor consists in the omission of that diligence which is required by the nature of the obligation and corresponds with the circumstances of the persons, of the time and of the place. When negligence shows bad faith, the provisions of Articles 1171 and 2201, paragraph 2, shall apply. If the law or contract does not state the diligence which is to be observed in the performance, that which is expected of a good father of a family shall be required.
Article 1174. Except in cases expressly specified by the law, or when it is otherwise declared by stipulation, or when the nature of the obligation requires the assumption of risk, no person shall be responsible for those events which could not be foreseen, or which, though foreseen, were inevitable.
Actions based on contractual negligence vs. Actions based on quasi-delict
Actions based on contractual negligence and actions based on quasi-delicts differ in terms of conditions, defenses, and proof. They generally cannot coexist.
Once a breach of contract is proved, the defendant is presumed negligent and must prove not being at fault. In a quasi-delict, however, the complaining party has the burden of proving the other party’s negligence.
In quasi-delict, negligence is direct, substantive and independent, while in breach of contract, negligence is merely incidental to the performance of the contractual obligation; there is a preexisting contract or obligation.
In quasi-delict, the defense of “good father of a family” is a complete and proper defense insofar as parents, guardians and employers are concerned, while in breach of contract, such is not a complete and proper defense in the selection and supervision of employees. In quasi-delict, there is no presumption of negligence and it is incumbent upon the injured party to prove the negligence of the defendant, otherwise, the former’s complaint will be dismissed, while in breach of contract, negligence is presumed so long as it can be proved that there was breach of the contract and the burden is on the defendant to prove that there was no negligence in the carrying out of the terms of the contract; the rule of respondeat superior is followed.
Can quasi-delict occur despite the presence of a contract?
There are instances when Article 2176 may apply even when there is a pre-existing contractual relation. A party may still commit a tort or quasi-delict against another, despite the existence of a contract between them.
In Cangco v. Manila Railroad, 38 Phil. 768 (1918), this Court explained why a party may be held liable for either a breach of contract or an extra-contractual obligation for a negligent act: It is evident, therefore, that in its decision in the Yamada case, the court treated plaintiff’s action as though founded in tort rather than as based upon the breach of the contract of carriage, and an examination of the pleadings and of the briefs shows that the questions of law were in fact discussed upon this theory. Viewed from the standpoint of the defendant the practical result must have been the same in any event. The proof disclosed beyond doubt that the defendant’s servant was grossly negligent and that his negligence was the proximate cause of plaintiff’s injury. It also affirmatively appeared that defendant had been guilty of negligence in its failure to exercise proper discretion in the direction of the servant. Defendant was, therefore, liable for the injury suffered by plaintiff, whether the breach of the duty were to be regarded as constituting culpa aquiliana or culpa contractual. As Manresa points out . . . whether negligence occurs as an incident in the course of the performance of a contractual undertaking or is itself the source of an extra-contractual obligation, its essential characteristics are identical. There is always an act or omission productive of damage due to carelessness or inattention on the part of the defendant.
Consequently, when the court holds that a defendant is liable in damages for having failed to exercise due care, either directly, or in failing to exercise proper care in the selection and direction of his servants, the practical result is identical in either case . . .
The true explanation of such cases is to be found by directing the attention to the relative spheres of contractual and extra-contractual obligations.
The field of noncontractual obligation is much more broader [sic] than that of contractual obligation, comprising, as it does, the whole extent of juridical human relations. These two fields, figuratively speaking, concentric; that is to say, the mere fact that a person is bound to another by contract does not relieve him from extra-contractual liability to such person. When such a contractual relation exists the obligor may break the contract under such conditions that the same act which constitutes a breach of the contract would have constituted the source of an extra-contractual obligation had no contract existed between the parties. x x x If a contracting party’s act that breaches the contract would have given rise to an extra-contractual liability had there been no contract, the contract would be deemed breached by a tort, and the party may be held liable under Article 2176 and its related provisions.
In situations where the contractual relation is indispensable to hold a party liable, there must be
In situations where the contractual relation is indispensable to hold a party liable, there must be a finding that the act or omission complained of was done in bad faith and in violation of Article 21 of the Civil Code to give rise to an action based on tort.
Negligence
The failure to observe that degree of. care, precaution and vigilance that the circumstances just demand, whereby that other person suffers injury.”
If the law or contract does not provide for the degree of diligence to be exercised, then the required diligence is that of a good father of a family. The test to determine a party’s negligence is if the party used “the reasonable care and caution which an ordinarily prudent person would have used in the same situation” when it performed the negligent act.
If the party did not exercise reasonable care and caution, then it is guilty of negligence.
A claim specifically grounded on the employer’s negligence to provide a safe, healthy and workable environment for its employees is a labor case or a tort case?
While the maintenance of a safe and healthy workplace is ordinarily a subject of labor cases, case law nevertheless clarifies that a claim specifically grounded on the employer’s negligence to provide a safe, healthy and workable environment for its employees is no longer a labor issue, but rather, is a case for quasi-delict which is under the jurisdiction of the regular courts, as in this case.
Anent petitioner’s claim for damages arising from DMCI’s purported negligence which resulted in Reynaldo’s death, the NLRC correctly ruled that petitioners’ allegations in their Position Paper before the LA make out a cause of action for a tort, which is cognizable not by the labor tribunals, but by the regular courts.
On this note, while the maintenance of a safe and healthy workplace is ordinarily a subject of labor cases, case law nevertheless clarifies that a claim specifically grounded on the employer’s negligence to provide a safe, healthy and workable environment for its employees is no longer a labor issue, but rather, is a case for quasi-delict which is under the jurisdiction of the regular courts, as in this case.
Does contributory negligence of drivers bar the passengers or their heirs from recovering damages from those who were at fault?
As early as 1933, in Junio v. Manila Railroad Co., 58 Phil. 176, the Supreme Court (SC) already clarified that the contributory negligence of drivers does not bar the passengers or their heirs from recovering damages from those who were at fault.
The concurring negligence of Lomotos, as the driver of the Kia Ceres wherein Rebultan, Sr. was the passenger, does not foreclose the latter’s heirs from recovering damages from Viloria.
The driver was, likewise, negligent because he did not comply with his duty to slacken the speed of the car and to “look and listen” before crossing the intersection and, above all, because he did not maintain a reasonable speed so as to permit him to stop any moment if it were necessary in order to avoid an accident. If, in the present case, the car had been running at a reasonable speed, there is no doubt that he could have stopped it instantly upon seeing the train from a distance of five meters. If the action for damages were brought by the driver, it is certain that it would not prosper in view of that fact that he had incurred in a notorious contributory negligence. But the persons who instituted the action are the appellants who were mere passengers of the car. Therefore, the question raised is whether the driver’s negligence is imputable to them so as to bar them from the right to recover damages suffered by them by reason of the accident.
Although this question is, perhaps, raised in this jurisdiction for the first time, it is, nevertheless, a well recognized principle of law that the negligence of a driver, who, in turn, is guilty of contributory negligence, cannot be imputed to a passenger who has no control over him in the management of the vehicle and with whom he sustains no relation of master and servant. This rule is applied more strictly when, as in the present case, hired cars or those engaged in public service, are involved.
Concept of diligence of a good father of a family
Case law states that the concept of diligence of a good father of a family “connotes reasonable care consistent with that which an ordinarily prudent person would have observed when confronted with a similar situation.
The test to determine whether negligence attended the performance of an obligation is: did the defendant in doing the alleged negligent act use that reasonable care and caution which an ordinarily prudent person would have used in the same situation? If not, then he is guilty of negligence.”
An act or omission causing damage to another may give rise to two separate civil liabilities on the part of the offender
An act or omission causing damage to another may give rise to two separate civil liabilities on the part of the offender, i.e.,
(1) civil liability ex delicto, under Article 100 of the Revised Penal Code; and
(2) independent civil liabilities, such as those (a) not arising from an act or omission complained of as a felony, e.g., culpa contractual or obligations arising from law under Article 31 of the Civil Code, intentional torts under Articles 32 and 34, and culpa aquiliana under Article 2176 of the Civil Code; or
(b) where the injured party is granted a right to file an action independent and distinct from the criminal action under Article 33 of the Civil Code.
Either of these liabilities may be enforced against the offender subject to the caveat under Article 2177 of the Civil Code that the offended party cannot recover damages twice for the same act or omission or under both causes. It is important to determine the nature of respondents’ cause of action.
The nature of a cause of action is determined by the facts alleged in the complaint as constituting the cause of action. The purpose of an action or suit and the law to govern it is to be determined not by the claim of the party filing the action, made in his argument or brief, but rather by the complaint itself, its allegations and prayer for relief.
Exemplary or corrective damages
As to exemplary or corrective damages, these may be granted in quasi-delicts if the defendant acted with gross negligence pursuant to Article 2231 of the Civil Code. The CA justified its award of exemplary damages in the following manner: On the liability of manufacturers, the principle of strict liability applies. It means that proof of negligence is not necessary. It appl[i]es even if the defendant manufacturer or processor has exercised all the possible care in the preparation and sale of his product x x x.
Extraordinary diligence is required of them because the life of the consuming public is involved in the consumption of the foodstuffs or processed products.
Evidently, the CA’s reasoning is not in accord with the gross negligence requirement for an award of exemplary damages in a quasi-delict case.
Liability for the Defective Products
Any Filipino or foreign manufacturer, producer, and any importer, shall be liable for redress, independently of fault, for damages caused to consumers by defects resulting from design, manufacture, construction, assembly and erection, formulas and handling and making up, presentation or packing of their products, as well as for the insufficient or inadequate information on the use and hazards thereof.
A product is defective when it does not offer the safety rightfully expected of it, taking relevant circumstances into consideration, including but not limited to:
(a) presentation of product;
(b) use and hazards reasonably expected of it;
(c) the time it was put into circulation.
A product is not considered defective because another better quality product has been placed in the market.
The manufacturer, builder, producer or importer shall not be held liable when it evidences:
(a) that it did not place the product on the market;
(b) that although it did place the product on the market such product has no defect;
(c) that the consumer or a third party is solely at fault. Republic Act No. 7394, Article 97
Liability of Tradesman or Seller
The tradesman/seller is likewise liable, pursuant to the preceding article when:
(a) it is not possible to identify the manufacturer, builder, producer or importer;
(b) the product is supplied, without clear identification of the manufacturer, producer, builder or importer;
(c) he does not adequately preserve perishable goods. The party making payment to the damaged party may exercise the right to recover a part of the whole of the payment made against the other responsible parties, in accordance with their part or responsibility in the cause of the damage effected.
Liability for Defective Services
The service supplier is liable for redress, independently of fault, for damages caused to consumers by defects relating to the rendering of the services, as well as for insufficient or inadequate information on the fruition and hazards thereof.
The service is defective when it does not provide the safety the consumer may rightfully expect of it, taking the relevant circumstances into consideration, including but not limited to:
(a) the manner in which it is provided;
(b) the result of hazards which may reasonably be expected of it;
(c) the time when it was provided. A service is not considered defective because of the use or introduction of new techniques.
The supplier of the services shall not be held liable when it is proven:
(a) that there is no defect in the service rendered;
(b) that the consumer or third party is solely at fault. Republic Act No. 7394, Article 99
Liability for Product and Service Imperfection
The suppliers of durable or non-durable consumer products are jointly liable for imperfections in quality that render the products unfit or inadequate for consumption for which they are designed or decrease their value, and for those resulting from inconsistency with the information provided on the container, packaging, labels or publicity messages/advertisement, with due regard to the variations resulting from their nature, the consumer being able to demand replacement to the imperfect parts. If the imperfection is not corrected within thirty (30) days, the consumer may alternatively demand at his option:
(a) the replacement of the product by another of the same kind, in a perfect state of use;
(b) the immediate reimbursement of the amount paid, with monetary updating, without prejudice to any losses and damages;
(c) a proportionate price reduction. The parties may agree to reduce or increase the term specified in the immediately preceding paragraph; but such shall not be less than seven (7) nor more than one hundred and eighty (180) days.
The consumer may make immediate use of the alternatives under the second paragraph of this Article when by virtue of the extent of the imperfection, the replacement of the imperfect parts may jeopardize the product quality or characteristics, thus decreasing its value.
If the consumer opts for the alternative under sub-paragraph (a) of the second paragraph of this Article, and replacement of the product is not possible, it may be replaced by another of a different kind, mark or model: Provided, That any difference in price may result thereof shall be supplemented or reimbursed by the party which caused the damage, without prejudice to the provisions of the second, third and fourth paragraphs of this Article. Republic Act No. 7394, Article 100
Liability for Product Quantity Imperfection
Suppliers are jointly liable for imperfections in the quantity of the product when, in due regard for variations inherent thereto, their net content is less than that indicated on the container, packaging, labeling or advertisement, the consumer having powers to demand, alternatively, at his own option:
(a) the proportionate price
(b) the supplementing of weight or measure differential;
(c) the replacement of the product by another of the same kind, mark or model, without said imperfections;
(d) the immediate reimbursement of the amount paid, with monetary updating without prejudice to losses and damages if any.
The provisions of the fifth paragraph of Article 99 shall apply to this Article. The immediate supplier shall be liable if the instrument used for weighing or measuring is not gauged in accordance with official standards. Republic Act No. 7394, Article 101
Liability for Service Quality Imperfection
The service supplier is liable for any quality imperfections that render the services improper for consumption or decrease their value, and for those resulting from inconsistency with the information contained in the offer or advertisement, the consumer being entitled to demand alternatively at his option:
(a) the performance of the services, without any additional cost and when applicable;
(b) the immediate reimbursement of the amount paid, with monetary updating without prejudice to losses and damages, if any;
(c) a proportionate price reduction.
Re-performance of services may be entrusted to duly qualified third parties, at the supplier’s risk and cost.
Improper services are those which prove to be inadequate for purposes reasonably expected of them and those that fail to meet the provisions of this Act regulating service rendering. Republic Act No. 7394, Article 102
Obligations arising from tort are, by their nature, always
Obligations arising from tort are, by their nature, always solidary. The ambiguity in petitioners’ counterclaims notwithstanding, respondents’ liability, if proven, is solidary.
This characterization finds basis in Article 1207 of the Civil Code, which provides that obligations are generally considered joint, except when otherwise expressly stated or when the law or the nature of the obligation requires solidarity.
However, obligations arising from tort are, by their nature, always solidary.
Joint vs. Solidary obligation
In a “joint” obligation, each obligor answers only for a part of the whole liability.
In a “solidary” or “joint and several” obligation, the relationship between the active and the passive subjects is so close that each of them must comply with or demand the fulfillment of the whole obligation.
The fact that the liability sought against the CCC is for specific performance and tort, while that sought against the individual respondents is based solely on tort does not negate the solidary nature of their liability for tortuous acts alleged in the counterclaims. Article 1211 of the Civil Code is explicit on this point: “Solidarity may exist although the creditors and the debtors may not be bound in the same manner and by the same periods and conditions.”
Owner’s liability vis-a-vis driver
As a general rule, the owners or those in possession and control of a vessel are liable for all natural and proximate damages caused to persons or property by reason of her negligent management or navigation.
But although the employer is solidarity liable with the employee for damages, the employer may demand reimbursement from his employee (driver) for whatever amount the employer will have to pay the offended party to satisfy the latter’s claim.
Proximate cause
Proximate cause is “that which, in natural and continuous sequence, unbroken by any new cause, produces an event, and without which the event would not have occurred.”
As to the denial of petitioner that he was drunk at the time of the accident, whether or not he was in a state of inebriation is inconsequential given the above findings. His being sober does not and will not erase the fact that he was still negligent and that the proximate cause of the collision was due to his said negligence. As such, petitioner is wrong when he claims that the proximate cause of the accident was the fault of the tricycle driver.
Vicarious liability
As a general rule, one is only responsible for his own act or omission. This general rule is laid down in Article 2176 of the Civil Code, which provides: Art. 2176. Whoever by act or omission causes damage to another, there being fault or negligence, is obliged to pay for the damage done. Such fault or negligence, if there is no preexisting contractual relation between the parties, is called a quasi-delict and is governed by the provisions of this Chapter.
One exception is an employer who is made vicariously liable for the tort committed by his employee under paragraph 5 of Article 2180.
Here, although the employer is not the actual tortfeasor, the law makes him vicariously liable on the basis of the civil law principle of pater familias for failure to exercise due care and vigilance over the acts of one’s subordinates to prevent damage to another. It must be stressed, however, that the above rule is applicable only if there is an employer-employee relationship. This employer-employee relationship cannot be presumed but must be sufficiently proven by the plaintiff. The plaintiff must also show that the employee was acting within the scope of his assigned task when the tort complained of was committed. It is only then that the defendant, as employer, may find it necessary to interpose the defense of due diligence in the selection and supervision of employees.
Article 2180
Under Article 2180, “when an injury is caused by the negligence of the employee, there instantly arises a presumption of law that there was negligence on the part of the master or employer either in the selection of the servant or employee, or in supervision over him after selection or both.”
“The liability of the employer under Article 2180 is direct and immediate; it is not conditioned upon prior recourse against the negligent employee and a prior showing of the insolvency of such employee.”
The finding of negligence against Santos gave rise to the presumption of negligence on the part of Maitim in the latter’s selection and/or supervision of the former. Therefore, it is incumbent upon Maitim to prove that she exercised the diligence of a good father of a family in the selection and supervision of her employee, Santos.
Standard in selection and supervision of employees
In the selection of prospective employees, employers are required to examine them as to their qualifications, experience and service records.
In the supervision of employees, the employer must formulate standard operating procedures, monitor their implementation and impose disciplinary measures for the breach thereof.
To fend off vicarious liability, employers must submit concrete proof, including documentary evidence, that they complied with everything that was incumbent on them.
Due diligence in the supervision of employees on the other hand, includes the formulation of suitable rules and regulations for the guidance of employees and the issuance of proper instructions intended for the protection of the public and persons with whom the employer has relations through his or its employees and the imposition of necessary disciplinary measures upon employees in case of breach or as may be warranted to ensure the performance of acts indispensable to the business of and beneficial to their employer. To this, we add that actual implementation and monitoring of consistent compliance with said rules should be the constant concern of the employer, acting through dependable supervisors who should regularly report on their supervisory functions.
Patria potestas
For the negligence of its nurses, petitioner is thus liable under Article 2180 in relation to Article 2176 of the Civil Code. Under Article 2180, an employer like petitioner hospital may be held liable for the negligence of its employees based on its responsibility under a relationship of patria potestas.
The liability of the employer under this provision is “direct and immediate; it is not conditioned upon a prior recourse against the negligent employee or a prior showing of the insolvency of that employee.” The employer may only be relieved of responsibility upon a showing that it exercised the diligence of a good father of a family in the selection and supervision of its employees. The rule is that once negligence of the employee is shown, the burden is on the employer to overcome the presumption of negligence on the latter’s part by proving observance of the required diligence.
There is no proof of actual supervision of the employees’ work or actual implementation and monitoring of consistent compliance with the rules. The testimony of petitioner’s Assistant Nursing Service Director, Lourdes H. Nicolas is belied by the actual records of petitioner. These show that Nurses David and Padolina had been observed to be latecomers and absentees; yet they were never sanctioned by those supposedly supervising them. While the question of diligent supervision depends on the circumstances of employment, we find that by the very nature of a hospital, the proper supervision of the attendance of its nurses, who are its frontline health professionals, is crucial considering that patients’ conditions can change drastically in a matter of minutes.
Petitioner’s Employee Handbook recognized exactly this as it decreed the proper procedure in availing of unavoidable absences and the commensurate penalties of verbal reprimand, written warning, suspension from work, and dismissal in instances of unexcused absence or tardiness. Petitioner’s failure to sanction the tardiness of the defendant nurses shows an utter lack of actual implementation and monitoring of compliance with the rules and ultimately of supervision over its nurses.
Res ipsa loquitor
Res ipsa loquitur is literally translated as “the thing or the transaction speaks for itself.” The doctrine res ipsa loquitur means that “where the thing which causes injury is shown to be under the management of the defendant, and the accident is such as in the ordinary course of things does not happen if those who have the management use proper care, it affords reasonable evidence, in the absence of an explanation by the defendant, that the accident arose from want of care.” It is simply “a recognition of the postulate that, as a matter of common knowledge and experience, the very nature of certain types of occurrences may justify an inference of negligence on the part of the person who controls the instrumentality causing the injury in the absence of some explanation by the defendant who is charged with negligence. It is grounded in the superior logic of ordinary human experience and on the basis of such experience or common knowledge, negligence may be deduced from the mere occurrence of the accident itself.
In UPCB General Insurance Co. vs. Pascual Liner, Inc., this Court reiterated the applicability of res ipsa loquitur in vehicular accidents, wherein it is sufficient that the accident itself be established, and once established through the admission of evidence, whether hearsay or not, the rule on res ipsa loquitur already starts to apply.
The fact that Angela was hit by a moving vehicle owned by Maitim and driven by Santos is undisputed, and the same is supported by the Traffic Accident Investigation Report dated April 25, 2006. The fact that Angela sustained injuries in her collision with Maitim’s vehicle is also not in question. Thus, since it is clearly established that there was a vehicular accident that caused injuries, then the rule on res ipsa loquitur shall apply. An inference of negligence on the part of Santos, the person who controls the instrumentality (vehicle) causing the injury, arises, and he has the burden of presenting proof to the contrary.
Ordinarily, driving inside a relatively narrow driveway shared by two houses would not result to children being hit and their bones fractured. This is because a reasonably prudent man, especially an alleged experienced driver, would have foreseen that the residents of the houses may exit towards the common driveway anytime, including young and playful children who may suddenly run across or along said driveway. Thus, a reasonably prudent man is expected to drive with utmost caution when traversing the said driveway, even if given a “clear” signal by a guard. In fact, Maitim herself admits that there is a natural tendency to drive at a slow speed when in a narrow driveway. However, her allegation that Santos was driving at a slow speed, which is admittedly “natural,” contradicts the circumstances surrounding Angela’s injury. If Santos truly drove slowly and with care, he should have been able to have ample opportunity to brake or otherwise steer the vehicle out of trouble, both of which did not happen in this case. Moreover, even if a running child were to get hit by a slow-moving vehicle, it is highly unlikely that the same would result to injuries so severe that it required surgery and afterwards being confined to a wheelchair for more than two months. In sum, there is nothing natural about a child getting dragged for three meters and her leg being completely fractured by a slow-moving vehicle, especially if a reasonably prudent man was driving the vehicle with care. Thus, both the RTC and CA were right in finding negligence on the part of Santos.
Before resort to the res ipsa loquitor doctrine may be allowed, the following requisites must be satisfactorily shown:
(1) the accident is of a kind which ordinarily does not occur in the absence of someone’s negligence;
(2) it is caused by an instrumentality within the exclusive control of the defendant or defendants; and
(3) the possibility of contributing conduct which would make the plaintiff responsible is eliminated
Damnum absque injuria
There can be no damage without injury when the loss or harm was not the result of a violation of a legal duty
Doctrine of assumption of risk
The doctrine of assumption of risk means that one who voluntarily exposes himself to an obvious, known and appreciated danger assumes the risk of injury that may result therefrom. It rests on the fact that the person injured has consented to relieve the defendant of an obligation of conduct toward him and to take his chance of injury from a known risk, and whether the former has exercised proper caution or not is immaterial.
In other words, it is based on voluntary consent, express or implied, to accept danger of a known and appreciated risk; it may sometimes include acceptance of risk arising from the defendant’s negligence, but one does not ordinarily assume risk of any negligence which he does not know and appreciate.
As a defense in negligence cases, therefore, the doctrine requires the concurrence of three elements, namely: (1) the plaintiff must know that the risk is present; (2) he must further understand its nature; and (3) his choice to incur it must be free and voluntary. According to Prosser: “Knowledge of the risk is the watchword of assumption of risk.”
Contributory negligence
To prove contributory negligence, it is still necessary to establish a causal link, although not proximate, between the negligence of the party and the succeeding injury.
The leading case in contributory negligence, Rakes v. Atlantic Gulf clarifies that damages may be mitigated if the claimant “in conjunction with the occurrence [contributes] only to his injury.” To hold a person as having contributed to his injuries, it must be shown that he performed an act that brought about his injuries in disregard of warnings or signs of an impending danger to health and body. To prove contributory negligence, it is still necessary to establish a causal link, although not proximate, between the negligence of the party and the succeeding injury. In a legal sense, negligence is contributory only when it contributes proximately to the injury, and not simply a condition for its occurrence.
Test to determine contributory negligence
Contributory negligence under Article 2179 of the Civil Code contemplates a negligent act or omission on the part of the plaintiff, which although not the proximate cause of his injury, contributed to his own damage, the proximate cause of the plaintiffs own injury being the defendant’s lack of due care. In the instant case, no contributory negligence can be imputed to the private respondent, considering the following test formulated in the early case of Picart v. Smith, 37 Phil. 809 (1918): The test by which to determine the existence of negligence in a particular case may be stated as follows: Did the defendant in doing the alleged negligent act use that reasonable care and caution which an ordinarily prudent man would have used in the same situation? If not, then he is guilty of negligence. The law here in effect adopts the standard supposed to be supplied by the imaginary conduct of the discreet paterfamilias of the Roman law. The existence of the negligence in a given case is not determined by reference to the personal judgment of the actor in the situation before him. The law considers what would be reckless, blameworthy, or negligent in the man of ordinary intelligence and prudence and determines liability by that.
The exempting circumstance of caso fortuito may be availed only when
(a) the cause of the unforeseen and unexpected occurrence was independent of the human will;
(b) it was impossible to foresee the event which constituted the caso fortuito or, if it could be foreseen, it was impossible to avoid;
(c) the occurrence must be such as to render it impossible to perform an obligation in a normal manner and
(d) the person tasked to perform the obligation must not have participated in any course of conduct that aggravated the accident. In fine, human agency must be entirely excluded as the proximate cause or contributory cause of the injury or loss. In a vehicular accident, for example, a mechanical defect will not release the defendant from liability if it is shown that the accident could have been prevented had he properly maintained and taken good care of the vehicle.
Medical negligence
When a patient engages the services of a physician, a physician-patient relationship is generated. The type of lawsuit which has been called medical malpractice or, more appropriately, medical negligence, is that type of claim which a victim (patient) has available to him or her to redress a wrong committed by a medical professional which has caused bodily harm. For lack of a specific law geared towards the type of negligence committed by members of the medical profession in this jurisdiction, such claim for damages is almost always anchored on the alleged violation of Art. 2176 of the Civil Code.
Medical malpractice is a particular form of negligence which consists in the failure of a physician or surgeon to apply to his practice of medicine that degree of care and skill which is ordinarily employed by the profession generally, under similar conditions, and in like surrounding circumstances. In order to successfully pursue such a claim, a patient must prove that the physician or surgeon either failed to do something which a reasonably prudent physician or surgeon would have done, or that he or she did something that a reasonably prudent physician or surgeon would not have done, and that the failure or action caused injury to the patient.
There are four elements involved in medical negligence cases, namely:
Duty, breach, injury, and proximate causation.
Medical procedures are expectedly fraught with risks and uncertainties. These may be compounded by negligence or malpractice. In medical negligence cases, there are four elements that must be established: (1) duty; (2) breach; (3) injury; and (4) proximate causation.
In litigations involving medical negligence, the plaintiffs have the burden of establishing these elements through the testimonies of expert witnesses. However, this rule should not be strictly interpreted to mean that the failure to present any expert witness on the part of the plaintiffs shall bar them from recovering damages. An exception that should be recognized such as when the testimony of the expert witness presented by the purported erring defendant physician establishes the standard of care necessary under the given circumstances and supports the claim of the plaintiffs, albeit indirectly.
Actual or compensatory damages
Actual or compensatory damages are “compensation for an injury that will put the injured party in the position where it was before the injury. They pertain to such injuries or losses that are actually sustained and susceptible of measurement.” They are “awarded in satisfaction of, or in recompense for, loss or injury sustained.” Under the law, “[i]n crimes and quasi-delicts, the defendant shall be liable for all damages which are the natural and probable consequences of the act or omission complained of[,]” which may include damages for loss of earning capacity.
To justify an award of actual damages, the claimant is duty bound to substantiate their claim by presenting competent proof of the actual amount of loss. Actual damages, to be recoverable, must not only be capable of proof, but must actually be proved with a reasonable degree of certainty. Courts cannot simply rely on speculation, conjecture or guesswork in determining the fact and amount of damages. To justify an award of actual damages, there must be competent proof of the actual amount of loss, credence can be given only to claims which are duly supported by receipts.
Particularly on the required proof of loss of earning capacity, this Court has held that either or both testimonial and documentary evidence may be presented to establish the deceased’s income.
It is settled that “damages for loss [or impairment] of earning capacity is in the nature of actual damages.
Moral damages
“Moral damages are awarded to enable the injured party to obtain means diversions or amusements that will serve to alleviate the moral suffering he has undergone, by reason of the defendant’s culpable action.”
They are granted to “compensate the claimant for [their] actual injury, and not to penalize the wrongdoer.”
Unlike actual damages, moral damages may be granted even without proof of pecuniary loss, as long as it is established that the offender’s act caused the complainant’s injury.
Article 2219. Moral damages may be recovered in the following and analogous cases:
(1) A criminal offense resulting in physical injuries;
(2) Quasi-delicts causing physical injuries;
(3) Seduction, abduction, rape, or other lascivious acts;
(4) Adultery or concubinage;
(5) Illegal or arbitrary detention or arrest;
(6) Illegal search;
(7) Libel, slander or any other form of defamation;
(8) Malicious prosecution;
(9) Acts mentioned in article 309;
(10) Acts and actions referred to in articles 21, 26, 27, 28, 29, 30, 32, 34, and 35.
The parents of the female seduced, abducted, raped, or abused, referred to in No. 3 of this article, may also recover moral damages.
The spouse, descendants, ascendants, and brothers and sisters may bring the action mentioned in No. 9 of this article, in the order named.
Article 2220. Willful injury to property may be a legal ground for awarding moral damages if the court should find that, under the circumstances, such damages are justly due. The same rule applies to breaches of contract where the defendant acted fraudulently or in bad faith.
In an action for breach of contract, moral damages may be recovered only when
In an action for breach of contract, moral damages may be recovered only when a) death of a passenger results; or b) the carrier was guilty of fraud and bad faith even if death does not result.
To stress, this case is one for breach of contract of carriage (culpa contractual) where it is necessary to show the existence of the contract between the parties, and the failure of the common carrier to transport its passenger safely to his or her destination. An action for breach of contract differs from quasi-delicts (also referred as culpa aquiliana or culpa extra contractual) as the latter emanate from the negligence of the tortfeasor including such instance where a person is injured in a vehicular accident by a party other than the carrier where he is a passenger.
Bad faith
Bad faith “does not simply connote bad judgment or negligence; it imports a dishonest purpose or some moral obliquity and conscious doing of a wrong, a breach of a known duty through some motive or interest or ill will that partakes of the nature of fraud.”
Can nominal damages coexist with actual damages?
It has been settled that nominal damages cannot coexist with actual damages.
Nominal damages are adjudicated in order that a right of the plaintiff, which has been violated or invaded by the defendant, may be vindicated or recognized, and not for the purpose of indemnifying the plaintiff for any loss suffered by him. Since respondent has already been indemnified for the damages made on the leased premises, there is no more reason to further grant nominal damages.
Nominal damages
Article 2221. Nominal damages are adjudicated in order that a right of the plaintiff, which has been violated or invaded by the defendant, may be vindicated or recognized, and not for the purpose of indemnifying the plaintiff for any loss suffered by him.
Article 2222. The court may award nominal damages in every obligation arising from any source enumerated in Article 1157, or in every case where any property right has been invaded.
So long as there is a violation of the right of the plaintiff — whether based on law, contract or other sources of obligations — an award of nominal damages is proper.
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 or where there has been a breach of contract and no substantial injury or actual damages whatsoever have been or can be shown.
Temperate damages
Under Article 2224, “[t]emperate or moderate damages, which are more than nominal but less than compensatory damages, may be recovered when the court finds that some pecuniary loss has been suffered but its amount cannot, from the nature of the case, be proved with certainty.”
The assessment of temperate damages is left to the discretion of the court, in accordance with the circumstances of each case and it must be reasonable.
Liquidated damages
By definition, liquidated damages are a penalty, meant to impress upon defaulting obligors the graver consequences of their own culpability.
Liquidated damages must necessarily make noncompliance more cumbersome than compliance. Otherwise, contracts might as well make no threat of a penalty at all.
“Liquidated damages are identical to penalty, so far as legal results are concerned. In either case, the injured party need not prove the damages suffered by him.” Under Article 2227 of the Civil Code, “[l]iquidated damages, whether intended as an indemnity or a penalty, shall be equitably reduced if they are iniquitous or unconscionable.”
Article 2226 of the Civil Code allows the parties to a contract to stipulated on liquidated damages to be paid in case of breach.
It is attached to an obligation in order to insure performance and has a double function:
(1) to provide for liquidated damages; and
(2) to strengthen the coercive force of the obligation by the threat of greater responsibility in the event of breach.
As a general rule, contracts constitute the law between the parties, and they are bound by its stipulations. For as long as they are not contrary to law, morals, good customs, public order or public policy, the contracting parties may establish such stipulations, clauses, terms and conditions as they may deem convenient.
Exemplary damages
Exemplary or corrective damages are imposed by way of example or correction for the public good, in addition to moral, temperate, liquidated, or compensatory damages. The award of exemplary damages is allowed by law as a warning to the public and as a deterrent against the repetition of socially deleterious actions. The requirements for an award of exemplary damages to be proper are as follows:
First, they may be imposed by way of example or correction only in addition, among others, to compensatory damages, and cannot be recovered as a matter of right, their determination depending upon the amount of compensatory damages that may be awarded to the claimant.
Second, the claimant must first establish his right to moral, temperate, liquidated, or compensatory damages.
And third, the wrongful act must be accompanied by bad faith; and the award would be allowed only if the guilty party acted in a wanton, fraudulent, reckless, oppressive, or malevolent manner.
Article 2232 of the Civil Code provides that in a contractual or quasi-contractual relationship, exemplary damages may be awarded only if the defendant had acted in a wanton, fraudulent, reckless, oppressive, or malevolent manner. Article 2234 of the Civil Code further requires that, to be entitled to exemplary damages, the claimant must show that he is entitled to moral, temperate, or compensatory damages.
Punitive or vindictive damages
Also known as “punitive” or “vindictive” damages, exemplary or corrective damages are intended to serve as a deterrent to serious wrongdoings, and as a vindication of undue sufferings and wanton invasion of the rights of an injured or a punishment for those guilty of outrageous conduct.
These terms are generally, but not always, used interchangeably. In common law, there is preference in the use of exemplary damages when the award is to account for injury to feelings and for the sense of indignity and humiliation suffered by a person as a result of an injury that has been maliciously and wantonly inflicted, the theory being that there should be compensation for the hurt caused by the highly reprehensible conduct of the defendant — associated with such circumstances as willfulness, wantonness, malice, gross negligence or recklessness, oppression, insult or fraud or gross fraud — that intensifies the injury. The terms punitive or vindictive damages are often used to refer to those species of damages that may be awarded against a person to punish him for his outrageous conduct. In either case, these damages are intended in good measure to deter the wrongdoer and others like him from similar conduct in the future.
Damages that May be Awarded When Death Occurs Due to a Crime
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.
Thus, with respect to the crime for which herein accused-appellant is convicted, civil indemnity in the amount of Php100,000 is granted without need of evidence other than the commission of the crime, moral damages in the sum of Php100,000 is granted automatically in the absence of any qualifying aggravating circumstance, exemplary damages in the sum of Php100,000 is granted where the circumstances of the case show the highly reprehensible conduct of the offenders.
When death occurs due to a crime, the following may be recovered: (1) civil indemnity ex delicto for the death of the victim; (2) actual or compensatory damages; (3) moral damages; (4) exemplary damages; (5) attorney’s fees and expenses of litigation; and (6) interest, in proper cases; The award of moral damages in case of violent death of the victim does not require allegation and proof of the emotional suffering of the heirs.
The damages to be awarded to the heirs of a victim of the special complex crime of rape with homicide where the penalty to be imposed upon the accused is death, but reduced to reclusion perpetua upon enactment of Republic Act (RA) No. 9346, shall be as follows:
Existing jurisprudence imparts that the damages to be awarded to the heirs of a victim of the special complex crime of rape with homicide where the penalty to be imposed upon the accused is death, but reduced to reclusion perpetua upon enactment of R.A. No. 9346, shall be as follows: civil indemnity – P100,000.00; moral damages – P100,000.00; exemplary damages – P100,000.00; and P50,000.00 as temperate damages.
In addition, the civil indemnity, moral damages, exemplary damages, and temperate damages payable by the appellant are subject to interest at the rate of six percent (6%) per annum from the finality of this decision until fully paid.
Duty of injured party
One who is injured then by the wrongful or negligent act of another should exercise reasonable care and diligence to minimize the resulting damage. Anyway, he can recover from the wrongdoer money lost in reasonable efforts to preserve the property injured and for injuries incurred in attempting to prevent damage to it.
It is a fundamental principle in the law on damages that a defendant cannot be held liable in damages for more than the actual loss which he has inflicted and that a plaintiff is entitled to no more than the just and adequate compensation for the injury suffered.
Mutuum
By the contract of loan, one of the parties delivers to another money or other consumable thing, upon the condition that the same amount of the same kind and quality shall be paid, in which case the contract is simply called a loan or mutuum.
Howey test
In our jurisdiction, the “Howey Test” is employed to determine whether an agreement is an investment contract. It requires the concurrence of the following for an investment contract to exist: (1) a contract, transaction; or scheme; (2) an investment of money (3) investment is made in a common enterprise; (4) expectation of profits; and (5) profits arising primarily from the efforts of others.
Mutuum vs. Investment Contract
On one hand, an investment contract refers to a contract, transaction, or scheme whereby a person invests his/her money in a common enterprise and is led to expect profits primarily from the efforts of others. It is presumed to exist whenever a person seeks to use the money or property of others on the promise of profits.
On the other hand, Article 1933 of the New Civil Code states that, “[b]y the contract of loan, one of the parties delivers to another x x x money or other consumable thing, upon the condition that the same amount of the same kind and quality shall be paid, in which case the contract is simply called a loan or mutuum.”
Simple loan may be gratuitous or with a stipulation to pay interest.
There are generally two types of interest:
There are generally two types of interest: first, monetary interest, and second, compensatory interest.
Monetary interest is the compensation fixed by the parties for the use or forbearance of money. On the other hand, compensatory interest is that imposed by law or by the courts as penalty or indemnity for damages. In other words, the right to recover interest arises only either by virtue of a contract (monetary interest) or as damages for the delay or failure to pay the principal loan on which the interest is demanded (compensatory interest).
“Interest” in BP129
It is clear that what the term “interest” found in BP 129 only pertains to compensatory interest.
Compensatory interest, which as stated above, is a form of penalty or indemnity, and similar to damages, attorney’s fees, and costs of suit, is merely incidental and ancillary to a plaintiffs cause of action. In stark contrast, monetary interest is a primary and inseparable component of a plaintiff’s cause of action, considering that it forms part of the total amount due, regardless of any breach of obligation.
Commodatum vs. Mutuum
By the contract of loan, one of the parties delivers to another, either something not consumable so that the latter may use the same for a certain time and return it, in which case the contract is called a commodatum; or money or other consumable thing, upon the condition that the same amount of the same kind and quality shall be paid, in which case the contract is simply called a loan or mutuum.
Commodatum is essentially gratuitous. Simple loan may be gratuitous or with a stipulation to pay interest. In commodatum, the bailor retains the ownership of the thing loaned, while in simple loan, ownership passes to the borrower.
Contract of loan vs. Contract of sale
A contract of loan is one where one of the parties delivers money or other consumable thing upon the condition that the same amount of the same kind and quality shall be paid. It is perfected upon delivery of the object of the contract. On the other hand, a contract of sale is a special contract whereby the seller obligates himself to deliver a determinate thing and to transfer its ownership to the buyer. The same is perfected by mere consent of the parties.
Thus, it is readily apparent that a contract of loan is distinct and separate from a contract of sale. In a loan, the object certain is the money or consumable thing borrowed by the obligor, while in a sale the object is a determinate thing to be sold to the vendee for a consideration. In addition, a loan agreement is perfected only upon the delivery of the object i.e., money or another consumable thing, while a contract of sale is perfected by mere consent of the parties. Under this premise, it is not hard to see the absurdity in the position of Spouses Batalla that they could rescind the car loan agreement and promissory note with Prudential on the ground of alleged defects of the car delivered to them by Honda.
The transactions of Spouses Batalla with Prudential and Honda are distinct and separate from each other. From the time Spouses Batalla accepted the loan proceeds from Prudential, the loan agreement had been perfected. As such, they were bound to comply with their obligations under the loan agreement regardless of the outcome of the contract of sale with Honda.
Escalation clause
The agreement between the parties on the imposition of increasing interest rates on the loan is commonly known as the escalation clause.
Generally, the escalation clause refers to the stipulation allowing increases in the interest rates agreed upon by the contracting parties. There is nothing inherently wrong with the escalation clause because it is validly stipulated in commercial contracts as one of the means adopted to maintain fiscal stability and to retain the value of money in long term contracts. In short, the escalation clause is not void per se. Yet, the escalation clause that “grants the creditor an unbridled right to adjust the interest independently and upwardly, completely depriving the debtor of the right to assent to an important modification in the agreement” is void. Such escalation clause violates the principle of mutuality of contracts, and should be annulled. To prevent or forestall any one-sidedness that the escalation clause may cause in favor of the creditor, therefore, Presidential Decree No. 1684 was promulgated.
De-escalation clause
Although it would not necessarily prevent the lender from discriminatorily increasing the interest rates, the de-escalation clause’s main objective is to prevent the unwanted one-sidedness in favor of the lender, a quality that is repugnant to the principle of mutuality of contracts. The clause proposes to ensure that any unconsented increase in interest rates is ineffective for transgressing the principle of mutuality of contracts. Indeed, the clause creates a balance in the contractual relationship between the lender and the borrower, and tempers the power of the stronger player between the two, which is the former.
Bank deposits
Bank deposits are in the nature of a simple loan or mutuum, which must be paid upon demand by the depositor. As such, the deposit of whatever amount to PNB creates a debtor-creditor relationship between the bank and the depositor. PNB, as the recipient of the deposit, is duty-bound to pay or release the amount deposited whenever the depositor so requires. By the very nature of the deposit, PNB could not have assumed that the Spouses Bacani’s alleged time deposit account was meant as an option money intended to secure the privilege of buying the subject property within a given period of time, especially since there was no option contract between them. Neither may PNB consider the deposit as a down payment on the price of the subject property because there was no perfected contract of sale. Evidently, as far as PNB was concerned, it cannot use the money in the time deposit to satisfy the purchase price for the subject property, without violating its obligation to return the amount upon the demand of the depositors. In other words, the time deposit with PNB did not create a contract of sale, or at the very least, an option contract, between PNB and the Spouses Bacani.
Bank deposits are in the nature of irregular deposits. They are really loans because they earn interest. All kinds of bank deposits, whether fixed, savings, or current are to be treated as loans and are to be covered by the law on loans.
Contract for the use of safety deposit box
Contract for the use of safety deposit box is a special kind of deposit and the relationship between the parties thereto, with respect to the contents of the box, is that of a bailor and bailee, the bailment being for hire and mutual benefit.
In the recent case of CA Agro-Industrial Development Corp. vs. Court of Appeals, this Court explicitly rejected the contention that a contract for the use of a safety deposit box is a contract of lease governed by Title VII, Book IV of the Civil Code. Nor did We fully subscribe to the view that it is a contract of deposit to be strictly governed by the Civil Code provision on deposit; it is, as We declared, a special kind of deposit. The prevailing rule in American jurisprudence—that the relation between a bank renting out safe deposit boxes and its customer with respect to the contents of the box is that of a bailor and bailee, the bailment being for hire and mutual benefit has been adopted in this jurisdiction.
Are conditions in a “Lease Agreement” covering a safety deposit box which exempt the bank from any liability for damage, loss or destruction of the contents thereof arising from its own or its agent’s fraud, negligence or delay valid?
Conditions in a “Lease Agreement” covering a safety deposit box which exempt the bank from any liability for damage, loss or destruction of the contents thereof arising from its own or its agent’s fraud, negligence or delay are considered null and void, for being contrary to law and public policy.
Contract of suretyship
A contract of suretyship is an agreement where a party called the surety guarantees the performance by another party called the principal or obligor of an obligation or undertaking in favor of a third person called the obligee.
Jurisprudence also defines a contract of suretyship as “an agreement where a party called the surety guarantees the performance by another party called the principal or obligor of an obligation or undertaking in favor of a third person called the obligee.”
The Court expounds that “a surety’s liability is joint and several, limited to the amount of the bond, and determined strictly by the terms of contract of suretyship in relation to the principal contract between the obligor and the obligee. We emphasize, however, that although the contract of suretyship is secondary to the principal contract, the surety’s liability to the obligee is nevertheless direct, primary, and absolute.” In other words, even though the contract of a surety is secondary only to a valid principal obligation, the surety becomes liable for the debt or duty of another although it possesses no direct or personal interest over the obligations nor receives any benefit therefrom.
In fact, since the surety is a solidary debtor, it is not necessary that the original debtor first failed to pay before the surety could be made liable; it is enough that a demand for payment is made by the creditor for the surety’s liability to attach.
A suretyship agreement is a contract of adhesion ordinarily prepared by the surety or insurance company. Therefore, its provisions are interpreted liberally in favor of the insured and strictly against the insurer who, as the drafter of the bond, had the opportunity to state plainly the terms of its obligation.
A suretyship consists of two different contracts:
A suretyship consists of two different contracts: (1) the surety contract and (2) the principal contract which it guarantees.
Since the insurer’s liability is strictly based only on the terms stated in the surety contract in relation to the principal contract, any change in the principal contract, which materially alters the principal’s obligations would, in effect, constitute an implied novation of the surety contract:
[A] surety is released from its obligation when there is a material alteration of the contract in connection with which the bond is given, such as a change which imposes a new obligation on the promising party, or which takes away some obligation already imposed, or one which changes the legal effect of the original contract and not merely its form. A surety, however, is not released by a change in the contract which does not have the effect of making its obligation more onerous.
A surety is released from its obligation when
A surety is released from its obligation when there is a material alteration of the principal contract in connection with which the bond is given, such as a change which imposes a new obligation on the promising party, or which takes away some obligation already imposed, or one which changes the legal effect of the original contract and not merely its form.
As decreed, not all changes in the principal contract would work to absolve a surety from liability. This liability is not extinguished when the modifications in the principal contract do not substantially or materially alter the principal’s obligations. Verily, the touchstone for contrariety would be an irreconcilable incompatibility between the old and new obligations. XXX There are no material alterations to speak of here. Unlike in People Trans-East Asia Insurance Corp. vs. Doctors of New Millenium, where a waiver was inserted in the agreement, or in PCIC vs. PDSC, where a memorandum of agreement was subsequently executed to revise the work schedule of the project, the principal contract here has remained materially the same from beginning to end; there was not even a supplemental contract executed to change, vary, or modify the Distributor Agreement. In any event, the Court of Appeals first pointed to the supposed change in the scheduled delivery of the goods from a monthly to a daily/weekly basis as a material alteration which made respondent’s obligation more onerous as it would hasten PASSI’s obligation to pay, thereby increasing the risk of non-payment and the forfeiture of the performance bond. This is at best conjectural. To be sure, no evidence was adduced to prove that the frequency of the deliveries to PASSI increased its risk of non-payment and accelerated the need to call on or forfeit the performance bond. The deliveries, in the first place, were based on orders placed by PASSI itself. Presumably, it would know if it has the capacity to pay for its orders. At any rate, should the performance bond get forfeited, respondent has the right to be subrogated to the remedies available to petitioner against PASSI.
Surety’s liability with the principal
A surety’s liability is joint and several with the principal. Thus, the creditor has the right to proceed even against the surety alone.
Under Article 2047 of the Civil Code, suretyship arises upon the solidary binding of a person deemed to be the surety with the principal debtor for the purpose of fulfilling an obligation. A creditor’s right to proceed against the surety exists independently of his right to proceed against the principal. Article 1216 of the Civil Code states that the creditor may proceed against any one of the solidary debtors or some or all of them simultaneously. The rule, therefore, is that if the obligation is joint and several, the creditor has the right to proceed even against the surety alone. Respondent may, thus, be sued separately or together with PASSI in view of the solidary nature of its liability. As it was, petitioner opted to pursue collection against the surety only, without impleading the principal debtor. Basic is the principle that “a contract is law between the parties” for as long as it is “not contrary to law, morals, good customs, public order, or public policy.” Under the contract of surety, respondent guaranteed the full and faithful compliance by PASSI of its obligations under the Distributor Agreement.
A surety’s liability is joint and several with the principal. “Article 2047 of the Civil Code provides that suretyship arises upon the solidary binding of a person deemed the surety with the principal debtor for the purpose of fulfilling an obligation.” Although the surety’s obligation is merely secondary or collateral to the obligation contracted by the principal, this Court has nevertheless characterized the surety’s liability to the creditor of the principal as “direct, primary, and absolute[;] [i]n other words, the surety is directly and equally bound with the principal.”
Although the contract of a surety is in essence secondary only to a valid principal obligation, the surety’s liability to the creditor or the “promise” of the principal is direct, primary and absolute. The surety becomes liable for the debt and duty of the principal obligor, even without possessing a direct or personal interest in the obligations constituted by the latter.
Continuing guaranty
A continuing guaranty is a recognized exception to the rule that an action to foreclose a mortgage must be limited to the amount mentioned in the mortgage contract.
In Bank of Commerce v. Spouses Flores, 637 SCRA 563 (2010), the Court explains the import of such phraseology as evidencing a continuing guaranty, thus: A continuing guaranty is a recognized exception to the rule that an action to foreclose a mortgage must be limited to the amount mentioned in the mortgage contract. Under Article 2053 of the Civil Code, a guaranty may be given to secure even future debts, the amount of which may not be known at the time the guaranty is executed. This is the basis for contracts denominated as a continuing guaranty or suretyship. A continuing guaranty is not limited to a single transaction, but contemplates a future course of dealing, covering a series of transactions, generally for an indefinite time or until revoked. It is prospective in its operation and is generally intended to provide security with respect to future transactions within certain limits, and contemplates a succession of liabilities, for which, as they accrue, the guarantor becomes liable. In other words, a continuing guaranty is one that covers all transactions, including those arising in the future, which are within the description or contemplation of the contract of guaranty, until the expiration or termination thereof. A guaranty shall be construed as continuing when, by the terms thereof, it is evident that the object is to give a standing credit to the principal debtor to be used from time to time either indefinitely or until a certain period, especially if the right to recall the guaranty is expressly reserved. In other jurisdictions, it has been held that the use of particular words and expressions, such as payment of “any debt,” “any indebtedness,” “any deficiency,” or “any sum,” or the guaranty of “any transaction” or money to be furnished the principal debtor “at any time” or “on such time” that the principal debtor may require, has been construed to indicate a continuing guaranty.
The guarantor cannot be compelled to pay the creditor unless
The guarantor cannot be compelled to pay the creditor unless the latter has exhausted all the property of the debtor and resorted to all the legal remedies against the debtor.
Under a normal contract of guarantee, the guarantor binds himself to the creditor to fulfill the obligation of the principal debtor in case the latter should fail to do so. The guarantor who pays for a debtor, in turn, must be indemnified by the latter. However, the guarantor cannot be compelled to pay the creditor unless the latter has exhausted all the property of the debtor and resorted to all the legal remedies against the debtor. This is what is otherwise known as the benefit of excussion. Conversely, if this benefit of excussion is waived, the guarantor can be directly compelled by the creditor to pay the entire debt even without the exhaustion of the debtor’s properties.
When does a guaranty become suretyship?
Under the Civil Code, by virtue of Article 2047, which states that a contract is called a suretyship when a person binds himself solidarily with the principal debtor, when the guarantor binds himself solidarily with the debtor, the contract ceases to be a guaranty and becomes suretyship.
Recognized Civil Law Commentator, former Court of Appeals Justice Eduardo P. Caguioa also explained that one of the hallmarks of a contract of guaranty is its subsidiary character — “that the guarantor only answers if the debtor cannot fulfill his obligation; hence the benefit of excussion in favor of the guarantor.” Hence, under the Civil Code, “by virtue of [Article 2047, which states that a contract is called a suretyship when a person binds himself solidarily with the principal debtor], when the guarantor binds himself solidarily with the debtor, the contract ceases to be a guaranty and becomes suretyship.” The eminent civilist further explained that what differentiates a surety from a guaranty is that in the former, “a surety is principally liable[,] while a guarantor is [only] secondarily liable.”
The defining characteristic that distinguishes a guarantee from a suretyship
The defining characteristic that distinguishes a guarantee from a suretyship is that in the latter, the obligor promises to pay the principal’s debt if the principal will not pay, while in the former, the obligor agrees that the creditor, after proceeding against the principal and exhausting all of the principal’s properties, may proceed against the obligor.
In the instant case, without any shadow of doubt, petitioner TIDCORP had expressly renounced the benefit of excussion and in no uncertain terms made itself directly and principally liable without any qualification to the Series A Noteholders and without the need of any prior recourse to PhilPhos. In effect, the nature of the guarantee obligation assumed by petitioner TIDCORP under the Guarantee Agreement was transformed into a suretyship. This is the case because the defining characteristic that distinguishes a guarantee from a suretyship is that in the latter, the obligor promises to pay the principal’s debt if the principal will not pay, while in the former, the obligor agrees that the creditor, after proceeding against the principal and exhausting all of the principal’s properties, may proceed against the obligor.
Can the obligation of the guarantor exist independently from the obligation of the debtor?
Under Article 2076 of the Civil Code, “(t)he obligation of the guarantor is extinguished at the same time as that of the debtor, and for the same causes as all other obligations.”
The contract of guaranty is merely accessory to a principal obligation; it cannot survive without the latter. Under Article 2076 of the Civil Code, “(t)he obligation of the guarantor is extinguished at the same time as that of the debtor, and for the same causes as all other obligations.” The resolution of Civil Case No. CEB 22294 and the consequent satisfaction of petitioner’s claim therein bars further recovery via a deficiency judgment as against respondents Eliezer and Leila Adlawan, who are deemed to have paid their loan obligation. For this reason, their obligation has been extinguished which should, in turn, operate to the benefit of their co respondents, Eliezer, Sr. and Elena Adlawan whose liability is based on guaranty, a mere accessory contract to the loan obligation that cannot survive after the extinguishment of the latter.
Guarantor
A contract of guaranty gives rise to a subsidiary obligation on the part of the guarantor. A guarantor agrees that the creditor, after proceeding against the principal, may proceed against the guarantor if the principal is unable to pay. Moreover, he contracts to pay if, by the use of due diligence, the debt cannot be made out of the principal debtor.
Liability under surety bond
Liability under a surety bond is “limited to the amount of the bond” and is determined strictly inn accordance with the particular terms and conditions set out in this bond. It is, thus, necessary to look into the actual terms of the performance bond.
Mortgage
A mortgage, by its nature, is an accessory contract which may only be enforced when there has been a breach of the principal obligation. On the other hand, in reciprocal obligations such as a loan, a party may only be deemed in breach when the other has already fulfilled his or her obligation.
Effects of pactum commissorium on the ownership of security
In pactum commissorium, the ownership of the security will pass to the creditor by the mere default in payment of the loan by the debtor.
The Court has invariably declared that this kind of arrangement is void for being contrary to morals and public policy. Here, when petitioner and respondent stipulated in their Deed that “if the VENDOR shall fail to exercise his right to repurchase as herein granted within the period stipulated, then this conveyance shall become absolute and irrecovable, without the necessity of drawing up a new deed of absolute sale, subject to the requirement of the law regarding consolidation of ownership xxx” they evidently entered into a pactum commissorium arrangement which enables the mortgagee to acquire ownership of the mortgaged property without the need of foreclosure proceedings.” This stipulation violates Article 2088 of the Civil Code, hence, it is void. It contradicts the nature of a true pacto de retro sale, under which a vendee acquires ownership of the thing sold immediately upon execution of the sale, subject only to the vendor’s right of redemption.
Effect of sale or transfer of a mortgaged property on mortgage
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 Court notes that the real estate mortgage over a portion of the property was annotated on the transfer certificate of titles. A mortgage is a real right, which follows the property, even after subsequent transfers by the mortgagor. “A registered mortgage lien is considered inseparable from the property inasmuch as it is a right in rem.” 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 implication in buying the property, with notice that it was mortgaged, was that Progressive necessarily undertook to allow the subject property to be sold upon failure of Gabriel to obtain payment from Cebrero once the indebtedness matured. Thus, it cannot invoke being a buyer in good faith to exclude the property from being claimed by virtue of foreclosure of the mortgage over the said property. This, however, does not mean that the Court rules in favor of the petitioners. Considering that the complaint was filed by Cañiza, who has failed to prove that he was validly authorized to do so, the complaint does not produce any legal effect. The RTC never validly acquired jurisdiction over the case. Thus, the instant petition must be dismissed.
Requisites of a Valid Mortgage
Under Article 2085 of the Civil Code, a mortgage, to be valid, must have the following requisites, namely: (a) that it be constituted to secure the fulfillment of a principal obligation; (b) that the mortgagor be the absolute owner of the thing mortgaged; and (c) that the person constituting the mortgage has free disposal of the property, and in the absence of the right of free disposal, that the person be legally authorized for the purpose.
Innocent purchaser for value
The term “innocent purchaser for value” (IPV) may also refer to an innocent mortgagee who had no knowledge of any defects in the title of the mortgagor of the property, such as in this case.
The rationale for the rule on innocent purchasers for value “is the public’s interest in sustaining ‘the indefeasibility of a certificate of title, as evidence of the lawful ownership of the land or of any encumbrance’ on it.” Notably, the term “innocent purchaser for value” may also refer to an innocent mortgagee who had no knowledge of any defects in the title of the mortgagor of the property, such as in this case. However, while “public policy and public order demand x x x that titles over lands under the Torrens system should be given stability for on it greatly depends the stability of the country’s economy[,] x x x [p]ublic policy also dictates that those unjustly deprived of their rights over real property by reason of the operation of our registration laws be afforded remedies.” Thus, as early as the 1925 case of Estrellado v. Martinez, 48 Phil. 256 (1925), it has been discerned that remedies, such as an action against the Assurance Fund, are available remedies to the unwitting owner.
Is registration of REM essential to its validity?
The registration of a real estate mortgage (REM) deed is not essential to its validity.
At the outset, We stress that the registration of a REM deed is not essential to its validity. The law is clear on the requisites for the validity of a mortgage, to wit: Art. 2085. The following requisites are essential to the contracts of pledge and mortgage:
(1) That they be constituted to secure the fulfillment of a principal obligation;
(2) That the pledgor or mortgagor be the absolute owner of the thing pledged or mortgaged;
(3) That the persons constituting the pledge or mortgage have the free disposal of their property, and in the absence thereof, that they be legally authorized for the purpose.
Third persons who are not parties to the principal obligation may secure the latter by pledging or mortgaging their own property. In relation thereto, Article 2125 provides:
Article 2125. 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. Thus, as between the parties to a mortgage, the nonregistration of a REM deed is immaterial to its validity. In the case of Paradigm Development Corporation of the Philippines v. Bank of the Philippine Islands, 826 SCRA 267 (2017), the mortgagee allegedly represented that it will not register one of the REMs signed by the mortgagor. In upholding the validity of the questioned REM between the said parties, the Court ruled that “with or without the registration of the REMs, as between the parties thereto, the same is valid and [the mortgagor] is bound thereby.”
Security interest
Security interest refers to a property right in collateral that secures payment or other performance of an obligation, regardless of whether the parties have denominated it as a security interest, and regardless of the type of asset, the status of the grantor or secured creditor, or the nature of the secured obligation; including the right of a buyer of accounts receivable and a lessor under an operating lease for not less than one (1) year; Personal Property Security Act, Republic Act No. 11057, Section 3(j)
Scope of Personal Property Security Act
This Act shall apply to all transactions of any form that secure an obligation with movable collateral, except interests in aircrafts subject to Republic Act No. 9497, or the “Civil Aviation Authority Act of 2008,” and interests in ships subject to Presidential Decree No. 1521, or the “Ship Mortgage Decree of 1978.”
Security Agreement
A security agreement must be contained in a written contract signed by the parties. It may consist of one or more writings that, taken together, establish the intent of the parties to create a security interest.
Right to Proceeds and Commingled Funds and Money
(a) A security interest in personal property shall extend to its identifiable or traceable proceeds.
(b) Where proceeds in the form of funds credited to a deposit account or money are commingled with other funds or money:
(1) The security interest shall extend to the commingled money or funds, notwithstanding that the proceeds have ceased to be identifiable to the extent they remain traceable;
(2) The security interest in the commingled funds or money shall be limited to the amount of the proceeds immediately before they were commingled; and
(3) If at any time after the commingling, the balance credited to the deposit account or the amount of the commingled money is less than the amount of the proceeds immediately before they were commingled, the security interest against the commingled funds or money shall be limited to the lowest amount of the commingled funds or money between the time when the proceeds were commingled and the time the security interest in the proceeds is claimed. Personal Property Security Act, Republic Act No. 11057, Section 8
Continuity of Security Interest
A security interest shall continue in collateral notwithstanding sale, lease, license, exchange, or other disposition of the collateral, except as otherwise provided in Section 21 of this Act, or agreed upon by the parties. Personal Property Security Act, Republic Act No. 11057, Section 9
A security interest may be perfected by:
(a) Registration of a notice with the Registry;
(b) Possession of the collateral by the secured creditor; and
(c) Control of investment property and deposit account.
A security interest in any tangible asset may be perfected by registration or possession. A security interest in investment property and deposit account may be perfected by registration or control. Personal Property Security Act, Republic Act No. 11057, Section 12
Priority Rules
The priority of security interests and liens in the same collateral shall be determined according to time of registration of a notice or perfection by other means, without regard to the order of creation of the security interests and liens. Personal Property Security Act, Republic Act No. 11057, Section 17
Priority for Perfection by Control
(a) A security interest in a deposit account with respect to which the secured creditor is the deposit-taking institution or the intermediary shall have priority over a competing security interest perfected by any method.
(b) A security interest in a deposit account or investment property that is perfected by a control agreement shall have priority over a competing security interest except a security interest of the deposit-taking institution or the intermediary.
(c) The order of priority among competing security interests in a deposit account or investment property that were perfected by the conclusion of control agreements shall be determined on the basis of the time of conclusion of the control agreements.
(d) Any rights to set-off that the deposit-taking institution may have against a grantor’s right to payment of funds credited to a deposit account shall have priority over a security interest in the deposit account.
(e) A security interest in a security certificate perfected by the secured creditor’s possession of the certificate shall have priority over a competing security interest perfected by registration of a notice in the Registry.
(f) A security interest in electronic securities not held with an intermediary perfected by a notation of the security interests in the books maintained for that purpose by or on behalf of the issuer shall have priority over a security interest in the same securities perfected by any other method.
(g) A security interest in electronic securities not held with an intermediary perfected by the conclusion of a control agreement shall have priority over a security interest in the same securities perfected by registration of a notice in the Registry.
(h) The order of priority among competing security interests in electronic securities not held with an intermediary perfected by the conclusion of control agreements is determined on the basis of the time of conclusion of the control agreements. Personal Property Security Act, Republic Act No. 11057, Section 18
Priority for Instruments and Negotiable Documents
A security interest in an instrument or negotiable document that is perfected by possession of the instrument or the negotiable document shall have priority over a security interest in the instrument or negotiable document that is perfected by registration of a notice in the Registry. Personal Property Security Act, Republic Act No. 11057, Section 19
Priority and Right of Retention by Operation of Law
A person who provides services or materials with respect to the goods, in the ordinary course of business, and retains possession of the goods shall have priority over a perfected security interest in the goods until payment thereof. Personal Property Security Act, Republic Act No. 11057, Section 20
Transferee Exceptions
Any party who obtains, in the ordinary course of business, any movable property containing a security interest shall take the same free of such security interest provided he was in good faith. No such good faith shall exist if the security interest in the movable property was registered prior to his obtaining the property. Personal Property Security Act, Republic Act No. 11057, Section 21
Purchase Money Security Interest
(a) A purchase money security interest in equipment and its proceeds shall have priority over a conflicting security interest, if a notice relating to the purchase money security interest is registered within three (3) business days after the grantor receives possession of the equipment.
(b) A purchase money security interest in consumer goods that is perfected by registration of notice not later than three (3) business days after the grantor obtains possession of the consumer goods shall have priority over a conflicting security interest.
(c) A purchase money security interest in inventory, intellectual property or livestock shall have priority over a conflicting perfected security interest in the same inventory, intellectual property or livestock if:
(1) The purchase money security interest is perfected when the grantor receives possession of the inventory or livestock, or acquires rights to intellectual property; and
(2) Before the grantor receives possession of the inventory or livestock, or acquires rights in intellectual property, the purchase money secured creditor gives written notification to the holder of the conflicting perfected security interest in the same types of inventory, livestock, or intellectual property. The notification sent to the holder of the conflicting security interest may cover multiple transactions between the purchase money secured creditor and the grantor without the need to identify each transaction.
(d) The purchase money security interest in equipment or consumer goods perfected timely in accordance with subsections (a) and (b), shall have priority over the rights of a buyer, lessee, or lien holder which arise between delivery of the equipment or consumer goods to the grantor and the time the notice is registered. Personal Property Security Act, Republic Act No. 11057, Section 23
Effectiveness of Notice
(a) A notice shall be effective at the time it is discoverable on the records of the Registry.
(b) A notice shall be effective for the duration of the term indicated in the notice unless a continuation notice is registered before the term lapses.
(c) A notice substantially complying with the requirements of this Chapter shall be effective unless it is seriously misleading.
(d) A notice that may not be retrieved in a search of the Registry against the correct identifier of the grantor shall be ineffective with respect to that grantor. Personal Property Security Act, Republic Act No. 11057, Section 30
Termination of Effectiveness of a Notice
(a) The effectiveness of a notice may be terminated by registering a termination notice that:
(1) Identifies the initial notice by its registration number; and
(2) Identifies each secured creditor who authorizes the registration of the termination notice.
(b) A termination notice terminates effectiveness of the notice as to each authorizing secured creditor. Personal Property Security Act, Republic Act No. 11057, Section 34
Public Land Act
Commonwealth Act No. 141 or the Public Land Act is the country’s primary law on matters concerning classification and disposition of lands of the public domain.
It provides that the President, upon the recommendation of the Secretary of Environment and Natural Resources, may designate by proclamation any tract or tracts of land of the public domain as reservations for the use of the Republic or any of its branches, or for quasi-public uses or purposes. The tract or tracts of land thus reserved shall be non-alienable and shall not be subject to sale or other disposition until again declared alienable. Thus, we find it necessary to determine the proper classification of the public land that the Philippine Navy developed into a golf course.
The appointment of a special administrator is warranted when
A special administrator is a representative of the decedent appointed by the probate court to care for and preserve the estate until the appointment of the executor or administrator. He is considered an officer of the court who is in charge of the estate, not a representative of the agent of the parties recommending his appointment. Hence, he is subject to the probate court’s supervision and control and is expected to work for the best interests of the entire estate, particularly towards its smooth administration and earliest settlement.
The appointment of a special administrator is warranted when there is delay in granting letters testamentary or of administration by any cause including an appeal from the allowance or disallowance of a will.
The rules in the selection or removal of regular administrators do not apply to special administrators. In appointing a special administrator, the probate court is not limited to the grounds for incompetence laid down in Rule 78, Section 1 and the order of preference provided in Rule 78, Section 6 pertinent to regular administrators. The appointment of a special administrator rests on the sound discretion of the probate court. As held in Ocampo v. Ocampo, this discretion must be exercised with reason, guided by the directives of equity, justice and legal principles.
Effect of minority, insanity, being a deaf-mute on one’s ability to act
Article 38. Minority, insanity, or imbecility, the state of being a deaf-mute, prodigality and civil interdiction are mere restrictions on capacity to act, and do not exempt the incapacitated person from certain obligations, as when the latter arise from his acts or from property relations, such as easements.
Effect of death on one’s civil personality
Article 42. Civil personality is extinguished by death.
The effect of death upon the rights and obligations of the deceased is determined by law, by contract, and by will.
That except for purposes of succession, when two persons perish in the same calamity, such as wreck, battle, or conflagration, and it is not shown who died first, and there are no particular circumstances from which it can be inferred, the survivorship is determined from the probabilities resulting from the strength and the age of the sexes, according to the following rules:
- If both were under the age of fifteen years, the older is deemed to have survived;
- If both were above the age sixty, the younger is deemed to have survived;
- If one is under fifteen and the other above sixty, the former is deemed to have survived;
- If both be over fifteen and under sixty, and the sex be different, the male is deemed to have survived, if the sex be the same, the older;
- If one be under fifteen or over sixty, and the other between those ages, the latter is deemed to have survived.
Domicile
a. of natural persons
b. of juridical persons
Article 50. For the exercise of civil rights and the fulfillment of civil obligations, the domicile of natural persons is the place of their habitual residence.
Article 51. When the law creating or recognizing them, or any other provision does not fix the domicile of juridical persons, the same shall be understood to be the place where their legal representation is established or where they exercise their principal functions.
Adoption shall have the following effects:
Article 189, Family Code
- For civil purposes, the adopted shall be deemed to be a legitimate child of the adopters and both shall acquire the reciprocal rights and obligations arising from the relationship of parent and child, including the right of the adopted to use the surname of the adopters;
- The parental authority of the parents by nature over the adopted shall terminate and be vested in the adopters, except that if the adopter is the spouse of the parent by nature of the adopted, parental authority over the adopted shall be exercised jointly by both spouses; and
- The adopted shall remain an intestate heir of his parents and other blood relatives.
Declaration of absence
Article 384. Two years having elapsed without any news about the absentee or since the receipt of the last news, and five years in case the absentee has left a person in charge of the administration of his property, his absence may be declared.
Article 386. The judicial declaration of absence shall not take effect until 6 months after its publication in a newspaper of general circulation.
Art. 41. A marriage contracted by any person during subsistence of a previous marriage shall be null and void, unless before the celebration of the subsequent marriage, the prior spouse had been absent for four consecutive years and the spouse present has a well-founded belief that the absent spouse was already dead. In case of disappearance where there is danger of death under the circumstances set forth in the provisions of Article 391 of the Civil Code, an absence of only two years shall be sufficient.
For the purpose of contracting the subsequent marriage under the preceding paragraph the spouse present must institute a summary proceeding as provided in this Code for the declaration of presumptive death of the absentee, without prejudice to the effect of reappearance of the absent spouse.
Presumption of Death
Article 390. After an absence of seven years, it being unknown whether or not the absentee still lives, he shall be presumed dead for all purposes, except for those of succession.
The absentee shall not be presumed dead for the purpose of opening his succession till after an absence of ten years. If he disappeared after the age of seventy-five years, an absence of five years shall be sufficient in order that his succession may be opened.
Article 391. The following shall be presumed dead for all purposes, including the division of the estate among the heirs:
(1) A person on board a vessel lost during a sea voyage, or an aeroplane which is missing, who has not been heard of for four years since the loss of the vessel or aeroplane;
(2) A person in the armed forces who has taken part in war, and has been missing for four years;
(3) A person who has been in danger of death under other circumstances and his existence has not been known for four years.
Essential & Formal requisites of marriage
Art. 2. No marriage shall be valid, unless these essential requisites are present:
(1) Legal capacity of the contracting parties who must be a male and a female; and
(2) Consent freely given in the presence of the solemnizing officer. (53a)ChanRoblesVirtualawlibrary
Art. 3. The formal requisites of marriage are:
(1) Authority of the solemnizing officer;
(2) A valid marriage license except in the cases provided for in Chapter 2 of this Title; and
(3) A marriage ceremony which takes place with the appearance of the contracting parties before the solemnizing officer and their personal declaration that they take each other as husband and wife in the presence of not less than two witnesses of legal age.
Marriage may be solemnized by
Art. 7. Marriage may be solemnized by:
(1) Any incumbent member of the judiciary within the court’s jurisdiction;
(2) Any priest, rabbi, imam, or minister of any church or religious sect duly authorized by his church or religious sect and registered with the civil registrar general, acting within the limits of the written authority granted by his church or religious sect and provided that at least one of the contracting parties belongs to the solemnizing officer’s church or religious sect;
(3) Any ship captain or airplane chief only in the case mentioned in Article 31;
(4) Any military commander of a unit to which a chaplain is assigned, in the absence of the latter, during a military operation, likewise only in the cases mentioned in Article 32;
(5) Any consul-general, consul or vice-consul in the case provided in Article 10.
Art. 35. The following marriages shall be void from the beginning:
(1) Those contracted by any party below eighteen years of age even with the consent of parents or guardians;
(2) Those solemnized by any person not legally authorized to perform marriages unless such marriages were contracted with either or both parties believing in good faith that the solemnizing officer had the legal authority to do so;
(3) Those solemnized without license, except those covered the preceding Chapter;
(4) Those bigamous or polygamous marriages not failing under Article 41;
(5) Those contracted through mistake of one contracting party as to the identity of the other; and
(6) Those subsequent marriages that are void under Article 53.
Art. 37. Marriages between the following are incestuous and void from the beginning, whether relationship between the parties be legitimate or illegitimate:
(1) Between ascendants and descendants of any degree; and
(2) Between brothers and sisters, whether of the full or half blood.
Art. 38. The following marriages shall be void from the beginning for reasons of public policy:
(1) Between collateral blood relatives whether legitimate or illegitimate, up to the fourth civil degree;
(2) Between step-parents and step-children;
(3) Between parents-in-law and children-in-law;
(4) Between the adopting parent and the adopted child;
(5) Between the surviving spouse of the adopting parent and the adopted child;
(6) Between the surviving spouse of the adopted child and the adopter;
(7) Between an adopted child and a legitimate child of the adopter;
(8) Between adopted children of the same adopter; and
(9) Between parties where one, with the intention to marry the other, killed that other person’s spouse, or his or her own spouse.
Prescription for nullity of marriage
Art. 39. The action or defense for the declaration of absolute nullity of a marriage shall not prescribe.
Art. 43. The termination of the subsequent marriage referred to in the preceding Article shall produce the following effects:
(1) The children of the subsequent marriage conceived prior to its termination shall be considered legitimate;
(2) The absolute community of property or the conjugal partnership, as the case may be, shall be dissolved and liquidated, but if either spouse contracted said marriage in bad faith, his or her share of the net profits of the community property or conjugal partnership property shall be forfeited in favor of the common children or, if there are none, the children of the guilty spouse by a previous marriage or in default of children, the innocent spouse;
(3) Donations by reason of marriage shall remain valid, except that if the donee contracted the marriage in bad faith, such donations made to said donee are revoked by operation of law;
(4) The innocent spouse may revoke the designation of the other spouse who acted in bad faith as beneficiary in any insurance policy, even if such designation be stipulated as irrevocable; and
(5) The spouse who contracted the subsequent marriage in bad faith shall be disqualified to inherit from the innocent spouse by testate and intestate succession.
Art. 45. A marriage may be annulled for any of the following causes, existing at the time of the marriage:
(1) That the party in whose behalf it is sought to have the marriage annulled was eighteen years of age or over but below twenty-one, and the marriage was solemnized without the consent of the parents, guardian or person having substitute parental authority over the party, in that order, unless after attaining the age of twenty-one, such party freely cohabited with the other and both lived together as husband and wife;
(2) That either party was of unsound mind, unless such party after coming to reason, freely cohabited with the other as husband and wife;
(3) That the consent of either party was obtained by fraud, unless such party afterwards, with full knowledge of the facts constituting the fraud, freely cohabited with the other as husband and wife;
(4) That the consent of either party was obtained by force, intimidation or undue influence, unless the same having disappeared or ceased, such party thereafter freely cohabited with the other as husband and wife;
(5) That either party was physically incapable of consummating the marriage with the other, and such incapacity continues and appears to be incurable; or
(6) That either party was afflicted with a sexually-transmissible disease found to be serious and appears to be incurable.
Art. 47. The action for annulment of marriage must be filed by the following persons and within the periods indicated herein:
(1) For causes mentioned in number 1 of Article 45 by the party whose parent or guardian did not give his or her consent, within five years after attaining the age of twenty-one, or by the parent or guardian or person having legal charge of the minor, at any time before such party has reached the age of twenty-one;
(2) For causes mentioned in number 2 of Article 45, by the same spouse, who had no knowledge of the other’s insanity; or by any relative or guardian or person having legal charge of the insane, at any time before the death of either party, or by the insane spouse during a lucid interval or after regaining sanity;
(3) For causes mentioned in number 3 of Article 45, by the injured party, within five years after the discovery of the fraud;
(4) For causes mentioned in number 4 of Article 45, by the injured party, within five years from the time the force, intimidation or undue influence disappeared or ceased;
(5) For causes mentioned in number 5 and 6 of Article 45, by the injured party, within five years after the marriage.
Art. 46. Any of the following circumstances shall constitute fraud referred to in Number 3 of the preceding Article:
(1) Non-disclosure of a previous conviction by final judgment of the other party of a crime involving moral turpitude;
(2) Concealment by the wife of the fact that at the time of the marriage, she was pregnant by a man other than her husband;
(3) Concealment of sexually transmissible disease, regardless of its nature, existing at the time of the marriage; or
(4) Concealment of drug addiction, habitual alcoholism or homosexuality or lesbianism existing at the time of the marriage.
No other misrepresentation or deceit as to character, health, rank, fortune or chastity shall constitute such fraud as will give grounds for action for the annulment of marriage.
Art. 55. A petition for legal separation may be filed on any of the following grounds:
(1) Repeated physical violence or grossly abusive conduct directed against the petitioner, a common child, or a child of the petitioner;
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(2) Physical violence or moral pressure to compel the petitioner to change religious or political affiliation;
(3) Attempt of respondent to corrupt or induce the petitioner, a common child, or a child of the petitioner, to engage in prostitution, or connivance in such corruption or inducement;
(4) Final judgment sentencing the respondent to imprisonment of more than six years, even if pardoned;
(5) Drug addiction or habitual alcoholism of the respondent;
(6) Lesbianism or homosexuality of the respondent;
(7) Contracting by the respondent of a subsequent bigamous marriage, whether in the Philippines or abroad;
(8) Sexual infidelity or perversion;
(9) Attempt by the respondent against the life of the petitioner; or
(10) Abandonment of petitioner by respondent without justifiable cause for more than one year.
For purposes of this Article, the term “child” shall include a child by nature or by adoption.
Art. 57. An action for legal separation shall be filed within five years from the time of the occurrence of the cause.
Art. 58. An action for legal separation shall in no case be tried before six months shall have elapsed since the filing of the petition.
Art. 56. The petition for legal separation shall be denied on any of the following grounds:
(1) Where the aggrieved party has condoned the offense or act complained of;
(2) Where the aggrieved party has consented to the commission of the offense or act complained of;
(3) Where there is connivance between the parties in the commission of the offense or act constituting the ground for legal separation;
(4) Where both parties have given ground for legal separation;
(5) Where there is collusion between the parties to obtain decree of legal separation; or
(6) Where the action is barred by prescription.
Art. 63. The decree of legal separation shall have the following effects:
(1) The spouses shall be entitled to live separately from each other, but the marriage bonds shall not be severed;
(2) The absolute community or the conjugal partnership shall be dissolved and liquidated but the offending spouse shall have no right to any share of the net profits earned by the absolute community or the conjugal partnership, which shall be forfeited in accordance with the provisions of Article 43(2);
(3) The custody of the minor children shall be awarded to the innocent spouse, subject to the provisions of Article 213 of this Code; and
(4) The offending spouse shall be disqualified from inheriting from the innocent spouse by intestate succession. Moreover, provisions in favor of the offending spouse made in the will of the innocent spouse shall be revoked by operation of law.
Art. 80. In the absence of a contrary stipulation in a marriage settlement, the property relations of the spouses shall be governed by Philippine laws, regardless of the place of the celebration of the marriage and their residence.
This rule shall not apply:
(1) Where both spouses are aliens;
(2) With respect to the extrinsic validity of contracts affecting property not situated in the Philippines and executed in the country where the property is located; and
(3) With respect to the extrinsic validity of contracts entered into in the Philippines but affecting property situated in a foreign country whose laws require different formalities for its extrinsic validity.
Donations by reason of marriage
Art. 82. Donations by reason of marriage are those which are made before its celebration, in consideration of the same, and in favor of one or both of the future spouses.
Art. 86. A donation by reason of marriage may be revoked by the donor in the following cases:
(1) If the marriage is not celebrated or judicially declared void ab initio except donations made in the marriage settlements, which shall be governed by Article 81;
(2) When the marriage takes place without the consent of the parents or guardian, as required by law;
(3) When the marriage is annulled, and the donee acted in bad faith;
(4) Upon legal separation, the donee being the guilty spouse;
(5) If it is with a resolutory condition and the condition is complied with;
(6) When the donee has committed an act of ingratitude as specified by the provisions of the Civil Code on donations in general.
Can a future spouse donate to the other spouse?
Art. 84. If the future spouses agree upon a regime other than the absolute community of property, they cannot donate to each other in their marriage settlements more than one-fifth of their present property. Any excess shall be considered void.
Donations of future property shall be governed by the provisions on testamentary succession and the formalities of wills.
What Constitutes Community Property
Art. 91. Unless otherwise provided in this Chapter or in the marriage settlements, the community property shall consist of all the property owned by the spouses at the time of the celebration of the marriage or acquired thereafter.
Art. 92. The following shall be excluded from the community property:
(1) Property acquired during the marriage by gratuitous title by either spouse, and the fruits as well as the income thereof, if any, unless it is expressly provided by the donor, testator or grantor that they shall form part of the community property;
(2) Property for personal and exclusive use of either spouse. However, jewelry shall form part of the community property;
(3) Property acquired before the marriage by either spouse who has legitimate descendants by a former marriage, and the fruits as well as the income, if any, of such property.
Art. 93. Property acquired during the marriage is presumed to belong to the community, unless it is proved that it is one of those excluded therefrom.
Art. 94. The absolute community of property shall be liable for:
(1) The support of the spouses, their common children, and legitimate children of either spouse; however, the support of illegitimate children shall be governed by the provisions of this Code on Support;
(2) All debts and obligations contracted during the marriage by the designated administrator-spouse for the benefit of the community, or by both spouses, or by one spouse with the consent of the other;
(3) Debts and obligations contracted by either spouse without the consent of the other to the extent that the family may have been benefited;
(4) All taxes, liens, charges and expenses, including major or minor repairs, upon the community property;
(5) All taxes and expenses for mere preservation made during marriage upon the separate property of either spouse used by the family;
(6) Expenses to enable either spouse to commence or complete a professional or vocational course, or other activity for self-improvement;
(7) Ante-nuptial debts of either spouse insofar as they have redounded to the benefit of the family;
(8) The value of what is donated or promised by both spouses in favor of their common legitimate children for the exclusive purpose of commencing or completing a professional or vocational course or other activity for self-improvement;
(9) Ante-nuptial debts of either spouse other than those falling under paragraph (7) of this Article, the support of illegitimate children of either spouse, and liabilities incurred by either spouse by reason of a crime or a quasi-delict, in case of absence or insufficiency of the exclusive property of the debtor-spouse, the payment of which shall be considered as advances to be deducted from the share of the debtor-spouse upon liquidation of the community; and
(10) Expenses of litigation between the spouses unless the suit is found to be groundless.
If the community property is insufficient to cover the foregoing liabilities, except those falling under paragraph (9), the spouses shall be solidarily liable for the unpaid balance with their separate properties.
Who shall borne losings/winnings in a game of chance/betting in a marriage?
Art. 95. Whatever may be lost during the marriage in any game of chance, betting, sweepstakes, or any other kind of gambling, whether permitted or prohibited by law, shall be borne by the loser and shall not be charged to the community but any winnings therefrom shall form part of the community property.
Art. 99. The absolute community terminates:
(1) Upon the death of either spouse;
(2) When there is a decree of legal separation;
(3) When the marriage is annulled or declared void; or
(4) In case of judicial separation of property during the marriage under Articles 134 to 138.
Art. 102. Upon dissolution of the absolute community regime, the following procedure shall apply:
(1) An inventory shall be prepared, listing separately all the properties of the absolute community and the exclusive properties of each spouse.
(2) The debts and obligations of the absolute community shall be paid out of its assets. In case of insufficiency of said assets, the spouses shall be solidarily liable for the unpaid balance with their separate properties in accordance with the provisions of the second paragraph of Article 94.
(3) Whatever remains of the exclusive properties of the spouses shall thereafter be delivered to each of them.
(4) The net remainder of the properties of the absolute community shall constitute its net assets, which shall be divided equally between husband and wife, unless a different proportion or division was agreed upon in the marriage settlements, or unless there has been a voluntary waiver of such share provided in this Code. For purpose of computing the net profits subject to forfeiture in accordance with Articles 43, No. (2) and 63, No. (2), the said profits shall be the increase in value between the market value of the community property at the time of the celebration of the marriage and the market value at the time of its dissolution.
(5) The presumptive legitimes of the common children shall be delivered upon partition, in accordance with Article 51.
(6) Unless otherwise agreed upon by the parties, in the partition of the properties, the conjugal dwelling and the lot on which it is situated shall be adjudicated to the spouse with whom the majority of the common children choose to remain. Children below the age of seven years are deemed to have chosen the mother, unless the court has decided otherwise. In case there in no such majority, the court shall decide, taking into consideration the best interests of said children.
Art. 100. The separation in fact between husband and wife shall not affect the regime of absolute community except that:
(1) The spouse who leaves the conjugal home or refuses to live therein, without just cause, shall not have the right to be supported;
(2) When the consent of one spouse to any transaction of the other is required by law, judicial authorization shall be obtained in a summary proceeding;
(3) In the absence of sufficient community property, the separate property of both spouses shall be solidarily liable for the support of the family. The spouse present shall, upon proper petition in a summary proceeding, be given judicial authority to administer or encumber any specific separate property of the other spouse and use the fruits or proceeds thereof to satisfy the latter’s share.
What happens to the community property in case of death of the other spouse?
Art. 103. Upon the termination of the marriage by death, the community property shall be liquidated in the same proceeding for the settlement of the estate of the deceased.
If no judicial settlement proceeding is instituted, the surviving spouse shall liquidate the community property either judicially or extra-judicially within six months from the death of the deceased spouse. If upon the lapse of the six months period, no liquidation is made, any disposition or encumbrance involving the community property of the terminated marriage shall be void.
Should the surviving spouse contract a subsequent marriage without compliance with the foregoing requirements, a mandatory regime of complete separation of property shall govern the property relations of the subsequent marriage.
Art. 106. Under the regime of conjugal partnership of gains,
Art. 106. Under the regime of conjugal partnership of gains, the husband and wife place in a common fund the proceeds, products, fruits and income from their separate properties and those acquired by either or both spouses through their efforts or by chance, and, upon dissolution of the marriage or of the partnership, the net gains or benefits obtained by either or both spouses shall be divided equally between them, unless otherwise agreed in the marriage settlements.
Art. 109. The following shall be the exclusive property of each spouse:
(1) That which is brought to the marriage as his or her own;
(2) That which each acquires during the marriage by gratuitous title;
(3) That which is acquired by right of redemption, by barter or by exchange with property belonging to only one of the spouses; and
(4) That which is purchased with exclusive money of the wife or of the husband.
Art. 117. The following are conjugal partnership properties:
(1) Those acquired by onerous title during the marriage at the expense of the common fund, whether the acquisition be for the partnership, or for only one of the spouses;
(2) Those obtained from the labor, industry, work or profession of either or both of the spouses;
(3) The fruits, natural, industrial, or civil, due or received during the marriage from the common property, as well as the net fruits from the exclusive property of each spouse;
(4) The share of either spouse in the hidden treasure which the law awards to the finder or owner of the property where the treasure is found;
(5) Those acquired through occupation such as fishing or hunting;
(6) Livestock existing upon the dissolution of the partnership in excess of the number of each kind brought to the marriage by either spouse; and
(7) Those which are acquired by chance, such as winnings from gambling or betting. However, losses therefrom shall be borne exclusively by the loser-spouse.
Art. 121. The conjugal partnership shall be liable for:
(1) The support of the spouse, their common children, and the legitimate children of either spouse; however, the support of illegitimate children shall be governed by the provisions of this Code on Support;
(2) All debts and obligations contracted during the marriage by the designated administrator-spouse for the benefit of the conjugal partnership of gains, or by both spouses or by one of them with the consent of the other;
(3) Debts and obligations contracted by either spouse without the consent of the other to the extent that the family may have benefited;
(4) All taxes, liens, charges, and expenses, including major or minor repairs upon the conjugal partnership property;
(5) All taxes and expenses for mere preservation made during the marriage upon the separate property of either spouse;
(6) Expenses to enable either spouse to commence or complete a professional, vocational, or other activity for self-improvement;
(7) Ante-nuptial debts of either spouse insofar as they have redounded to the benefit of the family;
(8) The value of what is donated or promised by both spouses in favor of their common legitimate children for the exclusive purpose of commencing or completing a professional or vocational course or other activity for self-improvement; and
(9) Expenses of litigation between the spouses unless the suit is found to groundless.
If the conjugal partnership is insufficient to cover the foregoing liabilities, the spouses shall be solidarily liable for the unpaid balance with their separate properties.
Who is liable for debts in a conjugal partnership regime?
Art. 122. The payment of personal debts contracted by the husband or the wife before or during the marriage shall not be charged to the conjugal properties partnership except insofar as they redounded to the benefit of the family.
Neither shall the fines and pecuniary indemnities imposed upon them be charged to the partnership.
However, the payment of personal debts contracted by either spouse before the marriage, that of fines and indemnities imposed upon them, as well as the support of illegitimate children of either spouse, may be enforced against the partnership assets after the responsibilities enumerated in the preceding Article have been covered, if the spouse who is bound should have no exclusive property or if it should be insufficient; but at the time of the liquidation of the partnership, such spouse shall be charged for what has been paid for the purpose above-mentioned.
Art. 129. Upon the dissolution of the conjugal partnership regime, the following procedure shall apply:
(1) An inventory shall be prepared, listing separately all the properties of the conjugal partnership and the exclusive properties of each spouse.
(2) Amounts advanced by the conjugal partnership in payment of personal debts and obligations of either spouse shall be credited to the conjugal partnership as an asset thereof.
(3) Each spouse shall be reimbursed for the use of his or her exclusive funds in the acquisition of property or for the value of his or her exclusive property, the ownership of which has been vested by law in the conjugal partnership.
(4) The debts and obligations of the conjugal partnership shall be paid out of the conjugal assets. In case of insufficiency of said assets, the spouses shall be solidarily liable for the unpaid balance with their separate properties, in accordance with the provisions of paragraph (2) of Article 121.
(5) Whatever remains of the exclusive properties of the spouses shall thereafter be delivered to each of them.
(6) Unless the owner had been indemnified from whatever source, the loss or deterioration of movables used for the benefit of the family, belonging to either spouse, even due to fortuitous event, shall be paid to said spouse from the conjugal funds, if any.
(7) The net remainder of the conjugal partnership properties shall constitute the profits, which shall be divided equally between husband and wife, unless a different proportion or division was agreed upon in the marriage settlements or unless there has been a voluntary waiver or forfeiture of such share as provided in this Code.
(8) The presumptive legitimes of the common children shall be delivered upon the partition in accordance with Article 51.
(9) In the partition of the properties, the conjugal dwelling and the lot on which it is situated shall, unless otherwise agreed upon by the parties, be adjudicated to the spouse with whom the majority of the common children choose to remain. Children below the age of seven years are deemed to have chosen the mother, unless the court has decided otherwise. In case there is no such majority, the court shall decide, taking into consideration the best interests of said children.
Regime of Separation of Property
Art. 143. Should the future spouses agree in the marriage settlements that their property relations during marriage shall be governed by the regime of separation of property, the provisions of this Chapter shall be suppletory.
Art. 144. Separation of property may refer to present or future property or both. It may be total or partial. In the latter case, the property not agreed upon as separate shall pertain to the absolute community.
Art. 145. Each spouse shall own, dispose of, possess, administer and enjoy his or her own separate estate, without need of the consent of the other. To each spouse shall belong all earnings from his or her profession, business or industry and all fruits, natural, industrial or civil, due or received during the marriage from his or her separate property.
Art. 146. Both spouses shall bear the family expenses in proportion to their income, or, in case of insufficiency or default thereof, to the current market value of their separate properties.
The liabilities of the spouses to creditors for family expenses shall, however, be solidary.
Art. 135. Any of the following shall be considered sufficient cause for judicial separation of property:
(1) That the spouse of the petitioner has been sentenced to a penalty which carries with it civil interdiction;
(2) That the spouse of the petitioner has been judicially declared an absentee;
(3) That loss of parental authority of the spouse of petitioner has been decreed by the court;
(4) That the spouse of the petitioner has abandoned the latter or failed to comply with his or her obligations to the family as provided for in Article 101;
(5) That the spouse granted the power of administration in the marriage settlements has abused that power; and
(6) That at the time of the petition, the spouses have been separated in fact for at least one year and reconciliation is highly improbable.
In the cases provided for in Numbers (1), (2) and (3), the presentation of the final judgment against the guilty or absent spouse shall be enough basis for the grant of the decree of judicial separation of property.
Property Regime of Unions Without Marriage
Art. 147. When a man and a woman who are capacitated to marry each other, live exclusively with each other as husband and wife without the benefit of marriage or under a void marriage, their wages and salaries shall be owned by them in equal shares and the property acquired by both of them through their work or industry shall be governed by the rules on co-ownership.
In the absence of proof to the contrary, properties acquired while they lived together shall be presumed to have been obtained by their joint efforts, work or industry, and shall be owned by them in equal shares. For purposes of this Article, a party who did not participate in the acquisition by the other party of any property shall be deemed to have contributed jointly in the acquisition thereof if the former’s efforts consisted in the care and maintenance of the family and of the household.
Neither party can encumber or dispose by acts inter vivos of his or her share in the property acquired during cohabitation and owned in common, without the consent of the other, until after the termination of their cohabitation.
When only one of the parties to a void marriage is in good faith, the share of the party in bad faith in the co-ownership shall be forfeited in favor of their common children. In case of default of or waiver by any or all of the common children or their descendants, each vacant share shall belong to the respective surviving descendants. In the absence of descendants, such share shall belong to the innocent party. In all cases, the forfeiture shall take place upon termination of the cohabitation.
Art. 148. In cases of cohabitation not falling under the preceding Article, only the properties acquired by both of the parties through their actual joint contribution of money, property, or industry shall be owned by them in common in proportion to their respective contributions. In the absence of proof to the contrary, their contributions and corresponding shares are presumed to be equal. The same rule and presumption shall apply to joint deposits of money and evidences of credit.
If one of the parties is validly married to another, his or her share in the co-ownership shall accrue to the absolute community or conjugal partnership existing in such valid marriage. If the party who acted in bad faith is not validly married to another, his or her shall be forfeited in the manner provided in the last paragraph of the preceding Article.
The foregoing rules on forfeiture shall likewise apply even if both parties are in bad faith.
Art. 150. Family relations include those:
(1) Between husband and wife;
(2) Between parents and children;
(3) Among brothers and sisters, whether of the full or half-blood
Art. 154. The beneficiaries of a family home are:
(1) The husband and wife, or an unmarried person who is the head of a family; and
(2) Their parents, ascendants, descendants, brothers and sisters, whether the relationship be legitimate or illegitimate, who are living in the family home and who depend upon the head of the family for legal support.
Art. 155. The family home shall be exempt from execution, forced sale or attachment except:
(1) For nonpayment of taxes;
(2) For debts incurred prior to the constitution of the family home;
(3) For debts secured by mortgages on the premises before or after such constitution; and
(4) For debts due to laborers, mechanics, architects, builders, materialmen and others who have rendered service or furnished material for the construction of the building.
Filiation
Art. 163. The filiation of children may be by nature or by adoption. Natural filiation may be legitimate or illegitimate.
Illegitimate children
Art. 165. Children conceived and born outside a valid marriage are illegitimate, unless otherwise provided in this Code.
Art. 168. 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.
Action to Impugn Legitimacy
Art. 170. The action to impugn the legitimacy of the child shall be brought within one year from the knowledge of the birth or its recording in the civil register, if the husband or, in a proper case, any of his heirs, should reside in the city or municipality where the birth took place or was recorded.
If the husband or, in his default, all of his heirs do not reside at the place of birth as defined in the first paragraph or where it was recorded, the period shall be two years if they should reside in the Philippines; and three years if abroad. If the birth of the child has been concealed from or was unknown to the husband or his heirs, the period shall be counted from the discovery or knowledge of the birth of the child or of the fact of registration of said birth, whichever is earlier.
Art. 171. The heirs of the husband may impugn the filiation of the child within the period prescribed in the preceding article only in the following cases:
(1) If the husband should died before the expiration of the period fixed for bringing his action;
(2) If he should die after the filing of the complaint without having desisted therefrom; or
(3) If the child was born after the death of the husband.
Are the effects of legitimation retroactive?
Art. 180. The effects of legitimation shall retroact to the time of the child’s birth.
Abandoned Child
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(a) Abandoned child refers to a child who has no proper parental care or guardianship, a foundling, or on who has been deserted by one’s parents for a period of at least three (3) continuous months, and has been declared as such by the NACC;
SEC. 9. Who May Adopt. — Any alien or a Filipino citizen permanently residing abroad may file an application for inter-country adoption of a Filipino child if he/she:
a. is at least twenty-seven (27) years of age and at least sixteen (16) years older than the child to be adopted, at the time of application unless the adoptor is the parent by nature of the child to be adopted or the spouse of such parent;
b. if married, his/her spouse must jointly file for the adoption;
c. has the capacity to act and assume all rights and responsibilities of parental authority under his national laws, and has undergone the appropriate counseling from an accredited counselor in his/her country;
d. has not been convicted of a crime involving moral turpitude;
e. is eligible to adopt under his/her national law;
f. is in a position to provide the proper care and support and to give the necessary moral values and example to all his children, including the child to be adopted;
g. agrees to uphold the basic rights of the child as embodied under Philippine laws, the U.N. Convention on the Rights of the Child, and to abide by the rules and regulations issued to implement the provisions of this Act;
h. comes from a country with whom the Philippines has diplomatic relations and whose government maintains a similarly authorized and accredited agency and that adoption is allowed under his/her national laws; and
i. possesses all the qualifications and none of the disqualifications provided herein and in other applicable Philippine laws.
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Section 21. Who May Adopt. – The following may adopt:
(a) Any Filipino citizen at least twenty-five (25) years of age, who is in possession of full civil capacity and legal rights; has not been convicted of any crime involving moral turpitude; is of good moral character and can model the same; is emotionally and psychologically capable of caring for children; at least sixteen (16) years older than the adoptee; and who is in a position to support and care for adopted children in keeping with the means of the family: Provided, That the requirement of sixteen (16)-years difference between the age of the adopter and the adoptee may be waived when the adopter is the biological parent of the adoptee, or is the spouse of the adoptee’s parent;
(b) The legal guardian with respect to the ward after the termination of the guardianship and clearance of financial accountabilities;
(c) The legal guardians with respect to the foster child;
(d) Philippine government officials and employees deployed or stationed abroad: Provided, That they are able to bring the child with them; and
(e) Foreign nationals who are permanent or habitual residents of the Philippines for at least five (5) years possessing the same qualifications as above stated for Filipino nationals prior to filing of the petition: Provided, That they come from a country with diplomatic relations with the Republic of the Philippines and that the laws of the adopter’s country will acknowledge the Certificate of Adoption as valid, acknowledge the child as a legal child of the adopters, and allow entry of the child into such country as an adoptee: Provided, further, That requirements of residency may be waived for the following:
(1) A former Filipino citizen, habitually residing in the Philippines, who seeks to adopt a relative within fourth (4th) civil degree of consanguinity or affinity; or
(2) One who seeks to adopt the legitimate child of the Filipino spouse; or
(3) One who is married to a Filipino citizen and seeks to adopt jointly with the spouse a relative within the fourth (4th) degree of consanguinity or affinity of the Filipino spouse.
Spouses shall jointly adopt, except in the following cases:
(a) If one spouse seeks to adopt the legitimate child of the other; or
(b) If one spouse seeks to adopt own illegitimate child: Provided, That the other spouse has signified consent thereto; or
(c) If the spouses are legally separated from each other.
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Art. 216. In default of parents or a judicially appointed guardian, the following person shall exercise substitute parental authority over the child in the order indicated:
(1) The surviving grandparent, as provided in Art. 214;
(2) The oldest brother or sister, over twenty-one years of age, unless unfit or disqualified; and
(3) The child’s actual custodian, over twenty-one years of age, unless unfit or disqualified.
Whenever the appointment or a judicial guardian over the property of the child becomes necessary, the same order of preference shall be observed.
The following are immovable property:
Article 415. The following are immovable property:
(1) Land, buildings, roads and constructions of all kinds adhered to the soil;
(2) Trees, plants, and growing fruits, while they are attached to the land or form an integral part of an immovable;
(3) Everything attached to an immovable in a fixed manner, in such a way that it cannot be separated therefrom without breaking the material or deterioration of the object;
(4) Statues, reliefs, paintings or other objects for use or ornamentation, placed in buildings or on lands by the owner of the immovable in such a manner that it reveals the intention to attach them permanently to the tenements;
(5) Machinery, receptacles, instruments or implements intended by the owner of the tenement for an industry or works which may be carried on in a building or on a piece of land, and which tend directly to meet the needs of the said industry or works;
(6) Animal houses, pigeon-houses, beehives, fish ponds or breeding places of similar nature, in case their owner has placed them or preserves them with the intention to have them permanently attached to the land, and forming a permanent part of it; the animals in these places are included;
(7) Fertilizer actually used on a piece of land;
(8) Mines, quarries, and slag dumps, while the matter thereof forms part of the bed, and waters either running or stagnant;
(9) Docks and structures which, though floating, are intended by their nature and object to remain at a fixed place on a river, lake, or coast;
(10) Contracts for public works, and servitudes and other real rights over immovable property
The following things are deemed to be personal property:
Article 416. The following things are deemed to be personal property:
(1) Those movables susceptible of appropriation which are not included in the preceding article;
(2) Real property which by any special provision of law is considered as personalty;
(3) Forces of nature which are brought under control by science; and
(4) In general, all things which can be transported from place to place without impairment of the real property to which they are fixed.
Article 417. The following are also considered as personal property:
(1) Obligations and actions which have for their object movables or demandable sums; and
(2) Shares of stock of agricultural, commercial and industrial entities, although they may have real estate. (336a)
Is owner entitled to compensation if his property is condemned or seized in the interest of safety?
Article 436. When any property is condemned or seized by competent authority in the interest of health, safety or security, the owner thereof shall not be entitled to compensation, unless he can show that such condemnation or seizure is unjustified.
Who owns hidden treasure?
Article 438. Hidden treasure belongs to the owner of the land, building, or other property on which it is found.
Nevertheless, when the discovery is made on the property of another, or of the State or any of its subdivisions, and by chance, one-half thereof shall be allowed to the finder. If the finder is a trespasser, he shall not be entitled to any share of the treasure.
If the things found be of interest to science or the arts, the State may acquire them at their just price, which shall be divided in conformity with the rule stated.
Treasure
Article 439. By treasure is understood, for legal purposes, any hidden and unknown deposit of money, jewelry, or other precious objects, the lawful ownership of which does not appear.
Fruits
Article 442. Natural fruits are the spontaneous products of the soil, and the young and other products of animals.
Industrial fruits are those produced by lands of any kind through cultivation or labor.
Civil fruits are the rents of buildings, the price of leases of lands and other property and the amount of perpetual or life annuities or other similar income.
Article 444. Only such as are manifest or born are considered as natural or industrial fruits.
With respect to animals, it is sufficient that they are in the womb of the mother, although unborn.
RA 4726, Section 8. Where several persons own condominiums in a condominium project, an action may be brought by one or more such persons for partition thereof by sale of the entire project, as if the owners of all of the condominiums in such project were co-owners of the entire project in the same proportion as their interests in the common areas: Provided, however, That a partition shall be made only upon a showing:
(a) That three years after damage or destruction to the project which renders material part thereof unit for its use prior thereto, the project has not been rebuilt or repaired substantially to its state prior to its damage or destruction, or
(b) That damage or destruction to the project has rendered one-half or more of the units therein untenantable and that condominium owners holding in aggregate more than thirty percent interest in the common areas are opposed to repair or restoration of the project; or
(c) That the project has been in existence in excess of fifty years, that it is obsolete and uneconomic, and that condominium owners holding in aggregate more than fifty percent interest in the common areas are opposed to repair or restoration or remodeling or modernizing of the project; or
(d) That the project or a material part thereof has been condemned or expropriated and that the project is no longer viable, or that the condominium owners holding in aggregate more than seventy percent interest in the common areas are opposed to continuation of the condominium regime after expropriation or condemnation of a material portion thereof; or
(e) That the conditions for such partition by sale set forth in the declaration of restrictions, duly registered in accordance with the terms of this Act, have been met.
Easement
Article 613. An easement or servitude is an encumbrance imposed upon an immovable for the benefit of another immovable belonging to a different owner.
The immovable in favor of which the easement is established is called the dominant estate; that which is subject thereto, the servient estate.
Kinds of easements
Article 615. Easements may be continuous or discontinuous, apparent or nonapparent.
Continuous easements are those the use of which is or may be incessant, without the intervention of any act of man.
Discontinuous easements are those which are used at intervals and depend upon the acts of man.
Apparent easements are those which are made known and are continually kept in view by external signs that reveal the use and enjoyment of the same.
Non-apparent easements are those which show no external indication of their existence.
Article 616. Easements are also positive or negative.
A positive easement is one which imposes upon the owner of the servient estate the obligation of allowing something to be done or of doing it himself, and a negative easement, that which prohibits the owner of the servient estate from doing something which he could lawfully do if the easement did not exist.
Article 619. Easements are established either by law or by the will of the owners. The former are called legal and the latter voluntary easements.
Is the finder entitled to an award for having found a movable property?
Article 720. If the owner should appear in time, he shall be obliged to pay, as a reward to the finder, one-tenth of the sum or of the price of the thing found.
How is ownership acquired?
Article 712. Ownership is acquired by occupation and by intellectual creation.
Ownership and other real rights over property are acquired and transmitted by law, by donation, by testate and intestate succession, and in consequence of certain contracts, by tradition.
They may also be acquired by means of prescription.
Rules on prescription
Article 1132. The ownership of movables prescribes through uninterrupted possession for four years in good faith.
The ownership of personal property also prescribes through uninterrupted possession for eight years, without need of any other condition.
With regard to the right of the owner to recover personal property lost or of which he has been illegally deprived, as well as with respect to movables acquired in a public sale, fair, or market, or from a merchant’s store the provisions of articles 559 and 1505 of this Code shall be observed.
Article 1133. Movables possessed through a crime can never be acquired through prescription by the offender.
Article 1134. Ownership and other real rights over immovable property are acquired by ordinary prescription through possession of ten years.
Article 1137. Ownership and other real rights over immovables also prescribe through uninterrupted adverse possession thereof for thirty years, without need of title or of good faith.
Article 1140. Actions to recover movables shall prescribe eight years from the time the possession thereof is lost, unless the possessor has acquired the ownership by prescription for a less period, according to articles 1132, and without prejudice to the provisions of articles 559, 1505, and 1133.
Article 1141. Real actions over immovables prescribe after thirty years.
This provision is without prejudice to what is established for the acquisition of ownership and other real rights by prescription.
Article 1142. A mortgage action prescribes after ten years.
Article 1143. The following rights, among others specified elsewhere in this Code, are not extinguished by prescription:
(1) To demand a right of way, regulated in article 649;
(2) To bring an action to abate a public or private nuisance.
Article 1144. The following actions must be brought within ten years from the time the right of action accrues:
(1) Upon a written contract;
(2) Upon an obligation created by law;
(3) Upon a judgment.
Article 1145. The following actions must be commenced within six years:
(1) Upon an oral contract;
(2) Upon a quasi-contract.
Article 1146. The following actions must be instituted within four years:
(1) Upon an injury to the rights of the plaintiff;
(2) Upon a quasi-delict;
Article 1147. The following actions must be filed within one year:
(1) For forcible entry and detainer;
(2) For defamation.
Article 1149. All other actions whose periods are not fixed in this Code or in other laws must be brought within five years from the time the right of action accrues.
Article 1155. The prescription of actions is interrupted when they are filed before the court, when there is a written extrajudicial demand by the creditors, and when there is any written acknowledgment of the debt by the debtor.
Property Registration Decree, PD 1529
Section 14. Who may apply. The following persons may file in the proper Court of First Instance an application for registration of title to land, whether personally or through their duly authorized representatives:
(1) Those who by themselves or through their predecessors-in-interest have been in open, continuous, exclusive and notorious possession and occupation of alienable and disposable lands of the public domain under a bona fide claim of ownership since June 12, 1945, or earlier.
(2) Those who have acquired ownership of private lands by prescription under the provision of existing laws.
(3) Those who have acquired ownership of private lands or abandoned river beds by right of accession or accretion under the existing laws.
(4) Those who have acquired ownership of land in any other manner provided for by law.
Where the land is owned in common, all the co-owners shall file the application jointly.
Where the land has been sold under pacto de retro, the vendor a retro may file an application for the original registration of the land, provided, however, that should the period for redemption expire during the pendency of the registration proceedings and ownership to the property consolidated in the vendee a retro, the latter shall be substituted for the applicant and may continue the proceedings.
A trustee on behalf of his principal may apply for original registration of any land held in trust by him, unless prohibited by the instrument creating the trust.
Section 32. Review of decree of registration; Innocent purchaser for value
Section 32. Review of decree of registration; Innocent purchaser for value. The decree of registration shall not be reopened or revised by reason of absence, minority, or other disability of any person adversely affected thereby, nor by any proceeding in any court for reversing judgments, subject, however, to the right of any person, including the government and the branches thereof, deprived of land or of any estate or interest therein by such adjudication or confirmation of title obtained by actual fraud, to file in the proper Court of First Instance a petition for reopening and review of the decree of registration not later than one year from and after the date of the entry of such decree of registration, but in no case shall such petition be entertained by the court where an innocent purchaser for value has acquired the land or an interest therein, whose rights may be prejudiced. Whenever the phrase “innocent purchaser for value” or an equivalent phrase occurs in this Decree, it shall be deemed to include an innocent lessee, mortgagee, or other encumbrancer for value.
Upon the expiration of said period of one year, the decree of registration and the certificate of title issued shall become incontrovertible. Any person aggrieved by such decree of registration in any case may pursue his remedy by action for damages against the applicant or any other persons responsible for the fraud.
R.A. No. 8371, The Indigenous Peoples Rights Act of 1997
SEC. 12. Option to Secure Certificate of Title Under Commonwealth Act 141, as amended, or the Land Registration Act 496. - Individual members of cultural communities, with respect to their individually-owned ancestral lands who, by themselves or through their predecessors-in-interest, have been in continuous possession and occupation of the same in the concept of owner since time immemorial or for a period of not less than thirty (30) years immediately preceding the approval of this Act and uncontested by the members of the same ICCs/ IPs shall have the option to secure title to their ancestral lands under the provisions of Commonwealth Act 141, as amended, or the Land Registration Act 496.
For this purpose, said individually-owned ancestral lands, which are agricultural in character and actually used for agricultural, residential, pasture, and tree farming purposes, including those with a slope of eighteen percent (18%) or more, are hereby classified as alienable and disposable agricultural lands. The option granted under this section shall be exercised within twenty (20) years from the approval of this Act.
Begun and held in Metro Manila, on Monday the twenty-eighth day of July, nineteen hundred and ninety-seven
Share of spouse as a compulsory heir
Article 892. If only one legitimate child or descendant of the deceased survives, the widow or widower shall be entitled to one-fourth of the hereditary estate. In case of a legal separation, the surviving spouse may inherit if it was the deceased who had given cause for the same.
If there are two or more legitimate children or descendants, the surviving spouse shall be entitled to a portion equal to the legitime of each of the legitimate children or descendants.
In both cases, the legitime of the surviving spouse shall be taken from the portion that can be freely disposed of by the testator.
Article 893. If the testator leaves no legitimate descendants, but leaves legitimate ascendants, the surviving spouse shall have a right to one-fourth of the hereditary estate.
This fourth shall be taken from the free portion of the estate.
Article 894. If the testator leaves illegitimate children, the surviving spouse shall be entitled to one-third of the hereditary estate of the deceased and the illegitimate children to another third. The remaining third shall be at the free disposal of the testator.
Article 897. When the widow or widower survives with legitimate children or descendants, and acknowledged natural children, or natural children by legal fiction, such surviving spouse shall be entitled to a portion equal to the legitime of each of the legitimate children which must be taken from that part of the estate which the testator can freely dispose of. (n)
Article 898. If the widow or widower survives with legitimate children or descendants, and with illegitimate children other than acknowledged natural, or natural children by legal fiction, the share of the surviving spouse shall be the same as that provided in the preceding article. (n)
Article 899. When the widow or widower survives with legitimate parents or ascendants and with illegitimate children, such surviving spouse shall be entitled to one-eighth of the hereditary estate of the deceased which must be taken from the free portion, and the illegitimate children shall be entitled to one-fourth of the estate which shall be taken also from the disposable portion. The testator may freely dispose of the remaining one-eighth of the estate. (n)
Article 900. If the only survivor is the widow or widower, she or he shall be entitled to one-half of the hereditary estate of the deceased spouse, and the testator may freely dispose of the other half. (837a)
If the marriage between the surviving spouse and the testator was solemnized in articulo mortis, and the testator died within three months from the time of the marriage, the legitime of the surviving spouse as the sole heir shall be one-third of the hereditary estate, except when they have been living as husband and wife for more than five years. In the latter case, the legitime of the surviving spouse shall be that specified in the preceding paragraph.
Share of an illegitimate child as compulsory heir
One-half of each of the legitimate children’s share
Article 896. Illegitimate children who may survive with legitimate parents or ascendants of the deceased shall be entitled to one-fourth of the hereditary estate to be taken from the portion at the free disposal of the testator.
Article 901. When the testator dies leaving illegitimate children and no other compulsory heirs, such illegitimate children shall have a right to one-half of the hereditary estate of the deceased.
The other half shall be at the free disposal of the testator.
