CIVIL LAW notes

CIVIL LAW

1. When is there impairment of the easement by the dominant estate?

Answer: There is impairment of the easement if the owner of the dominant estate violates the following restrictions on its rights over the servient estate:

(1) it can only exercise rights necessary for the use of the easement;(2) it cannot use the easement except for the benefit of the immovable property originally contemplated;(3) it cannot exercise the easement in any other manner than that previously established;(4) it cannot construct anything which is not necessary for the use and preservation of the easement;(5) it cannot alter or make the easement more burdensome;(6) it must notify the servient estate owner of its intention to make the necessary works thereon;(7) it should choose the most convenient time and manner to build said works so as to cause least inconvenience to the owner of servient estate.

2. Esperanza executed an Affidavit where she renounced, relinquished, waived and quitclaimed all her rights, shares, interest and participation over a parcel of land unto Spouses Ray and Elvira Arogante, their heirs, successors, and assigns. What is the nature of such affidavit and is it valid?

Answer: The affidavit is in the nature of a donation, a simple/pure covered by Article 749,NCC which provides:

In order that the donation of an immovable may be valid, it must be made in a public document, specifying therein the property donated and the value of the charges which the donee must satisfy.

The acceptance may be made in the same deed of donation or in a separate public document, but it shall not take effect unless it is done during the lifetime of the donor.

If the acceptance is made in a separate instrument, the donor shall be notified.

3. If an obligation is due and demandable and there is unjustified refusal to accept payment, does such act constitute extinguishment of the obligation by payment? Why?

Answer : No. To have the effect of payment, the law requires the twin acts of tender of payment and consignation. If there is tender of payment but there is no consignation, it does not have the effect of payment. If at all there is an effect of the tender, the debtor must be freed from the obligation to pay interest on the outstanding amount from the time the unjust refusal took place. (Go Sinco v. CA,et al., G.R. No. 151903, October 9, 2009).

4. State the effect of an unjustified refusal of the creditor to accept payment. Explain

Answer : The creditor can be liable for damages under Article 19 of the Civil Code which requires a person to act with honesty and good faith in the exercise of rights and in the fulfillment of his duties.(Go Sinco v. CA, et al., G.R. No. 151903, October 9, 2009).

5. Distinguish the effect of breach due to non-payment in a contract of sale from that of a contractto sell.

Answer: In cases of breach due to nonpayment, the vendor may avail of the remedy of rescission in a contract of sale. Nevertheless, the defaulting vendee may defeat the vendor’s right to rescind the

contract of sale if he pays the amount due before he receives a demand for rescission, either judicially or by a notarial act, from the vendor. This right is provided under Article 1592 of the Civil Code:

Article 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.

Nonpayment of the purchase price in contracts to sell, however, does not constitute a breach; rather, nonpayment is a condition that prevents the obligation from acquiring obligatory force and results in its cancellation It was said that in a contract to sell, 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 obligatory force. The non-fulfillment of the condition of full payment rendered the contract to sell ineffective and without force and effect.

6. What is an option? Explain.

Answer: 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 is not of itself a purchase, but merely secures the privilege to buy. It is not a sale of property but a sale of the right to purchase. It is simply a contract by which the owner of the property agrees with another person that he shall have the right to buy his property at a fixed price within a certain time. He does not sell his land; he does not then agree to sell it; but he does sell something, i.e., the right or privilege to buy at the election or option of the other party. Its distinguishing characteristic is that it imposes no binding obligation on the person holding the option, aside from the consideration for the offer.

It is also sometimes called an “unaccepted offer” and is sanctioned by Article 1479 of the Civil Code:

Article 1479. A promise to buy and sell a determinate thing for a price certain is reciprocally demandable. An accepted unilateral promise to buy or to sell a determinate thing for a price certain is binding upon the promissory if the promise is supported by a consideration distinct from the price.

For an option contract to be valid and enforceable against the promissor, there must be a separate and distinct consideration that supports it.

7. When is an option contract binding upon the promissor? Explain.

Answer: An accepted unilateral promise can only have a binding effect if supported by a consideration, which means that the option can still be withdrawn, even if accepted, if the same is not supported by any consideration. If the option is without consideration, it can therefore be withdrawn notwithstanding the acceptance made of it by appellee.

Without consideration that is separate and distinct from the purchase price, an option contract cannot be enforced; that holds true even if the unilateral promise is already accepted by the optionee.

8. Does a person who wants to purchase a property covered by the Torrens System need to relymerely upon the face of the title? Explain.

Answer: Yes, as a rule, because of the protection afforded by the Torrens System, otherwise, there would be no relying on the title. The rule, however, is not absolute. An ordinarily prudent man should inquire into the authenticity of the certificate of title, the property’s location and its owners. Although it is recognized principle that a person dealing with registered land need not go beyond its certificate of title, it is also a firmly established rule that where circumstances exist which would put a purchaser on guard and prompt him to investigate further, such as the presence of occupants/tenants on the property offered for sale, it is expected that the purchaser would inquire first into the nature of possession of the occupants, i.e., whether or not the occupants possess the land in the concept of an owner. Settled is the rule that a buyer of real property that is in the possession of a person other than the seller must be wary and should investigate the rights of those in possession. Otherwise, without such inquiry, the buyer can hardly be regarded as a buyer in good faith.

9. A property was the subject of co-ownership. The same was sold in full by four (4) of the co-owners to the exclusion of three (3) other co-owners as they were not authorized to sell the shares of the three (3) other co-owners. Is the sale of the shares of the three (3) co-owners without authority valid? Why?

Answer: The authority of an agent to execute a contract of sale of real estate must be conferred in writing and must give him specific authority, either to conduct the general business of the principal or to execute a binding 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.

It has been repeatedly held that the absence of a written authority to sell a piece of land is, ipso jure, void, precisely to protect the interest of an unsuspecting owner from being prejudiced by the unwarranted act of another.

10. Barricades were placed along the intersection of Katipunan Ave. and Rajah Matanda Street in order to prevent motorists from crossing Katipunan Avenue. Nonetheless, Y the driver of the respondent crossed Katipunan Avenue through certain portions of the barricade which were broken, thus violating the MMDA rule. A vehicular accident happened when the X car which was then moving at a high speed in a busy area that was then subject of an ongoing construction smashed into the rear door and fender of the passenger’s side of Y’s car, sending it spinning in a 180- degree turn. The RTC dismissed the complaint for damages but the CA modified it on appeal holding the X and the driver of the expedition car liable solidarily. The CA ruled that Y’s violation of MMDA prohibition against crossing Katipunan Avenue from Rajah Matanda Street

was the proximate cause of the accident but declared Ramos vicariously liable for his driver’s ( X ‘s ) contributory negligence in driving the Ford Expidition at high speed along a busy intersection. Ramos however contended on appeal that since Y’s willful disregard of the MMDA prohibition was the sole proximate cause of the accident, then, respondent alone should suffer the consequences of the accident and the damages it incurred. Respondent insisted that Ramos is vicariously liable for the contributory negligence of X, his driver. Whose contention is correct? Why?

Answer : The contention of X is correct. Y’s act of crossing Katipunan Avenue via Rajah Matanda Street constitutes negligence because it was prohibited by law. Moreover, it was the proximate cause of the accident, and thus, precludes recovery for any damages suffered by respondent from the accident. This is based on the principle that if the master is injured by the negligence of a third person and by the concurring contributory negligence of his own servant or agent, the latter’s negligence is imputed to his superior and will defeat the superior’s action against the third person, assuming of course that the contributory negligence was the proximate cause of the injury of which complaint is made.

If Y heeded the MMDA prohibition against crossing Katipunan Avenue from Rajah Matanda, the accident would not have happened. This specific untoward event is exactly what the MMDA prohibition was intended for. Thus, a prudent and intelligent person who resides within the vicinity where the accident occurred, Y had reasonable ground to expect that the accident would be a natural and probable result if he crossed Katipunan Avenue since such crossing is considered dangerous on account of the busy nature of the thoroughfare and the ongoing construction. It was manifest error for the Court of Appeals to have overlooked the principle embodied in Article 2179 of the Civil Code, that when the plaintiff’s own negligence was the immediate and proximate cause of his injury, he cannot recover damages.

11. Is the registered owner of a motor vehicle still liable for the damage or injury caused by the vehicle even if he has already sold it to someone else who has not yet transferred the registration when the injury occurred?

Answer: Yes. The registered owner of any vehicle is primarily responsible to the public for whatever damage or injury the vehicle may cause even if he had already sold it to someone else. Were the registered owner allowed to evade responsibility by proving who the supposed transferee or owner is, it would be easy for him, by collusion with others or otherwise, to escape said responsibility by transferring the same to an indefinite person or to one who possesses no property with which to respond financially for the damage or injury done.

The policy behind the vehicle registration is the easy identification of the owner who can be held responsible in case of accident, damage or injury caused by the vehicle. This is so as not to inconvenience or prejudice a third party injured by one whose identity cannot be secured.

12. The owners of a parcel of land covered by a TCT found out one day that a house was being constructed on it. They discovered that their title was cancelled due to a Deed of Sale to which they did not participate and a title was issued under the name of another. The same was likewise sold to a couple and a title was issued under their names and who in turn sold it to another where a title was likewise issued. The last buyer inspected the property at the Office of the Register of Deeds and found it to be clean. The original owners filed a complaint for nullity of title, reconveyance and damages but the last buyer contended that he was a buyer in good faith and for value to which argument the CA agreed. Is the ruling of the CA correct? Why?

Answer: Yes, because while the document from which the property came from may be forged or fraudulent, it may be the root of a valid title if the same has passed to a buyer in good faith and for value.

An innocent purchaser for value is one who buys the property of another without notice that some other person has a right to or interest in that same property, and who pays a full and fair price at the time of the purchase and before receiving any notice of another person’s claim.

The honesty of intention that constitutes good faith implies freedom from knowledge of circumstances that ought to put a prudent person on inquiry. Good faith consists in the belief of the possessors that the persons from whom they received the thing are the rightful owners who could convey their title. The burden of proving the status of purchaser in good faith lies on the one who asserts that status.

Every person dealing with a registered land may safely rely on the correctness of the certificate of title issued therefore and the law will in no way oblige him to go beyond the certificate to determine the condition of the property.

13. A real property was registered under the name of a person based on a forged document of sale. Can the owner recover the property? Explain.

Answer: Yes, because a forged deed is a nullity that conveys no title. Insofar as a person who fraudulently obtained a property is concerned, the registration of the property in said person’s name would not be sufficient to vest in him or her, the title to the property.

A certificate of title merely confirms or records title already existing and vested. The indefeasibility of the Torrens title should not be used as a means to perpetrate fraud against the rightful owner of real property. Good faith must concur with registration because, otherwise, registration would be an exercise in futility. A Torrens title does not furnish a shield for fraud, notwithstanding the longstanding rule that registration is a constructive notice of title binding upon the whole world. The legal principle is that if the registration of the land is fraudulent, the person in whose name the land is registered holds it as a mere trustee.

It has long been established that the sole remedy of the landowner whose property has been wrongfully or erroneously registered in another's name is to bring an ordinary action in an ordinarycourt of justice for reconveyance or, if the property has passed into the hands of an innocent purchaser for value, for damages.

“It is one thing to protect an innocent third party; it is entirely a different matter and one devoid of justification if deceit would be rewarded by allowing the perpetrator to enjoy the fruits of his nefarious deed.”

Reconveyance is all about the transfer of the property which has been wrongfully or erroneously registered in another person's name, to its rightful and legal owner, or to one with a better right.

14. There was a sale of a house and lot registered under the names of spouses. The buyer knew that the seller was married and yet they did not secure the conformity of the spouse. While the wife was outside the house and the children were in school, the buyer of the husband in connivance with some people transferred their belongings to an apartment and later on, they were

prevented from entering their house. They waited until evening under the rain. They sought the aid of the police but they were refused contending that it was a family matter. Are they entitled to damages? Why?

Answer : Yes, because the manner by which they were removed from the family home deserves condemnation. The defendant connived with the buyers and surreptitiously transferred all their personal belongings to another place while their children were in school. They were not allowed to enter their rightful home or family abode despite their impassioned pleas.

Firmly established in our civil law is the doctrine that: “Every person must, in the exercise of his rights and in the performance of his duties, act with justice, give everyone his due, and observe honesty and good faith.” (Art. 19, NCC) When a right is exercised in a manner that does not conform with such norms and results in damages to another, a legal wrong is thereby committed for which the wrong doer must be held responsible. Similarly, any person who willfully causes loss or injury to another in a manner that is contrary to morals, good customs or public policy shall compensate the latter for the damages caused. (Art. 21, NCC).

15. X contended that as co-owner, he acquired the property as sole owner by prescription having repudiated the co-ownership as a title was issued under his name, and paid the taxes. Is the contention correct? Why?

Answer: No. In order that a co-owner’s possession may be deemed adverse to that of the cestui que trust or the other co-owners, the following elements must concur:1. The co-owner has performed unequivocal acts of repudiation of the co-ownership amounting to an ouster of the cestui que trust or the other co-owners;2. Such positive acts of repudiation have been made known to the cestui que trust or the other co-owners;3. The evidence on the repudiation is clear and conclusive; and4. His possession is open, continuous, exclusive and notorious.

The sole fact of a co-owner declaring the land in question in his name for taxation purposes and paying the land taxes did not constitute an unequivocal act of repudiation amounting to an ouster of the other co-owner and could not constitute adverse possession as basis for title by prescription. Moreover, according to Blatero v. Intermediate Appellate Court, G.R. No. L-73889, September 30, 1987, 154 SCRA 530, if a sale a retro is construed as an equitable mortgage, then the execution of an affidavit of consolidation by the purported buyer to consolidate ownership of the parcel of land is of no consequence and the “constructive possession” of the parcel of land will not ripen into ownership, because only possession acquired and enjoyed in the concept of owner can serve as title for acquiring dominion.

16. The will of Basilio Santiago stated that a house and lot in the City of Manila shall be transferred in the names of Maria Pilar and Clemente, the children, for purposes of administration only but no one shall be the owner of the same. Is the condition in the will valid? Why?

Answer: No, it is contrary to law and public policy. When a will provides for indivision of a property, it is subject to statutory limitation as the law provides that the prohibition to divide a property in a co-ownership can only last for twenty (20) years. (Arts. 494, 870 and 1083, NCC). While the Civil Code is

silent as to the effect of the indivision of a property for more than 20 years, it would be contrary to public policy to sanction co-ownership beyond the period expressly mandated by the Civil Code.

17. There was a contract for the purchase of 36,000 cartons specifically designed for the business of exporting bananas. The plaintiff paid US$40,000.00. Allegedly, the defendant failed to manufacture and deliver the boxes and that it repeatedly followed-up the immediate production of the boxes, but to no avail. Hence, it filed a complaint for reimbursement of the amount paid. The defendant contended that it has completed the manufacture of the boxes. The complaint was dismissed which was affirmed on appeal. Will the action prosper? Why?

Answer: No. The claim for reimbursement is actually one for rescission or resolution of contract under Art. 1191, NCC, where the law provides that 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 right to rescind a contract arises once the other party defaults in the performance of his obligation. In determining when default occurs, Art. 1191 should be taken in conjunction with Art. 1169 of the same law.

In reciprocal obligations, as in a contract of sale, the general rule is that the fulfillment of the parties’ respective obligations should be simultaneous. Hence, no demand is generally necessary because, once a party fulfills his obligation and the other party does not fulfill his, the latter automatically incurs in delay. But when different dates for performance of the obligations are fixed , the default for each obligation must be determined by the rules given in the first paragraph of Article 1169 of the Civil Code, that is, the other party would incur in delay only from the moment the other party demands fulfillment of the former’s obligation. Thus, even in reciprocal obligations, if the period for the fulfillment of the obligation is fixed, demand upon the obligee is still necessary before the obligor can be considered in default and before a cause of action for rescission will accrue.

18. If an obligation is due and demandable and there is unjustified refusal to accept payment, does such act constitute extinguishment of the obligation by payment? Why?

Answer: No. To have the effect of payment, the law requires the twin acts of tender of payment and consignation. If there is tender of payment but there is no consignation, it does not have the effect of payment. If at all there is an effect of the tender, the debtor must be freed from the obligation to pay interest on the outstanding amount from the time the unjust refusal took place.

19. State the effect of an unjustified refusal of the creditor to accept payment. Explain.

Answer: The creditor can be liable for damages under Article 19 of the Civil Code which requires a person to act with honesty and good faith in the exercise of rights and in the fulfillment of his duties.

20. A contract of lease was entered into between Lao and Manansala and SPI over the latter’s building to be used as karaoke and restaurant. For failure to pay the rents, SPI sent a demand letter for payment, but despite demand, they failed to pay, hence, a complaint for sum of money was filed. In their answer, they alleged that the lessor did not deliver the building in a condition fit for the intended use, hence, they incurred expenses for necessary repairs as well as expenses for structural repairs. They prayed for the dismissal of the complaint and that judgment be rendered on their counterclaims. After trial, the MTC dismissed the action for lack

of cause of action. It held that while the rental stood at P95,000.00, the lessees, however spent P125,000.00 for the repair of the structural defects, applying the rule on compensation. The RTC affirmed the decision and the CA affirmed it too. Before the SC, they contended that compensation should be applied considering that the amount of P545,000.00 for repairs, P125,000.00 of which was spent for structural repairs. The lessor, however contended that they were not able to prove that they spent the said amounts. Can compensation be applied? Why?

Answer: No. Compensation shall take place when two persons, in their own right, are creditors anddebtors of each other. In order for compensation to be proper, it is necessary that:

1. Each one of the obligors be bound principally and that he be at the same time a principal creditor of the other;

2. Both debts consist in a sum of money, or if the things due are consumable, they be of the same kind, and also of the same quality if the latter has been stated;

3. The two debts are due:4. The debts are liquidated and demandable;5. Over neither of them be any retention or controversy, commenced by third parties and

communicated in due time to the debtor. (Art. 1279, NCC).

A claim is liquidated when the amount and time of payment is fixed. If acknowledged by the debtor, although not in writing, the claim must be treated as liquidated. When the defendant, who has an unliquidated claim, sets it up by way of counterclaim, and a judgment is rendered liquidating such claim, it can be compensated against the plaintiff’s claim from the moment it is liquidated by judgment.

Under the contract necessary repairs shall be undertaken by the lessee, while repairs of the structural defects shall be borne by the lessor.

If the contract contrastingly treats necessary repairs, which are on the account of the lessee, and repairs of structural defects, which are the responsibility of the lessor, the onus of the petitioners is two-fold:

(1) to establish the existence, amount and demandability of their claim; and(2) to show that these expenses were incurred in the repair of structural defects

If the lessees failed to prove that the repairs were undertaken by them on structural defects or fails to inform the lessor of the said structural repairs, unliquidated and legal compensation is inapplicable.

21. A lease contract was entered into between Cornelio as lessor and Orlando, as lessee. It provided for a prohibition against sale to a third person and option to renew. During the period of the contract Orlando died on November 7, 1983. The contract was set to expire on December 3, 1983 when Orlando died unless renewed by Orlando’s heirs for another four (4) years. The heirs never renewed the contract. The sale was made on January 29, 1987. The heirs of Orlando questioned the validity of the sale contending that it violated the prohibition against sale to third person. Is the contention correct? Why?

Answer: No, because the heirs of Orlando to whom the right to renew the contract was transmittedafter his death did not exercise the option to renew the lease. As a result, there was no obstacle for Orlando to sell, since the prohibitory clause was no longer existing at the time of the sale. It does not

follow, however, that the lease subsisted at the time of the sale of the subject lot on January 29, 1987. When Orlando died on November 7, 1983, the lease contract was set to expire 26 days later or on December 3, 1983, unless renewed by Orlando’s heirs for another four years. While the option to renew is an enforceable right, it must necessarily be first exercised to be given effect.

As the Court explained in a case :“A clause found in an agreement relative to the renewal of the lease agreement at the option of the lessee gives the latter an enforceable right to renew the contract in which the clause is found for such time as provided for. The agreement is understood as being in favor of the lessee, and the latter is authorized to renew the contract and to continue to occupy the leased property after notifying the lessor to that effect. A lessor’s covenant or agreement to renew gives a privilege to the tenant, but is nevertheless an executory contract, and until the tenant has exercised the privilege by way of some affirmative act, he cannot be held for the additional term. In the absence of a stipulation in the lease requiring notice of the exercise of an option or an election to renew to be given within a certain time before the expiration of the lease, which of course, the lessee must comply with, the general rule is that a lessee must exercise an option or election to renew his lease and notify the lessor thereof before, or at least at the time of the expiration of his original term, unless there is a waiver or special circumstances warranting equitable relief.”

The silence of the lessees after the termination of the original period cannot be taken to mean that they opted to renew the contract by virtue of the promise by the lessor, as stated in the original contract of lease, to allow them to renew. Neither can the exercise of the option to renew be inferred from their persistence to remain in the premises despite petitioners’ demand for them to vacate.

22. The A spouses obtained a loan from Prudential secured by a real estate mortgage on C’s property. The A spouses defaulted on their loan, and Prudential initiated foreclosure proceedings. C tried to annul the real estate mortgage but failed when the Court ruled that C had ratified the real estate mortgage. In effect, C became a third party accommodation mortgagor. C paid Prudential to avoid foreclosure of its mortgaged properties. C repeatedly asked the A spouses to reimburse what it paid Prudential, but the A spouses refused to do so. Is their refusal proper? Why?

Answer: No. C paid the debt of the A spouses to Prudential as an interested third party. The second paragraph of Article 1236 of the Civil Code reads: Whoever pays for another may demand from the debtor what he has paid, except that if he paid without the knowledge or against the will of thedebtor, he can recover only insofar as the payment has been beneficial to the debtor.

Even if the A spouses insist that C’s payment to Prudential was without their knowledge or against their will, Article 1302(3) of the Civil Code states that C still has a right to reimbursement, thus When, even without the knowledge of the debtor, a person interested in the fulfillment of the obligation pays, without prejudice to the effects of confusion as to the latter’s share. C clearly has an interest in the fulfillment of the obligation because it owns the properties mortgaged to secure the A spouses’ loan.

When an interested party pays the obligation, he is subrogated in the rights of the creditor. Because of its payment of the A spouses’ loan, C actually steps into the shoes of Prudential and becomes entitled, not only to recover what it has paid, but also to exercise all the rights which Prudential could have exercised. There is, in such cases, not a real extinguishment of the obligation, but a change in the active subject.

23. There was a contract of loan secured by a Real Estate Mortgage. The mortgagor further executed an instrument entitled Waiver of Hereditary Rights and Interests Over a Real Property (Still Undivided) or a future inheritance. On the basis of the affidavit, the creditor executed a document of adverse claim and annotated it at the back of the title. At the time of the execution of the Waiver of Hereditary Rights, the parents of the affiant were still alive. Is the waiver valid? Is the adverse claim valid? Why?

Answer : No. Pursuant to the Civil Code, no contract may be entered into upon a future inheritance except in cases expressly authorized by law. For the inheritance to be considered “future”, the succession must not have been opened at the time of the contract.

A contract may be classified as a contract upon future inheritance, prohibited under the second paragraph of Article 1347, where the following requisites concur:

(1) That the succession has not yet been opened.(2) That the object of the contract forms part of the inheritance; and,(3) That the promissor has, with respect to the object, an expectancy of a right whichis purely hereditary in nature.

In this case, there is no question that at the time of execution of Comandante’s Waiver of Hereditary Rights and Interest Over a Real Property (Still Undivided), succession to either of her parent’s properties has not yet been opened since both of them are still living. With respect to the other two requisites, both are likewise present considering that the property subject matter of affiant’s waiver concededly forms part of the properties that she expect to inherit from her parents upon their death and, such expectancy of a right, as shown by the facts, is undoubtedly purely hereditary in nature. Hence, the waiver is void.

24. In Metropolitan Bank & Trust Co. v. Rural Bank of Gerona, Inc. (RBG), the Central Bank & RBG entered into an agreement where RBG would facilitate the loan application of farmers-borrowers under the CB-IBRD program. The agreement required RBG to open an account where the IBRD loan proceeds shall be deposited, which it did with Metrobank. The latter was designated to receive the credit advice released by the CB representing the loans and Metrobank in turn credited the proceeds to RBG’s account to be released to the farmers-borrowers. There were loans that were approved and hence, CB released the credit advice to Metrobank and the latter credited it for the account of RBG. Later, however, after RBG made withdrawals from its account with Metrobank the CB issued debit advices reversing all the approved IBRD loans and debited from Metrobank’s demand deposit account the amounts corresponding to all the IBRD loans. Metrobank then debited from the account of RBG the amounts withdrawn but it claimed that they were insufficient to cover all the credit advices, hence, it filed a complaint for sum of money against RBG. After trial, the RTC held that there was legal subrogation in favor of Metrobank. The CA reversed the ruling and ruled that there was no legal subrogation under Art. 1302, NCC, but recognized the right of the bank to be reimbursed. It ruled that the CB should be impleaded to shed light on the IBRD loan reversals. Was there subrogation of Metrobank against RBG? Why?

Answer: Yes. Under the law, it is presumed that there is legal subrogation:

1. When a creditor pays another creditor who is preferred, even without the debtor’s knowledge;

2. When a third person, not interested in the obligation, pays with the express or tacit approval of the debtor;

3. When, even without the knowledge of the debtor, a person interested in the fulfillmentof the obligation pays, without prejudice to the effects of confusion as to the latter’s share. (Art. 1302, NCC)

Metrobank was a third party to the Central Bank-RBG agreement, had no interest except as a conduit, and was not legally answerable for the IBRD loans. Despite this, it was Metrobank’s demand deposit account, instead of RBG’s, which the Central Bank proceeded against, on the assumption perhaps that this was the most convenient means of recovering the cancelled loans. That Metrobank’s payment was involuntarily made does not change the reality that it was Metrobank which effectively answered for RBG’s obligations. Article 1303 of the Civil Code states that subrogation transfers to the person subrogated the credit with all the rights thereto appertaining, either against the debtor or against third persons. As the entity against which the collection was enforced, Metrobank was subrogated to the rights of Central Bank and has a cause of action to recover from RBG the amounts it paid to the Central Bank, plus 14% per annum interest.

Under this situation, impleading the Central Bank as a party is completely unnecessary. In so far as Metrobank is concerned, however, the Central Bank’s presence and the reasons for its reversals of the IBRD loans are immaterial after subrogation has taken place; Metrobank’s interest is simply to collect the amounts it paid the Central Bank. Whatever cause of action RBG may have against the Central Bank for the unexplained reversals and any undue deductions is for RBG to ventilate as a third-party claim; if it has not done so at this point, then the matter should be dealt with in a separate case that should not in any way further delay the disposition of the present case.

25. May the grantee of a market stall in Marawi City sell the same without the consent of the government? The SC

Answer: No, since she is not the owner of the same. She cannot sell, donate or alienate the same without the consent of the owner, otherwise it is void.

A void contract is equivalent to nothing; it produces no civil effect. It does not create, modify, or extinguish a juridical relation. Parties to a void agreement cannot expect the aid of the law; the courts leave them as they are, because they are deemed in pari delicto or in equal fault. To this rule, however, there are exceptions that permit the return of that which may have been given under avoid contract. One of the exceptions is found in Article 1412 of the Civil Code, which states: If the act in which the unlawful or forbidden cause consists does not constitute a criminal offense, the following rules shall be observed:

(1) When the fault is on the part of both contracting parties, neither may recover what he has given by virtue of the contract, or demand the performance of the other's undertaking;(2) When only one of the contracting parties is at fault, he cannot recover what he has given by reason of the contract, or ask for the fulfillment of what has been promised him. The other, who is not at fault, may demand the return of what he has given without any obligation to comply with his promise.

Since the buyer was not aware of the status of the ownership by the seller, he can recover the amount given by him under the contract.

The essential elements of estoppel are: (1) conduct of a party amounting to false representation or concealment of material facts or at least calculated to convey the impression that the facts are otherwise than, and inconsistent with, those which the party subsequently attempts to assert; (2) intent, or at least expectation, that this conduct shall be acted upon by, or at least influence, the other party; and (3) knowledge, actual or constructive, of the real facts.

26. The terms and conditions of the contract between the parties were: (1) failure of the vendees to comply with the conditions of payment shall cause the rescission of this contract; (2) upon the fulfillment of the terms and conditions, a Deed of Absolute Sale shall be executed; (3) possession and ownership are reserved by the seller until full payment.

Answer : This is a contract to sell, hence, there is no need to rescind. Payment of the price is a positive suspensive condition, failure of which is not a breach but an event that prevents the obligation of the vendor to convey title from becoming effective. Strictly speaking, there can be no rescission or resolution of an obligation that is still non-existent due to the non-happening of the suspensive condition. The owner is thus not obliged to execute a Deed of Absolute Sale in the buyers’ favor because of petitioners’ failure to make full payment on the stipulated date.

Article 1592 of the New Civil Code, requiring demand by suit or by notarial act in case the vendor of realty wants to rescind does not apply to a contract to sell but only to contract of sale. In contracts to sell, where ownership is retained by the seller and is not to pass until the full payment, such payment, as we said, is a positive suspensive condition, the 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. To argue that there was only a casual breach is to proceed from the assumption that the contract is one of absolute sale, where non-payment is a resolutory condition, which is not the case.

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:

1. the fulfillment and the rescission of the obligation, with the payment of damages in either case.

2. He may also seek rescission, even after he has chosen fulfillment, if the latter should become impossible.

This is understood to be without prejudice to the rights of third persons who have acquired the thing, in accordance with Articles 1385 and 1388 and the Mortgage Law. (1124)

There is nothing in this law which prohibits the parties from entering into an agreement that a violation of the terms of the contract would cause its cancellation even without court intervention. The rationale for the foregoing is that:

in contracts providing for automatic revocation, judicial intervention is necessary not for purposes of obtaining a judicial declaration rescinding a contract already deemed rescinded by virtue of an

agreement providing for rescission even without judicial intervention, but in order to determine whether or not the rescission was proper.

27. There was contract of sale where the seller sold properties in a manner absolute and irrevocable requiring the buyer to pay P415,000.00 upon the execution of the deed of sale with the balance payable directly to the mortgagee bank within a reasonable time. Nothing in the contract showed that the seller reserved the right of ownership. There was a conflict between the buyer and seller since the seller sold it again on the contention that the first contract was a contract to sell. The buyer contended that it was a contract of absolute sale. Whose contention is correct? Why?

Answer: The contention of the buyer is correct that it is a contract of absolute sale. The terms and conditions of the contract only affected the manner of payment, not the immediate transfer of ownership upon the execution of the notarized contract. The terms and conditions pertained to the performance of the contract and not the perfection therefore or the transfer of ownership.

Settled is the rule that the seller is obliged to transfer title over the properties and deliver the same to the buyer. In this regard, Article 1498 of the Civil Code provides that, as a rule, the execution of a notarized deed of sale is equivalent to the delivery of a thing sold.

Article 1186. The condition shall be deemed fulfilled when the obligor voluntarily prevents its fulfillment.

28. At the time the buyer bought the property, there was already an occupant who fenced it and has been in actual physical possession. Before they bought it, they visited the same. They claimed to be buyers in good faith, but the Supreme Court ruled otherwise. The first buyer, therefore is the owner.

Answer : In case of a double sale of immovables, ownership shall belong to: (1) the first registrant in good faith;

(2) then, the first possessor in good faith; and (3) finally, the buyer who in good faith presents the oldest title.”

However, mere registration is not enough to confer ownership. The law requires that the second buyer must have acquired and registered the immovable property in good faith.

In order for the second buyer to displace the first buyer, the following must be shown: (1) the second buyer must show that he acted in good faith ( i.e., in ignorance of the first sale and of the first buyer’s rights) from the time of acquisition until title is transferred to him by registration or failing registration, by delivery of possession; and (2) the second buyer must show continuing good faith and innocence or lack of knowledge of the first sale until his contract ripens into full ownership through prior registration as provided by law.

One is considered a purchaser in good faith if he buys the property without notice that some other person has a right to or interest in such property and pays its fair price before he has notice of the adverse claims and interest of another person in the same property. Well-settled is the rule that every person dealing with registered land may safely rely on the correctness of the certificate of title issued

therefor and the law will in no way oblige him to go beyond the certificate to determine the condition of the property. “However, this rule shall not apply when the party has actual knowledge of facts and circumstances that would impel a reasonably cautious man to make such inquiry or when the purchaser has knowledge of a defect or the lack of title in his vendor or of sufficient facts to induce a reasonably prudent man to inquire into the status of the title of the property in litigation.” “His mere refusal to believe that such defect exists, or his willful closing of his eyes to the possibility of the existence of a defect in his vendor’s title will not make him an innocent purchaser for value if it later develops that the title was in fact defective, and it appears that he had such notice of the defect had he acted with that measure of precaution which may reasonably be required of a prudent man in a like situation.”

29. A contract over a parcel of land was entered into with an area of 4,000 sq.m. more or less. When the title was issued, it was 14,475 sq.m. with an excess of 10,475 sq.m. The buyer contended that it was sale in lump sum and hence, the seller is bound to deliver the property citing Article 1542, NCC. Is the contention correct? Why?

Answer: No, because the excess in the phrase “more or less” covers only a reasonable excess or deficiency. In this case, it is quite a big excess. This is especially so if the contract provides for the boundaries of the land. The 10,475 sq.m. excess is not slight difference in quantity. The difference in the area is obviously sizeable and too substantial to be overlooked. It is not a reasonable excess or deficiency that should be deemed included in the deed of sale.

The Court had the occasion to pronounce:In sales involving real estate, the parties may choose between two types of pricing agreement:

1. a unit price contract wherein the purchase price is determined by way of reference to a stated rate per unit area (e.g., P1,000 per square meter), or

2. a lump sum contract which states a full purchase price for an immovable the area of which may be declared based on the estimate or where both the area and boundaries are stated (e.g.,P1 million for 1,000 square meters, etc.).

The Court discussed the distinction:1. In a unit price contract, the statement of area of immovable is not conclusive and the price

may be reduced or increased depending on the area actually delivered. If the vendor delivers less than the area agreed upon, the vendee may oblige the vendor to deliver all that may be stated in the contract or demand for the proportionate reduction of the purchase price if delivery is not possible. If the vendor delivers more than the area stated in the contract, the vendee has the option to accept only the amount agreed upon or to accept the whole area, provided he pays for the additional area at the contract rate.

2. In the case where the area of an immovable is stated in the contract based on an estimate, the actual area delivered may not measure up exactly with the area stated in the contract.According to Article 1542 of the Civil Code, in the sale of real estate, made for a lump sum and not at the rate of a certain sum for a unit of measure or number, there shall be no increase or decrease of the price, although there be a greater or less areas or number than that stated in the contract.

The area covered within the boundaries of the immovable prevails over the stated area. In cases of conflict between areas and boundaries, it is the latter which should prevail. What really defines a piece

of ground is not the area, calculated with more or less certainty, mentioned in its description, but the boundaries therein laid down, as enclosing the land and indicating its limits.

In a contract of sale of land in a mass, it is well established that the specific boundaries stated in the contract must control over any statement with respect to the area contained within its boundaries. It is not of vital consequence that a deed or contract of sale of land should disclose the area with mathematical accuracy. It is sufficient if its extent is objectively indicated with sufficient precision to enable one to identify it. An error as to the superficial area is immaterial. Thus, the obligation of the vendor is to deliver everything within the boundaries, inasmuch as it is the entirety thereof that distinguishes the determinate object.

The Court, however, clarified that the rule laid down in Article 1542 is not hard and fast and admits of an exception. It held:The use of “more or less” or similar words in designating quantity covers only a reasonable excess or deficiency. A vendee of land sold in gross or with the description “more or less” with reference to its area does not thereby ipso facto take all risk of quantity in the land..excess or deficiency in area. Courts must consider a host of other factors.

In the instant case, the deed of sale is not one of a unit price contract. The parties agreed on the purchase price of P40,000.00 for a predetermined area of 4,000 sq m, more or less, bounded on all sides as stated. In a contract of sale of land in a mass, the specific boundaries stated in the contract must control over any other statement, with respect to the area contained within its boundaries.

30. Francisco Gosiengfiao was the owner of a property which he mortgaged to a bank. Due to his failure to pay the bank, it was foreclosed. Amparro Gosiengfiao-Ibarra redeemed the property. One of the children, Antonia in her behalf and that of her minor children executed a document waiving their right of redemption in favor of Amparo who later on sold it to Leonardo Mariano. Grace Gosiengfiao filed a complaint for reconveyance and with legal redemption against Leonardo and Avelina Mariano as well as the subsequent buyers, Lazaro Mariano and Dionicia Aquino. The RTC dismissed the case ruling that when Amparo redeemed the property, it was only herself who became the sole owner. The CA reversed and declared that plaintiffs as co-heirs have the right to redeem. The SC in a decision promulgated on May 8, 1993 affirmed the decision, and ruled that the plaintiffs co-heirs have not lost their right to redeem for in the absence of a written notification of the sale by the vendors, the 30-day period has not yet begun to run. Subsequent events happened when the motion for execution was filed where the lower courts ruled that they have lost their right to redeem since the 30-day redemption period should run from August 2, 1993, date of the entry of the judgment, hence, this petition. Is the ruling correct? Why?

Answer : No. The plaintiffs have the right to redeem. It cited its ruling in Mariano v. CA, thus:The requirement of a written notice has long been settled as early as in the case of Castillo v.

Samonte where it was held reiterating the ruling in Hernaez v. Hernaez , thus:Both the letter and spirit of the New Civil Code argue against any attempt to widen the scope of

the notice specified in Article 1088 by including therein any other kind of notice, such as verbal or by registration. If the intention of the law had been to include verbal notice or any other means of information as sufficient to give the effect of this notice, then there would have been no necessity or reasons to specify in Article 1088 of the New Civil Code that the said notice be made in writing for, under the old law, a verbal notice or information was sufficient. The ruling in Castillo v. Samonte, was

reiterated in the case of Garcia v. Calaliman where the reason for the requirement of the written notice was explained, thus: Consistent with aforesaid ruling, in the interpretation of a related provision (Article 1623 of the New Civil Code) this Court had stressed that written notice is indispensable, actual knowledge of the sale acquired in some other manners by the redemptioner, notwithstanding. He or she is still entitled to written notice, as exacted by the code to remove all uncertainty as to the sale, its terms and its validity, and to quiet any doubt that the alienation is not definitive . The law not having provided for any alternative, the method of notifications remains exclusive, though the Code does not prescribe any particular form of written notice nor any distinctive method for written notification of redemption.

The right of the petitioner-heirs to exercise their right of legal redemption exists, and the running of the period for its exercise has not even been triggered because they have not been notified in writing of the fact of sale.

Lease with option to buy.

31. There was a contract of lease with option to buy, the price to be negotiated and determined at the time the option to purchase is exercised. The property was however sold to PUP by NDC upon order of the President. Before however the sale was made, the lessee wrote a letter to the lessor manifesting the exercise of the option to buy. There was, however, no action on the offer to buy, hence, the contract expired without exercising the right. The lessee contended that NDC, the lessor violated its right of first refusal by the sale of the property to PUP. It was contended on the other hand by the lessor that since the contract has already expired, with the right of first refusal not being carried over into the impliedly renewed contract, there was no violation. Is the contention correct? Why?

Answer: No, because the right of first refusal was exercised before the contract of lease expired and before it was sold to PUP by the lessor. An option is a contract by which the owner of the property agrees with another person that the latter shall have the right to buy the 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.

Right of first refusal not impliedly renewed.

32. It was contended that the right of first refusal was not impliedly renewed when the lease contract expired. Is the contention correct? Why?

Answer: No, because the right was exercised before the contract of lease expired. Hence, whether it was carried over into the impliedly renewed contract is irrelevant. As the right was still existing when it was exercised and when the property was sold to PUP, the lessor violated the right of first refusal.

When a lease contract contains a right of first refusal, the lessor has the legal duty to the lessee not to sell the leased property to anyone at any price until after the lessor has made an offer to sell the property to the lessee and the lessee has failed to accept it. Only after the lessee has failed to exercise

his right of first priority could the lessor sell the property to other buyers under the same terms and conditions offered to the lessee, or under terms and conditions more favorable to the lessor.

The contractual grant of a right of first refusal is enforceable, the execution of such right consists in directing the grantor to comply with his obligation according to the terms at which he should have offered the property in favor of the grantee and at that price when the offer should have been made.

Indeed, basic is the rule that a party to a contract cannot unilaterally withdraw a right of first refusal that stands upon valuable consideration. It is not correct to say that there is no consideration for the grant of the right of first refusal if such grant is embodied in the same contract of lease. Since the stipulation forms part of the entire lease contract, the consideration for the lease includes the consideration for the grant of the right of first refusal. In entering into the contract, the lessee is in effect stating that it consents to lease the premises and to pay the price agreed upon provided the lessor also consents that, should it sell the leased property, then, the lessee shall be given the right to match the offered purchase price and to buy the property at that price.

Demand for periodic accounting is evidence of partnership.

33. Petitioners filed a complaint for Partition, Accounting and Damages against the respondent, alleging that their father Jose Lim entered into a contract of partnership with Jimmy and Norberto Uy. The respondent denied the claim, contending that her husband Elfledo, the son of Jose Lim was the partner, not their father. In fact, their mother testified that Jose gave P50,000.00 to Elfledo which was contributed into the partnership. He ran the affairs of the partnership without intervention of the petitioners; all the properties were registered under his name; Jimmy testified that Elfledo managed the partnership without salaries, but received his shares of the partnership business. Petitioners never demanded for periodic accounting from Elfledo. Who is the partner, Jose or Elfledo? Explain.

Answer: Elfledo is the partner. As early as Tan Eng Kee v. CA, the SC has ruled that a demand for periodic accounting is evidence of a partnership, (citing Art. 1769, NCC). Elfledo received shares in the profits of the business which is a prima facie evidence that he was a partner. There was no evidence presented by petitioners to prove that the receipt of share did not amount to partnership. Bare allegation is not proof.

If it were true that it was Jose Lim and not Elfledo who was the partner, then upon his death the partnership should have been dissolved and its assets liquidated. On the contrary, these were not done but instead its operation continued under the helm of Elfledo and without any participation from the heirs of Jose Lim.

Hospital’s liability for negligence of a doctor under the doctrine of ostensible agency.

The SC held PSI directly liable to the Aganas for the negligence of Dr. Ampil in not removing from the body of Natividad Agana the two (2) gauzes which were used in the surgery performed on her. The direct liability was premised on the following facts and law.

1. First, there existed between PSI and Dr. Ampil an employer-employee relationship as contemplated in the December 29, 1999 decision in Ramos v. Court of Appeals that “for purposes of allocating responsibility in medical negligence cases, an employer-employee relationship exists between hospitals and their consultants.”

2. Second, by accrediting Dr. Ampil and advertising his qualifications, PSI created the public impression that he was its agent. Enrique testified that it was on account of Dr. Ampil's accreditation with PSI that he conferred with said doctor about his wife's (Natividad's) condition. After his meeting with Dr. Ampil, Enrique asked Natividad to personally consult Dr. Ampil. In effect, when Enrigue and Natividad engaged the services of Dr. Ampil, at the back of their minds was that the latter was a staff member of a prestigious hospital. Thus, under the doctrine of apparent authority applied in Nogales, et al. v. Capitol MedicalCenter, et al., PSI was liable for the negligence of Dr. Ampil.

3. Finally, as owner and operator of Medical City General Hospital, PSI was bound by its duty to provide comprehensive medical services to Natividad Agana, to exercise reasonable care to protect her from harm, to oversee or supervise all persons who practiced medicine within its walls, and to take active steps in fixing any form of negligence committed within its premises. PSI committed a serious breach of its corporate duty when it failed to conduct an immediate investigation into the reported missing gauzes.

34. In their respective memoranda, intervenors raised parallel arguments that the Court's ruling on the existence of an employer-employee relationship between private hospitals and consultants will force a drastic and complex alteration in the long-established and currently prevailing relationships among patient, physician and hospital, with burdensome operational and financial consequences and adverse effects on all three parties. After gathering its thoughts on the issues, the Supreme Court

Held: PSI is liable to the Aganas, not under the principle of respondeat superior for lack of evidence of an employment relationship with Dr. Ampil but under the principle of ostensible agency for the negligence of Dr. Ampil and, pro hac vice, under the principle of corporate negligence for its failure to perform its duties as a hospital.

While in theory a hospital as a juridical entity cannot practice medicine, in reality it utilizes doctors, surgeons and medical practitioners in the conduct of its business of facilitating medical and surgical treatment. Within that reality, three legal relationships crisscross:

(1) between the hospital and the doctor practicing within its premises; (2) between the hospital and the patient being treated or examined within its premises and (3) between the patient and the doctor.

The exact nature of each relationship determines the basis and extent of the liability of the hospital for the negligence of the doctor.

Where an employment relationship exists, the hospital may be held vicariously liable under Article 2176 in relation to Article 2180 of the Civil Code or the principle of respondeat superior.

Even when no employment relationship exists but it is shown that the hospital holds out to the patient that the doctor is its agent, the hospital may still be vicariously liable under Article 2176 in relation to Article 1431 and Article 1869 of the Civil Code or the principle of apparent authority.

Moreover, regardless of its relationship with the doctor, the hospital may be held directly liable to the patient for its own negligence or failure to follow established standard of conduct to which it should conform.

Two factors that determine apparent authority:

1. first, the hospital's implied manifestation to the patient which led the latter to conclude that the doctor was the hospital's agent; and

2. second, the patient’s reliance upon the conduct of the hospital and the doctor, consistent with ordinary care and prudence.

Effect if agent does not act for and in behalf of principal; principal is not bound.

35. The owner of a property executed a special power of attorney in favor of her daughter to secure a loan and mortgage her property for not more than P300,000.00. The contract however did not indicate that she was acting on behalf of the principal. The binding effect of the contract was the basic issue where the SC

Held: The principal is not bound. The mortgages were not binding on the principal and as to them, they were void. It is a general rule in the law of agency that, in order to bind the principal by a mortgage on real property executed by an agent, it must upon its face purport to be made, signed and sealed in the name of the principal, otherwise, it will bind the agent only. It is not enough merely that the agent was in fact authorized to make the mortgage, if he has not acted in the name of the principal. Neither is it ordinarily sufficient that in the mortgage the agent describes himself as acting by virtue of a power of attorney, if in fact the agent has acted in his own name and has set his own hand and seal to the mortgage. This is especially true where the agent himself is a party to the instrument. However clearly the body of the mortgage may show and intend that it shall be the act of the principal, yet, unless in fact it is executed by the agent for and on behalf of his principal and as the act and deed of the principal, it is not valid as to the principal.

Laches is negligence or omission to assert a right within a reasonable time, warranting a presumption that the party entitled to assert it either has abandoned it or declined to assert it. It’s essential elements are:

(1) conduct on the part of the defendant, or of one under whom he claims, giving rise to the situation complained of; (2) delay in asserting complainant’s right after he had knowledge of the defendant’s conduct and after he has an opportunity to sue; (3) lack of knowledge or notice on the part of the defendant that the complainant would assert the right on which he bases his suit; and (4) injury or prejudice to the defendant in the event relief is accorded to the complainant

Sale by agent without a written authority is void.

In Sps. Alcantara, et al. v. Nido, the SC had the occasion to rule that Article 1874 of the Civil Code explicitly requires a written authority before an agent can sell an immovable property. Consequently, the sale of the lot by a person who did not have a written authority from the owner is void . A void contract produces no effect either against or in favor of anyone and cannot be ratified.

A special power of attorney is also necessary to enter into any contract by which the ownership of an immovable is transmitted or acquired for a valuable consideration. Without an authority in writing, respondent cannot validly sell the lot to petitioners. Hence, any “sale” in favor of the petitioners is void.Further, Article 1318 of the Civil Code enumerates the requisites for a valid contract, namely:

1. consent of the contracting parties;2. object certain which is the subject matter of the contract;

3. cause of the obligation which is established.

36. Is not a general power of attorney executed before a notary public in the USA sufficient to authorize an agent to sell the property? Explain.

Answer: No. When the special power of attorney is executed and acknowledged before a notary public or other competent official in a foreign country, it cannot be admitted in evidence unless it is certified as such in accordance with the foregoing provision of the rules by a secretary of embassy or legation, consul general, consul, vice consul, or consular agent or by any officer in the foreign service of the Philippines stationed in the foreign country in which the record is kept of said public document and authenticated by the seal of his office. A city judge-notary who notarized the document, as in this case, cannot issue such certification.

Since the General Power of Attorney was executed and acknowledged in the United States of America, it cannot be admitted in evidence unless it is certified as such in accordance with the Rules of Court by an officer in the foreign service of the Philippines stationed in the United States of America. Hence, this document has no probative value.

Duties and liabilities of a gun store owner,

37. A minor was killed inside a gun store, fired from a gun brought by the owner for repair. The gun was kept inside a drawer by the owner. The caretaker left the store and requested two (2) sales agents to take care of the store and entrusted a bunch of keys including the key of the drawer where the gun was kept. The sales agents brought out the gun and placed it on top of the table and attracted by the sight of the gun, the minor Alfredo Pacis got hold of it. He was asked to return it but when he did, it went off and a bullet hit his head, killing him. A criminal case was filed against the owner but he was acquitted because of accident under Art. 12, par. 4, RPC. A complaint for damages was filed by the parents where by agreement of the parties, the evidence in the criminal case was reproduced and adopted in the civil action. The defendant was held liable for damages. The CA reversed it and absolved him pursuant to Art. 2180, NCC. The trial court held respondent civilly liable for the death of Alfred under Article 2180 in relation to Article 2176 of the Civil Code. The trial court held that the accidental shooting of Alfred which caused his death was partly due to the negligence of respondent’s employee Aristedes Matibag. Matibag and Jason Herbolario were employees of respondent even if they were only paid on a commission basis. Under the Civil Code, respondent is liable for the damages caused by Matibag on the occasion of the performance of his duties, unless respondent proved that he observed the diligence of a good father of a family to prevent the damage. The trial court held that respondent failed to observe the required diligence when he left the key to the drawer containing the loaded defective gun without instructing his employees to be careful in handling the loaded gun.

It was found by the CA that the defendant exercised the diligence of a good father of a family to prevent the accident by keeping the gun inside his drawer which was locked which was taken away without his knowledge, hence, what happened to the deceased was purely accidental. In reversing the CA, the SC and holding that the defendant was negligent, for failure to comply with the PNP Circular, the SC

Answer: Under the PNP Circular No. 9, entitled “Policy on Firearms and Ammunition Dealership/Repair”, a person who is in the business of purchasing and selling firearms and ammunitions must maintain basic security and safety requirements of a gun dealer, otherwise his license to Operate Dealership will be suspended or cancelled.

Indeed, a higher degree of care is required of someone who has in his possession or under his control an instrumentality extremely dangerous in character, such as dangerous weapons or substances. Such person in possession or control of dangerous instrumentalities has the duty to take exceptional precautions to prevent any injury being done thereby. Unlike the ordinary affairs of life or business which involve little or no risk, a business dealing with dangerous weapons requires the exercise of a higher degree of care.

As a gun store owner, respondent is presumed to be knowledgeable about firearms safety and should have known never to keep a loaded weapon in his store to avoid unreasonable risk of harm or injury to others. Respondent has the duty to ensure that all the guns in his store are not loaded. Firearms should be stored unloaded and separate from ammunition when the firearms are not needed for ready-access defensive use. With more reason, guns accepted by the store for repair should not be loaded precisely because they are defective and may cause an accidental discharge such as what happened in this case.

Respondent was clearly negligent when he accepted the gun for repair and placed it inside the drawer without ensuring first that it was not loaded. In the first place, the defective gun should have been stored in a vault. Before accepting the defective gun for repair, respondent should have made sure that it was not loaded to prevent any untoward accident. Indeed, respondent should never accept a firearm from another person, until the cylinder or action is open and he has personally checked that the weapon is completely unloaded. For failing to insure that the gun was not loaded, respondent himself was negligent. Clearly, respondent did not exercise the degree of care and diligence required of a good father of a family, much less the degree of care required of someone dealing with dangerous weapons, as would exempt him from liability in this case.

Brothers and sisters of the victim are not entitled to moral damages.

38. The basic issue is whether the surviving brothers and sisters of a passenger of a vessel that sinks during a voyage are entitled to recover moral damages from the common carrier. The SC

Answer: No, because only the spouse, legitimate and illegitimate descendants and ascendants of the deceased may demand moral damages for mental anguish by reason of the death of the deceased.

The foregoing legal provisions set forth the persons entitled to moral damages. The omission from Article 2206 (3) of the brothers and sisters of the deceased passenger reveals the legislative intent to exclude them from the recovery of moral damages for mental anguish by reason of the death of the deceased. Inclusio unius est exclusio alterius. The solemn power and duty of the courts to interpret and apply the law do not include the power to correct the law by reading into it what is not written therein.

Essentially, the purpose of moral damages is indemnity or reparation, that is, to enable the injured party to obtain the means, diversions, or amusements that will serve to alleviate the moral suffering he has undergone by reason of the tragic event. Accordingly, the conditions for awarding moral damages are:

(a) there must be an injury, whether physical, mental, or psychological, clearly substantiated by the claimant; (b) there must be a culpable act or omission factually established; (c) the wrongful act or omission of the defendant must be the proximate cause of the injury sustained by the claimant; and (d) the award of damages is predicated on any of the cases stated in Article 2219 of the Civil Code.

To be entitled to moral damages, the respondents must have a right based upon law. Article 2219 circumscribes the instances in which moral damages may be awarded. The provision does not include succession in the collateral line as a source of the right to recover moral damages. The usage of the phrase analogous cases in the provision means simply that the situation must be held similar to those expressly enumerated in the law in question following the ejusdem generis rule. Hence, Article 1003 of the Civil Code is not concerned with recovery of moral damages

In fine, moral damages may be recovered in an action upon breach of contract of carriage only when: (a) where death of a passenger results, or (b) it is proved that the carrier was guilty of fraud and bad faith, even if death does not result.

Malicious prosecution; mere filing and dismissal of a suit does not warrant a complaint for malicious prosecution.

There was a complaint for damages due to malicious prosecution. It was alleged that the respondents filed a complaint for theft of electricity against petitioner Tiu alleging that he committed the crimes of theft of electricity and tampering with electric meter resulting in zero-zero power consumption. The cases were dismissed which was even affirmed by the SupremeCourt, hence, the suit for malicious prosecution. Tiu alleged that he suffered mental anguish, serious anxiety, besmirched reputation, wounded feelings, moral shock and social humiliation and that petitioner Limanch-O Hotel suffered loss of business goodwill, financial reverses, and injured reputation.

In its answer, the respondent City alleged that there was no ill motive in filing the criminal complaint. A demurrer to evidence was filed after plaintiff presented evidence and it was granted, dismissing the complaint, as there was no showing of legal malice. The order was affirmed by the CA, hence, a petition for review was filed with the SC which affirmed the CA decision and

Answer: To entitle the petitioners to damages for malicious prosecution, they needed to prove thefollowing elements:

(1) that the respondent had caused their prosecution; (2) that the criminal action ended in their acquittal; (3) that, in bringing the action, the complaint had no probable cause; and (4) that it was impelled by legal malice—an improper or a sinister motive.

The burden in suits for malicious prosecution is being able to prove the complainant’s deliberate initiation of a criminal action knowing the charge to be false and groundless. The respondent did not concoct out of thin air the criminal charge for theft of electricity against petitioners. It filed the case based on the result of an investigation carried out at Tiu’s premises which indicated a tampering of the electric meter. Indeed, petitioners never claimed that the inspection of Tiu’s premises was just a farce.

The City did not merely conjure the charge with the intention of vexing the petitioners. It acted within its right to bring up the result of that investigation to the authorities for evaluation and resolution.

It is not enough to say that, since the Supreme Court sustained the Secretary of Justice’s finding that no probable cause for electricity theft existed against petitioners, a case for malicious prosecution already exists against the complainant. The test should be whether sufficient facts exist which show that, in bringing the criminal action, complainant acted without probable cause, defined as the existence of such facts and circumstances as would excite the belief in a reasonable mind that the person charged and prosecuted in a criminal case is probably guilty of the crime or wrongdoing. Here, the fact that the filing of the complaint was prompted by the result of an investigation shows that the City had a reasonable ground to believe that a crime had probably been committed. Resort to judicial processes, by itself, is not an evidence of ill will which would automatically make the complainant liable for malicious prosecution. Otherwise, peaceful recourse to the courts will be greatly discouraged and the exercise of one’s right to litigate would become meaningless and empty.

ACCESSION CONTINUA INDUSTRIAL

Owner of land (OL) builds, plants or sows on thereon with materials of another (OM):

1. 1st situation: OL and OM in good faithOL can remove materials if it can be done without injury to work. Otherwise, OM can keep

materials but pay for their value.

2 2nd situation: OL in bad faith, OM in good faithOM can remove materials or demand payment, plus damages in either case.

3.. 3rd situation: OL in good faith, OM in bad faithOL can keep materials without paying, plus damages.

4. 4th situation: Both are in bad faithSame as both in good faith.

39. Builder, planter or sower (BPS) builds, plants or sows on land of another (OL) in good faith.

OL has option to appropriate the works upon payment of indemnity, or to compel builder or planter to buy the land and the sower to pay the proper rent.

But he cannot compel the builder or planter to buy the land if the value thereof is considerably higher than the value of the improvement. In such case, they will enter into a contract of lease, and if they cannot agree on the terms and conditions thereof, the court will fix it for them

***The OL and BPS are in good faith. BPS is in good faith if he builds, plants or sows on the land believing that it belongs to him

OL is in good faith if he did not know that someone was building, planting or sowing in his land, or when he learned about it, he objected immediately.

Option is given to OL because the land is the principal.

OL’s choice is limited to two only. He cannot demand removal. He can demand it only if the builder or planter failed to

buy the land. The indemnity OL should pay is the fair market value.

***OL in good faith, BPS in bad faithOL has three options:1. To appropriate the improvement without indemnity, or2. To compel the builder or planter to buy the land, even if considerably

higher in value, and the sower to pay the proper rent, or3. To demand removal of the work,Plus damages in either case.

BPS is entitled only to reimbursement for the necessary expenses for the preservation of the land.

If OL in bad faith, BPS in good faith BPS may demand indemnity or removal of the work, with damages in

either case

If both parties are in bad faith - both treated as in good faith

If materials belong to a third person (OM) - OL is subsidiarily liable to the owner of the materials if:

a. OL has appropriated the works, andb. OM is in good faith.

ACCESSION CONTINUA NATURAL

1. Alluvium. - To the owners of lands adjoining the banks of rivers belong the accretion which they

gradually receive from the effects of the current of the waters.

Requisites: (1) cause is current of the river, (2) deposit must be gradual and imperceptible, (3) land where accretion takes place is adjacent to the banks of the river, (4) river must continue to exist.

- Accretion can take place along the banks of a lake but not in ponds and lagoons - Accretion does not take place along the shores of the sea

Ownership is automatically acquired by the riparian owner by law. Riparian owner is not required to take any act to acquire ownership.

Registration is not required for acquiring ownership, but useful to protect ownership from being acquired by others through acquisitive prescription.

2. AVULSION

- Whenever the current of a river, creek or torrent segregates from an estate on its bank a known portion of land and transfers it to another estate, the owner of the land to which the segregated portion belonged retains the ownership of it, provided that the removes the same within two years.

- Action of river is abrupt, soil segregated is identifiable, original owner retains ownership provided he remove the same within two years.►Delayed accessionit takes place only after 2 years

- Trees uprooted and carried away by the current belong to the owner of the land upon which they may be cast, if the owners do not claim them within six months. ►Also a case of delayed accession, because owner of land on which the trees may be cast

acquires ownership of them only after six months and original owners did not claim them.

3. Change in course of Rivers - River beds which are abandoned through the natural change in the course of the waters

ipso facto belong to the owners whose lands are covered by the new course in proportion to the area lost. However, the owners of the lands adjoining the old bed shall have the right to acquire the same by paying the value thereof, which value shall not exceed the value of the area occupied by the new bed.

Notes:1. Change of course must be sudden, a natural one and more or less permanent.2. Owners of the land along the old bed have a period of two years to bring the river back to it old

course. 3. Also a case of delayed succession due to the right of the lands bordering the abandoned bed to

acquire it by paying the value thereof.4. New bed becomes property of public dominion 5. Owner retains ownership of land isolated by branching of waters of a river

ACCESSION WITH RESPECT TO MOVABLES1. Adjunction or Conjunction

- process by virtue of which two movable things belonging to different persons are united a such a way that they form a single object

- Different kinds: inclusion, soldering, escritura, pintura, weaving.Rules:

1. When the things are united without bad faith - owner of principal acquires the accessory after paying for its value.

2. When the owner of the accessory made the incorporation in bad faith - he shall lose the thing incorporated, and indemnify the owner of the principal for damages.

3. If the one who acted in bad faith is the owner of the principal, - the owner of the accessory shall have the option ( a) to demand payment for its value or

( b ) separation of the thing belonging to him eve it will mean destroying the principal thing, plus damages in either case.

4. If both are in bad faith, they shall be treated as in good faith

5. Whenever the things united can be separated, their owners can demand separation. Nevertheless, if the accessory is much more precious than the principal, the owner of the former may demand its separation even though the principal may suffer some injury.

6. The principal is deemed to be that to which the other has been united as an ornament or for its use or perfection. If it cannot be determined by his rule, that of the greater value shall be considered the principal, and if of equal value, that of the greater volume

7. In painting, sculpture, writings, printed matter, engraving and lithographs, the board, metal , stone, canvas, paper or parchment shall be deemed the accessory.

2. Mixture - combination or union of materials where the respective identities of the component

elements are lost.- Kinds:

a) commixtion (if solids are mixed), or b) confusion (if liquids are mixed)

- Rules:

a) If caused by the will of their owners, by chance, or by the will of only one owner who acted in good faith, ►each owner shall acquire a right proportional to the value of the part belonging to him

b) If the one who caused the mixture acted in bad faith►he shall lose his thing plus being liable for damages.

3. Specification - giving of a new form to another’s material thru the application of labor.

a) If the worker (principal) is in good faith►He appropriates the new thing but must pay indemnity for the material.►But if the material (accessory) is more precious than the new thing, the owner has the

option:i) to get the new thing, or ii) demand indemnity.

b)If worker is in bad faith►owner of material has option:i) to appropriate work without paying for work, but not if the value of the work is

more valuable than the material, orii) To demand indemnity for materials, plus damages.

REAL RIGHTS AND PERSONAL RIGHTSA real right (jus in re) is the power of a person to obtain certain financial or economic

advantages over a specific thing,a power enforceable against the whole word.

A personal right i(jus in personam) is the power belonging to a person to demand from another as a definite passive subject debtor, the fulfillment of a prestation to give, to do or not to do.

REAL RIGHT1. Has a specific object; 2. In real right, there is a definite active subject while the word is

the passive subject; 3. Real right is a right over a thing; 4. Real right is created by mode and title; 5. Real right is extinguished by loss or destruction;

PERSONAL RIGHT1. Personal right affects all the present and future properties of the debtor,2. In personal right there is a definite active and passive subject.3. In personal right, the right is to a thing.4. Personal right is created by title only.5. Personal right is not so extinguished

MODES OF ACQUIRING OWNERSHIP1. Original modes – Occupation and intellectual creation.

2. Derivative modes – law, donation, testate and intestate succession, tradition as a consequence of certain contracts, prescription.

LIMITATIONS ON OWNERSHIP1. General Limitations:

a. Taxation – government may impose a tax on property, and if these are not paid, the property may be seized.

b. Police power – Property may be condemned or seized in the interest of health, safety or security and the owner shall not be entitled to compensation unless he can show such seizure is unjustified. Salus populi est suprema lex.

c. Eminent domain – No person shall be deprived of his property except by competent court and for public use and always upon payment of just compensation

2. Specific Limitations

a. imposed by law – legal easement of waters

b. sic utere tuo ut alterium non alienas – The owner of a thing cannot make use thereof in such a manner as to injure the rights of a third person

c. nuisance – a public nuisance may be abated without judicial proceedings.

d. state of necessity – the owner of a thing has no right to prohibit the interference of another with the same if the interference is necessary to avert an eminent danger and the threatened damage, compared to the damage arising from the interference, is much greater.

e. Voluntary easements – the owner of property may establish thereon such easement as he may deem proper, so long as it does not violate the law, public policy or public order.

f. Servitudes (Spanish law concept) – same as easements (common law concept), only broader (covers personal property).

g. mortgages imposed by contracts.

QUIETING OF TITLE

A. Requirement - a fixed determination on the part of the defendant to create a cloud on title to real property, consisting of any instrument, record, claim, encumbrance or proceeding which is apparently valid or effective but in truth and in fact is invalid, ineffective, voidable, unenforceable, extinguished or terminated, or barred by extinctive prescription.

B. Quieting title is remedial; preventing a cloud is preventive.

C. Action does not prescribe if the plaintiff is in possession; prescribes if he is not in possession, because the action would actually be one to recover possession

CO-OWNERSHIPCharacteristics of co-ownership

1. There must be more than one subject or owner.2. There is one physical whole divided into ideal undivided shares.3. Each ideal share is definite in amount, but is not physically segregated from the rest.4. Regarding the physical whole, each co-owner must respect each other in the common use, enjoyment or preservation of the physical whole.5. Regarding the ideal share, each co-owner holds almost absolute control over the same.6. It is not a juridical person.7. A co-owners is in a sense a trustee for the other co-owners

Rights of Co-owners1. As to the property – each co-owner may use the thing owned in common , provided

i. he does so in accordance with the purpose for which it is intended, and ii. in such a way as not to injure the interests of the co-ownership or prevent the other

co-owners from using it according to their rights.

2. As to the ideal share – 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.

Acts of AlterationNone of the co-owners shall, without the consent of the others, make alterations in the thing

owned in common, even though benefits for all will result therefrom. However, if the withholding of the consent of one or more of the co-owners is clearly prejudicial to the common interest , the courts may afford adequate relief.

An alteration is a change which is more or less permanent, changes the use of the thing, and prejudices the condition of the thing or its enjoyment by the others.

Right to partition- No co-owner shall be obliged to remain in the co-ownership.

- Each co-owner may demand at any time the partition of the thing owned in common, insofar as his share is concerned.

- Nevertheless, an agreement to keep the thing undivided for certain period of time, not exceeding ten years, shall be valid. This term maybe extended by a new agreement.

- A donor or testator may prohibit partition for a period which shall not exceed twenty years.

- Neither shall there be any partition when it is prohibited by law.

- No prescription shall run in favor of a co-owner or co-heir against his co-owners or co-heirs as long as he expressly or impliedly recognizes the co-ownership.

- The family home shall continue despite the death of one or both spouses or of the unmarried head of the family :

i) for a period of ten years; or ii) for as long as there is a minor beneficiary,

and the heirs cannot partition the same unless the court finds compelling reasons therefor. - This rule shall apply regardless of whoever owns the property or constituted the family home

Necessary expenses ( property co-owned )- Each co-owner shall have a right to compel the other co-owners to contribute to the

expenses of preservation of the thing or right owned in common and to the taxes.

- Any one of the latter may exempt himself from this obligation by renouncing so much of his undivided interest as may be equivalent to his share of the expenses and taxes.

- No such waiver shall be made if it is prejudicial t o the co-ownership.

Right of redemption of co-owner’s share- A co-owner of a thing may exercise the right of redemption in case the share of all the co-

owners or any of them are sold to a third person. If the price of the alienation is grossly excessive, the redemptioner shall pay only a reasonable one.

- Should two or more co-owners desire to exercise the right of redemption, they may only do so in proportion to the share they may respectively have in the thing owned in common. (Art. 1620)

- Right must be exercised within 30 days from notice in writing.

Effects of partition- There shall be mutual accounting for benefits received and reimbursement for expenses

made.

- Each co-owner shall pay for damages caused by reason of his negligence or fraud.

- Every co-owner shall, after partition, be liable for defects of title and quality of the portion assigned to each of the other co-owners,

Rights against individual co-owners- The partition of a thing owed in common shall not prejudice third persons, who shall retain

the rights of mortgage, servitude, or any other real right belonging to them before the division was made.

- Personal rights pertaining to third persons against the co-ownership shall also remain in force, notwithstanding the partition.

Partition in case co-owners cannot agree:- If the parties are unable to agree upon the partition, the court shall appoint not more than

three competent and disinterested persons as commissioners to make the partition, commanding them to set off to the plaintiff and to each party in interest such part and proportion of the property as the court shall direct.

- A co-owner of a thing may exercise the right of redemption in case the shares of all the co-owners or any of them, are sold to a third person. If the price of the alienation is excessive, the redemptioner shall pay only a reasonable one.

- Should two or more co-owners desire to exercise the right of redemption, they may only do so in proportion to the share hey may respectively have in the thing owned in common.

CONDOMINIUMConcept - A condominium is an interest in real property consisting of a separate interest in a unit in a residential, industrial or commercial building and an undivided interest in common, directly or indirectly, in the land on which it is located and in other common areas of the building. (Sec. 2, R.A. 47260 )

- Interest in real property – may be ownership or any other real right in real property recognized by the law of property in the Civil Code and other pertinent laws.

- Common areas – the entire project excepting all units separately granted or held or reserved.

- Condominium Corporation – a corporation specially formed to hold title to the land and common areas. (Sec. 2, R.A. 4726)

- Master Deed – an enabling deed to be recorded in the Register of Deeds and annotated in the title of the land, which shall contain:

a. a description of the land;b. a description of the buildingc. description of the common areasd. statement of the interest acquired or to be acquired by the purchaser;e. statement of the purposes for which the building and units are intended or restricted;f. consent of the registered owner;g. any reasonable restriction on the right of the owner to alienate. (Sec.4)

Declaration of Restrictions – restrictions on the use of the condominium which shall constitute a lien on each unit in the project, to be enforced, by the owner or management body, description and powers of the management body.

- Condominium Corporation –The corporate purposes shall be limited to the holding of the common areas, either by ownership or any other interest in real property recognized by law, to the management of the project, and to such other purposes as may be necessary, incidental or convenient to the accomplishment of said purposes . The articles of incorporation or by laws of the corporation shall not contain any provision contrary to or inconsistent with the provisions of this Act, the enabling or master deed, or the declaration of restrictions of the project.

- Membership in a condominium corporation shall not be transferable separately from the condominium unit of which it is an appurtenance . (Sec. 10, R.A. 4726)

- The term of a condominium corporation shall be coterminous with the duration of the condominium project

Assessments – under the declaration of restrictions, the management body shall provide for reasonable assessments to meet authorized expenditures. Such assessments shall constitute a lien on the unit assessed when a notice of such assessment is registered with the Register of Deeds.

RA 6552 AND PD 957R.A. 6552 provides protection to buyers of real property on installment basis.

a. A buyer who has paid less than 2 year of installment is entitled to a grace period of not less than 60 days to pay the installment due. b. A buyer who has paid at least two years of interest is entitled to a grace period of one month for every year of installment payment made, to be exercised only once every five years of the life of the contract, and to be refunded a cash surrender value equal to 50% of his total payments if the contract is cancelled. If he has paid five years or more, he is entitled to an increase of 5% for every year, up to 90% of his total payment.

PD 957 allows a buyer of a subdivision lot or condominium, after due notice, to desist from paying installments, due to the failure of the owner or developer to develop the subdivision or condominium project according to the approved plans and within the time limit for complying

with the same. Such buyer may, at his option, be reimbursed for the total amount paid including amortization interests but excluding delinquency interests.

Grounds for partition of common areas: - In case of voluntary dissolution of condominium corporation, the common areas

shall be transferred pro indiviso to the members of the corporation

Grounds for dissolution of the condominium;a. Three years after damage or destruction to ½ of the units, more than 30% of the stockholders

are opposed to the rebuilding or repair; or

b. The project or material part thereof has been condemned or expropriated and more than 70% of the members are opposed to the repair.

c. By affirmative vote of all the stockholders.

POSSESSIONA. Requisites of possession:

1. There must be holding or control of a thing or right.2. There must be deliberate intention to possess (animus possidendi)3. Possession must be by virtue of one’s own rights.

B. Degrees of possession1. Mere holding without any right whatsoever (grammatical possession e.g. possession of a thief).2. Possession with a juridical title, but not of an owner (juridical possession, e.g. possession of a lessee)3. Possession with a just title (real possessory right, e.g. possession of a car bought from one who is not the owner).4. Possession with the title of dominion (possession of the owner)

C. Acquisition of Possession: 1. By material occupation (detention) of a thing or exercise of a right (quasi-possession). This

includes constitutum possessorium or traditio brevi manu.2. By subjection to our will (this includes traditio longa manu and traditio simbolica)3. By constructive possession or proper acts and legal formalities (such as succession, donation,

or execution of a public instrument)

KINDS OF POSSESSION1. Possession in one’s own name (as by the owner) or the name of another (as by the agent). Note: Possession in another’s name may be voluntary, necessary or unauthorized.

2. Possession in the concept of owner or of the holder. Note: Refers to concept of other people derived from the acts of the possessor.

3. Possession in good faith and in bad faith

POSSESSOR IN GOOD FAITH

1. He is deemed a possessor in good faith who is not aware that there exists in his title or mode of acquisition any flaw which invalidates it.

2. He is deemed a possessor in bad faith who possesses in any case contrary to the foregoing.

***Mistake upon a doubtful or difficult a question of law may be the basis of good faith.

*** Good faith is always presumed, and upon him who alleges bad faith on the part of the possessor rests the burden of proof.

EFFECTS OF POSSESSION IN GOOD FAITHAs to Fruits1. A possessor in good faith is entitled to the fruits received before the possession is legally

interrupted.Natural and industrial fruits are considered received from the time they are gathered or

severed.Civil fruits are deemed to accrue daily and belong to the possessor in good faith in that

proportion.

2. If at the time the good faith ceases, there should be any natural or industrial fruits, the possessor shall have a right to a part of the expenses of cultivation, and to a part of the net harvest, both in proportion to the time of the possession.

- The charges shall be divided on the same basis by the two possessors.

- The owner of the thing may, should he so desires, give the possessor in good faith the right to finish the cultivation and gathering of the growing fruits, as an indemnity for his part of the expenses of cultivation and the net proceeds; the possessor in good faith who for any reason whatever should refuse to accept this concession, shall lose the right to be indemnified in any manner.

As to Expenses1. Necesssary expenses shall be refunded to every possessor; but only the possessor in good

faith may remain the thing until he has been reimbursed therefor.

2. Useful expenses shall be refunded only to he possessor in good faith with the same right of retention, the person who has defeated him in the possession having the option of refunding the amount of the expenses or of paying the increase in value which the thing may have acquired by reason thereof.

If the useful improvements can be removed without damage to the principal thing, the possessor in good faith may remove them, unless the person who recovers the possession exercises the option under paragraph 2 of the preceding article. Art. 547)

3. Expenses for pure luxury or mere pleasure shall not be refunded to the possessor in good faith; but he may remove the ornaments with which he has embellished the principal thing if it suffers no injury thereby, and if his successor in the possession does not prefer to refund the amount expended

POSSESSOR IN BAD FAITH1. He who builds, plants or sows in bad faith on the land of another, loses what is built, planted or sown without right of indemnity.

2. The possessor in bad faith shall reimburse the fruits received and those which the legitimate possessor could have received, and shall have a right only to the expenses mentioned in paragraph 1 of Article 546, and in Article 443.

The expenses incurred in improvements for pure luxury or mere pleasure shall not be refunded to the possessor in bad faith, but he may remove the objects for which such expenses have been incurred, provided that the lawful possessor does not prefer to retain them by paying the value they may have at the time he enters into possession.

RIGHTS OF A POSSESSOR1. Every possessor has a right to be respected in his possession and should he be disturbed

therein he shall be protected in or restored to said possession by the means established by law and the Rules of Court. (Art. 539

2. Only the possession acquired and enjoyed in the concept of owner can serve as a title for acquiring dominion.

3. A possessor in the concept of owner has in his favor the legal presumption that he possesses with a just title and he cannot be obliged to show or prove it.

4. The possession of real property is presumed that of the movables therein as long as it is not shown or proved that they should be excluded.

4. Each one of the participants of a thing possessed in common shall be deemed to have exclusively possessed the part which may be allotted to him upon the division thereof for the entire period during which the co-possession lasted.

LOSS OR UNLAWFUL DEPRIVATION OF A MOVABLEA. The possession of movable property acquired in good faith is equivalent to a title.

Nevertheless, one who has lost any movable or has been unlawfully deprived thereof, may recover it from the person in prosecution of the same.

If the possessor of a movable loss or of which the owner has been unlawfully deprived , has acquired it in good faith at a public sale, the owner cannot obtain its return without reimbursing the price paid therefor.

The owner cannot recover, even if he offers to reimburse, If the possessor had acquired it in good faith by purchase from a merchant’s store, or in fairs or markets in accordance with the Code of Commerce and special laws.

Period to Recover:1. The ownership of movables prescribes through uninterrupted possession for four years in

good faith.

2. The ownership of personal property also prescribes through uninterrupted possession for eight years, without need of any other condition.

Movables possessed through a crime can never be acquired through prescription by the offender.

3. Ownership and other real rights over immovable property are acquired by ordinary prescription through possession of ten years.

4. Actions to recover movables shall prescribe eight years from the time the possession thereof is lost, unless the possessor has acquired ownership by prescription for a less period.

5. Where the seller of goods has a voidable title thereto, but his title has not been avoided at the time of the sale, the buyer acquires a good title to the goods, provided that he buys them in good faith, for value, and without notice to the seller’s defect of title.

FINDER OF LOST MOVABLEWhoever finds a movable, which is not treasure, must return it to the previous possessor. If the

later is unknown, the finder shall immediately deposit it with the mayor of the city or municipality where the finding has taken place.

The finding shall be publicly announced by the mayor for two consecutive weeks in the way he deems best.

If the movable cannot be kept without deterioration, or without expenses which considerably diminish its value, it shall be sold at public auction eight days after the publication.

Six months from the publication having elapsed without the owner having appeared, the thing found , or is value, shall be awarded to the finder. The finder and the owner shall be obliged, as the case may be, to reimburse the expenses. (Art. 719)

FINDING A LOST MOVABLEIf 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.

LOSS OR EXTINGUISHMENT OF POSSESSIONA possessor may lose his possession:1. By abandonment of the thing.2. By an assignment made to another either by onerous or gratuitous title.3. By the destruction or total loss of the thing, or because it goes out of commerce.4. By the possession of another, subject to the provisions of Article 537,if the new possession

has lasted longer than one year. But the real right of possession is not lost until after the lapse of ten years . (Art. 555)

5. Others: final judgment, expropriation, recovery by legitimate owner, escaping of wild animals.

USUFRUCTA. CharacteristicsEssential –1. A real right.

2. Of a temporary nature.3. Purpose is to enjoy the benefits and derive all the advantages from the object as a consequence of normal use or exploitation.

Natural –1. Obligation of conserving or preserving the form and substance.

Accidental –1. Pure or conditional2. Period3. No. of usufructuaries

B. Classification:As to origin:1. Legal2. Voluntary

a. inter vivosb. mortis causa

As to extent of fruits or objects –a. Fruits - total or partialb. Objects – universal or particular

As to number of usufructuaries –a. Simpleb. Multiple

As to quality and kind of objects –1. Usufruct over rights2. Usufruct over things

a. Normal (perfect or regular)b. Abnormal (imperfect or irregular)

As to terms and conditions:1. Pure2. With a term3. With a condition

C. Rights of Usufructuary1. Right to all the fruits, natural, industrial and civil

a. natural and industrial fruits pending at the beginning and end of the usufruct b. lease of tenements under usufruct c. Usufruct over right to receive rent or pension, and over commercial and industrial enterprise

2. Right to enjoy any increase acquired through accession , servitudes, and inherent benefits

3. Abnormal usufructs

4. Usufruct over fruit-bearing trees and shrubs 5. Usufruct over a woodland 6. Usufruct over right to recover property 7. Right to make improvements.

D. Obligations of the usufructuaryBefore entering into the usufruct 1. To make an inventory2. To give securityExceptions:

a. when no one will be injured thereby b. when waived by the ownerc. when usufructuary is the donor of the property d. parental usufructe. caucion juratoria (Art.586)

During the usufruct1. Take care of the property as a good father of a family 2. Answer for the damage of substitute3. Make ordinary repairs 4. Pay annual taxes on fruits 5. Notify owner of adverse claim by 3rd persons

After the usufructReturn the property

D. Rights of the owner1. Right to pending fruits at end of usufruct.2.Right to enjoy any increase not through accession.3.Right to alienate the property but not alter its form and substance and prejudice the usufruct 4. To retain property pending inventory and security.5. To construct works and improvements, provided it does not prejudice rights of usufructuary

E. Extinguishment of usufruct1. By death of usufructuary unless contrary intention appears (death of the last survivor in case of multiple usufruct).2. By expiration of the period or fulfillment of resolutory condition (maximum period: lifetime of natural person, 50 years if juridical person.)3. Merger of usufruct and ownership in one person.4. By renunciation of the usufructuary.5. By total loss of the thing6. By termination of the right of the person constituting the usufruct7. By prescription

EASEMENTSA. Characteristics:

1. A real right.

2. Imposable only on another’s property3. Jus in re aliena4. Limitation or encumbrance on another’s estate.5. Inherence or inseparability6. Intransmisibility7. Indivisibility8. Not presumed

B. Classification1. Real (predial) and personal2. Continuous and discontinuous3. Apparent and non –apparent4. Positive and negative5. Partial use or getting of specific materials6. Voluntary or legal or mixed

C. Modes of Acquiring Easements:Compulsory easements1. Continuous and apparent easements are acquired either by virtue of a title or by prescription of ten years 2. Continuous non-apparent easements, and discontinuous ones, whether apparent or not, may be acquired only by virtue of a title. 3, Apparent sign of an easement (Art. 624)

Voluntary easementsEvery owner of a tenement or piece of land may establish thereon the easements which he may deem suitable and in the manner and form which he may deem best, provided he does not contravene the laws, public policy and public order. (Art. 688)

: A. Easement of Right of WayTo be entitled to an easement of right of way, the following conditions should be met: 1. the dominant estate is surrounded by other immovables and has no adequate outlet to a

public highway 2. there is payment of proper indemnity3. the isolation is not due to the acts of the proprietor of the dominant estate and 4. the right of way claimed is at the point least prejudicial to the servient estate; and insofar as

consistent with this rule, where the distance from the dominant estate to a public highway may be the shortest

B. Easement of Light and ViewThe easement of light and view is either positive or negative. ►Positive, if the window is through a party wall

►Negative, if the window is through one’s own wall Art

When the distances in Article 670 ( 2 meters between the wall in which they are made ) are not observed, the owner of a wall which is not a party wall adjoining a tenement or piece of land belonging to another, can make in it openings to admit light at the height of the ceiling joists or

immediately under the ceiling, and of the size of thirty centimeters square, and , in every case, with an iron grating imbedded in the wall and with a wire screen.

Nevertheless, the owner of the tenement or property adjoining the wall in which the openings are made can close them should he acquire Part-ownership thereof, if there be no stipulation to the contrary. He may also obstruct them by constructing a building on his land or by raising a wall thereon contiguous to that having such opening, unless an easement of light has been acquired.

2. No windows, apertures, balconies or other similar projections which afford a direct view upon or towards an adjoining land or tenement can be made, without leaving a distance of two meters between the wall in which they are made and such contiguous property.

Neither can side or oblique views upon or towards such conterminous property be had, unless there be a distance of sixty centimeters.

The non-observance of these distances does not give rise to prescription.

The distance referred to in the preceding article shall be measured in cases of direct views from the outer line of the wall when the openings do not project, from the outer line of the latter when they do, and in cases of oblique views from the dividing line between the two properties.

The provisions of Article 670 are applicable to buildings separated by a public way or alley, which is not less than three meters wide, subject to special regulations and local ordinances.

Whenever by any title a right has been acquired to have a direct views, balconies or belvederes overlooking an adjoining property, the owner of the servient estate cannot build thereon at less than a distance of three meters to be measured in the manner provided in article 671. Any stipulation permitting distances less than those prescribed in article 670 is void.

NUISANCE►A nuisance is any act, omission, establishment, business, condition or property, or anything else, which: ( IASOH )

(1) Injures or endangers the health or safety of others; or(2) Annoys or offends the senses; or(3) Shocks, defies or disregards decency or morality; or(4) Obstructs or interferes with the free passage of any public highway or street, or any body of

water; or(5) Hinders or impairs the use of property. (Art. 6940

MODES OF ACQUIRING OWNERSHIP►Ownership is acquired by occupation and intellectual creation.►Ownership and other real rights over property are acquired and transmitted by law, by donation, by estate and intestate succession, and in consequence of certain contracts, by tradition.►They may also be acquired by means of prescription. (Art. 712)

Mode – the process of acquiring or transferring ownership

Title - that which gives a juridical justification for a mode, that is, it provides the cause for the acquisition of ownership

OCCUPATION►Things appropriable by nature which are without an owner, such as animals that are the object of hunting or fishing, hidden treasure and abandoned movables, are acquired by occupation. (Art. 713)Requisites:1. Seizure or apprehension2. Property seized must be corporeal personal property.3. Property seized must be susceptible of appropriation.4. Intent to appropriate.5. Requisites or conditions of law must be complied with.

DONATIONA. Definition – Donation is an act or liberality whereby a person disposes gratituously of a thing

or right in favor of another who accept it.

B. Characteristics:1. consent, subject matter, cause2. necessary form.3. consent or acceptance of the donee4. irrevocability, except for legal causes5. intent to benefit the donee (animus donandi)6. resultant decrease in the assets or patrimony of the donor.

C. Extent of property donated:1. Donation may comprehend all the present property of the donor .provided he reserves

sufficient means for the support of himself and of all relatives who, at the time of acceptance of the donation, are by law entitled to be supported by the donor. Without such reservation, the donation shall be reduced on petition of any person affected.

2. The provisions of Article 750 notwithstanding, no person may give or receive by way of a donation, more that he may give or receive by will. The donation shall be inofficious in all that it may exceed this limitation.

3. Donations cannot comprehend future property. By future property is understood anything which the donor cannot dispose of at the time of the donation.

D. Reservations and reversions1. The right to dispose of some of the things donated, or of some amount which shall be a

charge thereon, may be reserved by the donor; but if he should die without having made use of this right, the property or amount reserved shall belong to the donee.

2. Reversion may be validly established in favor of only the donor for any case or circumstances, but not in favor of other persons unless they are living at the time of the donation.

Any reversion stipulated by the donor in favor of a third person in violation of what is provided shall be void, but shall not nullify the donation.

E. Kinds:1. As to time of effectivity:Inter vivos – When the donor intends that the donation shall take effect during the lifetime of

the donor, though the property shall not be delivered till after the donor’s death.

mortis causa - The donations which are to take effect upon the death of the donor partake of the nature of testamentary provisions and shall be governed by the rules established in the Title on Succession.

propter nuptias – donations made by reason of marriage, before its celebration, in consideration of the same, and in favor of one or both of the future spouses.

2. As to consideration:a. Pure or simple – consideration is liberality of the donor or merits of the donee. (Governed by

the law on donations)

b. Remuneratory or compensatory – consideration is services rendered by the donee to the donor, which do not constitute a demandable debt. (Governed by the law on donations.)

c. Conditional or modal – consideration is future services of the donee which are worth less than the value of the gift. (Governed by the law on contracts insofar as the gift is equal to the value of the services; by the law on donations insofar as value of the gift exceeds the value of the services.

d. Onerous – consideration is future services equal to or morethan the value to that of the gift. (Governed by the law on contracts)

F. Formalities:1. donation of personal property

a. may be done orally or in writing;b. oral donation requires simultaneous delivery of thing or document;c. If value of thing exceeds P5,000.00, donation and acceptance must be made in writing;

2. donation of real property a. public document its, specifying property and value of charges;b. acceptance may be made in same or separate public document; if in separate instrument,

donor notified and this step noted in both instruments.

G. Perfection:The donation is perfected from the moment the donor knows of the acceptance by the donee. (

H. Qualifications of donor and donee.1. Donor – All persons who may contract and dispose of their property may make a donation.

2. Donee –All those who are not specially disqualified by law may accept a donation.

Disqualified donees:a. Persons found guilty of adultery or concubinage at time of donation;b. persons found guilty of same offense;c. made to public officer, his wife, descendants and ascendants by reason of his office,d. Incapacity to succeed by will shall be applicable to donations inter vivos.

The following are incapable of succeeding(1) priest who heard confession of testator during last illness;(2) relatives of pries to 4th degree and church to which he belongs(3) guardian before approval of final accounts;(4) attesting witness, spouse, parents or children of witness;(5) physician, surgeon, nurse, health officer or druggist;(6) individuals, associations and corporations not permitted by law to inherit.

I. Effects-1. Donees subrogated to all the rights and actions which in case of eviction would pertain to

the donor. 2. There being no provision regarding payment of debt, donee shall be responsible for payment

of donor’s debts only when donation made in fraud of creditors. (Art. 759)3. Donation of same thing to two persons – Donee who first accepts shall be preferred. (Note:

Article 744 is a mistake. Donation cannot be compared to a sale, because donation is a mode.

J. Excessive/Inofficious donations:1. Art. 750 – may comprehend all of present property provided he reserves sufficient means for

his support and those of his relatives whom he is legally obliged to support (Art. 750)

2. No person may give more by way of donation than he may give by will (Art. 752)

K. In Fraud of creditors:►When the donation imposes upon the donee the obligation to pay the debts of the donor, if

the clause does not contain any declaration to the contrary, the former is understood to be liable to pay only the debs which appear to have been previously contracted.

►In no case shall the donee be responsible for debts exceeding the value of the property donated, unless a contrary intention clearly appears. (Art. 758)

►There being no stipulation regarding the payment of debts, the donee shall be responsible therefor only when the donation has been made in fraud of creditors.

►The donation is always presumed to be in fraud of creditors, when at the time thereof, the donor did not reserve sufficient property to pay his debts prior to the donation.

L. Revocation and Reduction1. Ground: ►Birth, Adoption of minor child and Reappearance of a child believed to be dead, made by a

donor having no children or descendants.

a. How done: Action for reduction insofar as donation exceeds portion that may be freely disposed of at birth, adoption and reappearance of child (inofficious donation), based on presumedlegitimate of child (Art. 761)

b. Prescriptive period: 4 years from birth of first child, adoption and reappearance (At. 763)

c. Effects: property shall be returned; mortgage may be redeemed by donor subject to recovery from donee; if it can no longer be returned, value estimated as at time of donation; donee shall not return the fruits except from the filing of the complaint

2. Non-compliance with conditions (At. 764)a. How done: Action for revocation at the instance of the donor, or by the heirs of the donor

against the donee’s heirs.b. Prescriptive period: four years from non-compliance with the condition (10 years if donation

is onerous).►( If no period for compliance is stipulated, action to fix period should first be filed, unless

sufficient time has already elapsed.)c. Effects: property donated shall be returned, alienations and mortgages made by the donee

being void, with limitation established with regard to third persons by the Mortgage Law and Land Registration; donee to return fruits received after having failed to fulfill the condition.

3. Acts of Ingratitude (Art. 765)a. Grounds:(1) If donee should commit some offense against the person, honor or property of the donor, his

wife, or children under his parental authority.(2) If donee imputes to the donor any criminal offence, or any act involving moral turpitude,

even though he should prove it, unless the crime 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.

b. How done: action for revocation by donor himself (although action commenced can be transmitted to his heirs and continued against heir of donee. (Art. 770)

c. Prescriptive period: 1 year from the time the donor had knowledge of the fact and it was possible for him to bring the action. (Art. 769)

d. Effect: Property to be returned or its value if already alienated (At. 767); alienations and mortgages before notation of complaint for revocation, shall subsist; done shall not return the fruits except from the filing of the complaint.

4. Inofficious donationsa. Ground: inofficious donation under Art. 752.

b. How done: action for reduction by compulsory heirs and their heirs and successors in interest at the time of the donor’s death.

c. Prescriptive period: 10 years from donor’s death.

d. Effects: Donation is excess of free portion shall be reduced. Reduction shall not prevent the donations from taking effect during the life of the donor, nor shall it bar the donee from appropriating the fruits. (Art. 771)

►If there being two or more donation, the disposable portion is not sufficient to cover all of them, those of the more recent date shall be suppressed or reduced with regard to the excess. (Art. 773)